Government urged to respect property rights

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The Real Estate Institute of Zimbabwe (REIZ) says the new administration should urgently restore property rights to attract foreign investors.
This comes as one of the major factors hampering FDI has been violation of property rights.
Mike Juru (pictured), the REIZ president, told The Financial Gazette that resuscitation of the property market can be achieved through sector specific solutions that respond to market needs, especially the issue of property rights.
“A lot has to be done to boost the real estate sector. To start off, there must be recognition and respect of property rights as this is the major problem affecting investor confidence. Government is responsible for providing infrastructure and with proper infrastructure in place, investment in the sector will balloon,” he said.
Juru, who was recently re-elected for a second term, said property sector players are expected to yield better results going forward.
“The issuance of title deeds is also important to release dead capital as this will result in significant growth in the sector. There is need to address the liquidity crisis which has resulted in multi-tier asset prices,” he added.
While real estate is becoming a popular investment as people look for ways to secure their wealth, the requirements make it difficult for everybody to take part and are tilted in favour of the rich.
Traditional real estate investment models have immense barriers to entry. They are an onerous financial burden that makes investing in real estate unfeasible for most. In comparison with regional trends, the Zimbabwe real estate sector is hampered by low investment levels, especially in housing.
Local authorities on the other hand are financially incapacitated as they can no longer provide proper and adequate onsite and offsite infrastructure.
“Government needs to come up with measures to rehabilitate street vendors as this is affecting investment in property in the Central Business District (CBD). There is need for government to work with REIZ to bring transparency to the sector,” said Juru.
He further indicated that the retail sector was submerged by the informal sector, with traders operating in front of shops selling the same products, which discourages potential tenants from taking up space, affects returns from investors’ point of view, which ultimately reduces government revenue in taxes.
“The commercial sector requires urgent attention since meaningful development, especially in the CBD, was last seen 20 years ago,” Juru said.
The property market was relatively depressed during the first half of the year due to a subdued economy, with rental income suffering a knock as voids increased.
High financing costs and the cost of building materials for new property developments have seen property prices remaining comparatively high compared to regional peers.
Various property sector reports released in the year to December 31, 2017 indicated that the retail property sector recorded marginal returns, although rentals within that sector have declined.
The sector was, however, expected to recover in response to the country’s economic development.
newdesk@fingaz.co.zw