eBusiness Weekly
Business Writer
Zimbabweans are increasingly turning to brick-and-mortar investments as a way to preserve their wealth and generate passive income, a survey by this publication shows.
This trend has been driven by a number of factors, including high inflation rate, depreciation of the local currency, and lack of affordable investment alternatives.
Brick-and-mortar investments, such as commercial and residential properties are regarded as a safe and reliable way to store value. In the past few years, there has been a strong demand for both commercial and residential properties in Zimbabwe.
In addition to providing a hedge against inflation, brick-and-mortar investments can also generate passive income. For example, landlords can rent out their properties to tenants, and landowners can lease their land to farmers or developers.
This can provide a steady stream of income that can be used to cover living expenses, save for retirement, or invest in other ventures, according to property analysts.
Harare resident Wonder Moyo says he sees no incentive to bank his money because of the country’s high inflation rate.
“It makes no sense to take my money to the bank because there are no returns,” he says.
“Whatever the extra money I get, I put in brick and mortar.” He is building his third house, and all of his properties are in high-density suburbs. He says that he is not concerned about the location of his properties as long they appreciate value over time.
Another Harare resident Clever Shato says that witnessing his father struggle after the value of his retirement savings was wiped out when the country dollarized in 2009 made him realise that the best way to preserve wealth is through brick-and-mortar investments.
He says his father’s experience taught him the only way to protect money was to invest in something that holds value over time. “You will never go wrong with property,” Shato said.
“It might not make sense now, but over time the economy will recover, more jobs will be created, and demand for decent accommodation will also go up,” he added.
Shato’s optimism is shared by many other Zimbabweans. As the country’s economy continues to grow and develop, the demand for housing and commercial space is expected to increase. This will drive up the value of brick-and-mortar investments, making them a good option for investors looking to preserve wealth.
According to an advisory note by Imara Capital, many people prefer to keep their cash under mattresses or investing in property due to lack of trust in the banking sector.
Zimbabwe’s recent history of hyperinflation makes monetary assets a questionable investment option, according to a recent commentary by a local online publication. Similarly, the equities market, while tracking inflation and outperforming other investments in some years, is also vulnerable to policy inconsistency.
Given the high level of informality in the country, some economic agents who would ordinarily participate in other investment options do not consider them, says the report.
This leaves the real estate market as a viable investment option for the general investing public to understand and consider. In addition, property returns tend to track inflation or increase faster in the case of currency change, the report says.
