eBusiness Weekly
Enacy Mapakame
Vast developments projects in satellite cities are expected to continue to create opportunities and unlock value for businesses across sectors, according to market watchers.
Not only those in real estate and construction related businesses are to benefit from the developments of for instance, the New City in Mt Hampden, but all businesses as they respond to the shifting demand in geographic locations.
As the New City grows, new schools, hospitals and clinics, recreational facilities, retailers, manufacturers will also follow the trend to set up in these new developments unlocking billions of dollars into the economy.
This is the trend expected in Zimbabwe according to global real estate experts — Knight Frank.
“Separately, satellite cities continue to attract more occupiers as businesses seek relatively affordable suburban offices, and developers are responding to this shift in geographic demand,” said Knight Frank in their Africa Offices Dashboard Q4 2022.
“The futuristic Cybercity, for instance, is projected to anchor the ‘New Capital City’ or the ‘New Harare’ in the Mount Hampden area, 26 kilometers Northwest of Harare and will feature luxury homes and high-tech offices,” said Knight Frank.
The 2,5 million square metre project includes 250 townhouses, around 50 villas, several apartment buildings, state -of-the-art office facilities in a 15-storey commercial tower, and landscaped gardens within a gated community.
Overall, the real estate and construction sector is expected to grow in line with the Government’s general economic projections for the year 2023.
Treasury is projecting the economy to grow by 3,8 percent supported mainly by increased activity in mining, which should be a US$12 billion annual revenue sector starting this year. Increased agricultural production is also expected to support the economic growth mantra. This anticipated growth is also expected to reflect in the real estate sector and construction where it will be supported mostly by public investments, although it may not be all rosy due to a host of challenges.
Knight Frank says foreign currency shortages and exchange rate volatility will be one of the major hurdles to the realisation of the sector’s full potential.
Akribos Research Services concurs.
“Forex shortages and rising inflation will continue to be major headwinds for the real estate and construction sector. Increased Government spending on infrastructure and housing projects presents growth opportunities for construction and building materials firms.”
Road rehabilitation, dam, and house construction are some of the government-sponsored activities that are expected to bear fruit in the near term.
“We expect growth for the real estate and construction sectors to be in line with the government’s estimates of 3,7 percent and 5,8 percent in 2023.
“On infrastructure development, we opine that the treasury may need to make timely payments to contractors and suppliers to reduce the speculative behaviour in the market.
“Public-Private Partnerships (PPPs) should take the centre stage in infrastructure development to ease pressure on the Government. The infrastructure funding gap in Zimbabwe presents investment opportunities for private equity to participate and earn reasonable returns as they are likely to receive much-needed support from the Government,” said the research firm. The sector has in the past few years faced several challenges varying from segment to the other.
The retail segment has however remained competitive in the past year with activity favoring the SME traders who have taken up space in the central business district (CBD) providing low-priced goods.
In addition, the fast-growing e-commerce segment has reshaped the retail industry as there has been an increasing number of online groceries, furniture, and clothes.
“This has weighed heavily on the physical store’s revenues thus limiting demand for retail space for expansion purposes,” said Akribos.
On the other hand, the residential sub-segment has become a more robust market as the supply of affordable housing to low and middle-income households in Zimbabwe falls far short.
Zimbabwe has a national housing backlog of about two million units while Harare alone has almost one million people on the waiting list.
Businesses into housing developments and construction related stocks like Willdale have seen firm demand for bricks coming from individual home developers while institutional developers have also come in.
This demand is expected to continue on the back of growing new developments across the country, while construction of schools and other social amenities in newly established residential areas should further drive demand.
“The young demographic profile whose taste and preferences are driven mainly by convenience have been demanding cluster and estate homes.
“These come with reduced costs of amenities such as security, common swimming pools braai, and entertainment areas as well as easy access to restaurants, schools, coffee shops, gyms, and shopping malls,” said Akribos.
