THE Estate Agency Council of Zimbabwe (EAC) has said the default rate in the property sector has increased to around 60% in the multi-currency system due to the financial situation in the country that resulted in the deterioration of the quality of tenants.
Victoria Mtomba
Official statistics show that under normal circumstances, the default rate for the sector should be between 10%-20%.
“We are now recording defaults that range from 40%, to 60% depending with the sector. The quality of tenants has significantly changed since the turn from the Zimbabwean dollar to the multicurrency system. The change was due to recapitalisation that some firms went through, some firms’ capital were eaten away and in the process they became victims,” EAC chairman Oswald Nyakunika said.
“We lost quality tenants during the Zimbabwean dollar era. But we are now seeing new blue chip tenants and survivors of the crisis although we have not fully recovered from the dollarisation problem,” Nyakunika said.
He could not give the figures of how many properties were sold or auctioned in the first quarter of the year as the industry doesn’t have a system to capture the sales.
“Generally, the auctions have increased since dollarisation as people are defaulting in servicing their loans due to the liquidity crunch,” he said.
He said the country had reached a serious point and there was need for recapitalisation.
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“With the way businesses are closing down, we have reached a dangerous point now. The only thing to do is to recapitalise. Maybe after elections we will have money coming into industries,” he said. Nyakunika said the performance of the property sector was getting worse since 2009 when the country dollarised and the sector was yet to recover fully as it was dependent on the economy.
“The future of the property sector depends on the future of industry in Zimbabwe.” The property sector in the country comprises commercial, industrial and residential properties.
