PROPERTY investors need to relook their portfolio mix and adjust accordingly given a massive shift in industry with central business district (CBD) becoming a small to medium enterprise (SME) market, Standardbusiness has learnt.
The migration of firms away from the CBD has been occurring owing to soaring rentals, leaving companies unable to afford them. This phenomenon is mostly occurring due to the massive depreciation of the Zimbabwe dollar, forcing firms to charge rentals in foreign currency.
As an example, clothing chain Truworths closed three of its shops in Harare CBD in July 2022 owing to the same challenges.
Global Renaissance Investments chief executive officer Ngoni Dzirutwe told Standardbusiness that it was important for investors to know that the emergence of the global pandemic Covid-19 had changed customer’s needs and wants.
“Hence, property investors should do property due diligence, empirical research and data analytics to invest wisely. As a good example, the NSSA Beitbridge hotel suffered a heavy blow due to no proper due diligence and market understanding,” he said.
“The new housing project in Budiriro also suffered the very consequences as the houses were over-priced. The Mainway Meadows project was a success because we did research and due diligence there, when I was with Costain Properties International.
“It is time to relook at your property portfolio mix and swiftly adjust since the CBD is now an SME market who are high risk clients and low paying clients.”
Dzirutwe said the CBD was now highly congested with blue-chip companies now preferring low density areas such as Milton Park, Avondale, Belgravia, Mount Pleasant, Borrowdale and Newlands.
Regarding industries, he added that industries now preferred Msasa and other areas.
“More focus should be on the clientele, which is able to pay in forex such as embassies and non-governmental organisations. Also target the diaspora market as it is very keen to buy properties back home. Let’s use online platforms as they reach many globally in a short time and will always be there. I will not be deleted,” Dzirutwe said.
“Thus, the good of smart technology or 4IR (Fourth Industrial Revolution). For example, the notable ones Facebook, Twitter, Linked-in, Instagram, websites, WhatsApp and many more. Surely, the 4IR is changing the way of living.”
A 2020 World Bank report found that most businesses experienced liquidity challenges, poor stocking, paying back loans and overdrafts, and poor sales as compared to previous years.
Therefore, Dzirutwe said sound and effective administration and accounting were now of paramount importance to navigate these challenges.
He said the above trials would have a spill-over effect to property markets and that property owners needed to be ready for future free up of rental space by boosting their residential properties as the market was skewing towards those neighbourhoods.
“Real estate business has been on a growth trajectory over the last few years due to high demand. Investing in property is more secure than in company equities,” Dzirutwe said.
“Moreso, the advent of real estate investment trusts will make the property market more attractive since it enables capacity by all players.”
He said most companies liquidate and dissolve, yet property markets take time to dissolve.
“Therefore, when investing in property you need to do so wisely.”