Property firm — Zimre property Investments Limited (ZPI), says it is prepared to exit the Central Business District (CBD) as the company angles to cash in on other lucrative properties, a senior official has said.
The property firm recently disposed of its Zimre Centre in Harare’s CBD and developed an upmarket shopping mall — Sawanga — in the resort town of Victoria Falls.
The developments come as demand for CBD office space has been on a decline especially in Harare, with firms opting for office parks or suburban offices.
Others have downsized operations while some eventually closed shop, leaving voids in the CBD offices.
ZPI managing director Edson Muvingi, said while the property sector still has numerous opportunities, currently, CBD space is becoming a problem child for the sector. But opportunities are vast in office parks, shopping malls and student accommodation in the wake of ballooning student population at the country’s universities and other tertiary institutions.
As such, ZPI will not hesitate to leave office CBD if better offers arise.
“If we get good offers, we are prepared to get rid of the office buildings in the CBD and re-invest in office parks and shopping malls,” said Mr Muvingi, in a discussion in Harare recently.
Overall, the real estate sector has been hit by the tough operating environment characterised by liquidity constraints, with firms downsizing operations while others wind up operations, choking earnings for the property sector.
As a result, property companies are diverting their attention to office parks, student accommodation and the emerging small to medium enterprises to grow their businesses.
A trend analysis of earnings reports by property companies show CBD office space has not been doing very well and weighing down on rental income.
This has been mainly driven by downward rental reviews and voids as tenants seek cheaper options elsewhere or forced evictions.
Indications are also that some firms now shun the CBD to avoid high traffic congestion, noise and a general “decay” of the CBD.
Market watchers have guided the property industry to be the safe haven of investment in a turbulent economic environment. But they contend, property firms now need to spread their nets wider to survive and offset the effects of rent reductions across property portfolios.
Mr Muvingi said ZPI had several projects in the pipeline and was looking at leveraging on student accommodation among others. Already, the company has opened its Nicoz House, an upmarket student accommodation facility in Bulawayo with a capacity to hold 200 beds.
“Uptake has been positive,” said Mr Muvingi.