DEMAND for industrial space has gone down in most small towns and cities due to viability problems besetting the country’s manufacturing sector, a top real estate firm has said.
In its mid-year report for 2012, Bard Real Estate said failure by companies to remain afloat due to economic constraints has resulted in rising vacancy rates for most industrial properties.
The real estate firm said Bulawayo, once the industrial hub of the country, had been hit most by massive business closures as companies struggle to source cheap capital or compete with regional peers.
“Industrial rentals have almost maintained the same level as in 2011. In small towns, demand for industrial space has been low due to the economic meltdown and viability challenges,” read part of the report.
“Bulawayo used to be the hub of the manufacturing industry in Zimbabwe. Due to the teetering economy, it has lost more manufacturing jobs, experienced company relocations and failures than any other city.
“Hence, there are more industrial vacant space and factories for sale which have no takers. Most of the operating companies are hanging by a thread. Industry in general faces challenges of low capacity utilisation and inefficiency due to old equipment, liquidity constraints and high cost of funding, power shortages and competition from cheaper imports.”
Industry also expressed fears over looming general elections, saying the polls could trigger collapse of the under-financed manufacturing sector.
Office rentals in the country’s central business district, according to Bard, is expected to fall due to the glut of space on the market as companies shun the hustle and bustle of urban centres, leaving most high-rise buildings virtually empty.
“There is an increasing number of properties in the low densities in Harare that cannot be let or sold due to water shortages, no matter how beautiful the property is. Some properties have stayed for over a year without generating interest from the market,” the report added.
Experts say the property market has generally performed relatively better than other investment avenues such as the stock market and, to some extent, the money market.