Growing economic hardships are driving a number of business owners out of the central business district (CBD) into suburban areas due to inability to afford rentals.
BY TATIRA ZWINOIRA
This has resulted in low occupancy levels in the CBD, according to Gilbert Gumpo, Old Mutual Property general manager.
“Old Mutual Property, like all other property managers, is dealing with low occupancy levels as a result of the prevailing depressed economic activity. Across the property industry, arrears stand at about 20% as at March 2015. This represents a deterioration compared to 2013 from around 16%,” Gumpo said.
Rentals within the CBD currently stand at $14 to $20 a square metre and with low turnovers this was a hard figure to match every month with direct competition outside the premises of these businesses.
“Financial results for listed property companies show that there has been a decline in basic rentals ranging between -2% to -7%. Rental increases have been few and far between, limited to sectors that can afford these increases,” Gumpo said.
“Liquidity challenges, which have been exacerbated by high operational costs, such as utility bills, have resulted in high rental arrears in the property market.”
Gumpo said the cost of doing business was affecting every economic sector in Zimbabwe, including the property market.
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Analysts say small businesses were experiencing low turnovers as the increased amount of vending in the CBD has rendered their businesses unable to operate due to direct competition right outside their places of business and not exactly the rentals themselves.
“Rentals are being affected by low turnover received by businesses that make it hard for them to pay the rentals,” economist John Robertson said.
Robertson said businesses were finding it easier to convert houses and flats into office space and renting as a whole unit rather than paying at a price per square metre as it works out to be cheaper.
Zimre Property Investments (ZPI) said recently it was mulling the disposal of its properties in the CBD saying it had good buildings in the wrong place.
“We are seriously considering disposal. We are in talks with various funders. We need to reduce our CBD portfolio,” ZPI managing director Edison Muvingi told an analyst briefing last month.
Last month, Pearl Properties its rental yield eased to 7,50% as compared to 7,80% in 2013 reflective of the decline in rental income.
“There has been stagnation and declining in occupancies across most sectors. The most affected is the central business district office sector but they are strong demand for retail space,” Christopher Manyowa, Pearl Properties general manager for developments, said.
