By Alois Vinga
THE properties sector has bemoaned the paltry 2.21 % loans extended by financial institutions last year saying such a trend partly contributed to the market’s depression.
The details contained in the Zimbabwe Property Market Report (ZPMR) for 2020 describe the situation as unfortunate for the real estate sector.
“It was announced during the 2021 budget presentation that of the productive loans advanced, only 2.21% and 0.4% were directed towards mortgages and construction respectively, an unfortunate scenario for the real estate sector.
“This in a way confirms the assumed position that most purchases are cash transactions. The mortgage market is dying, and its resuscitation is underpinned by currency stability,” the report said.
The figures fall far below neighbouring South Africa which enjoys much higher loans extension to support the mortgaging sector.
Market experts believe that the support by banks through lending to fund mortgage needs goes a long way to create brisk business for the real estate sectors.
The ZPMR also notes that the sector was subdued for the greater part of the year with activities largely overshadowed by the Covid-19 pandemic.
It observes that the new Covid-19 induced work patterns which encourage remote work also dealt the sector another blow.
“With the pandemic encouraging staff to work remotely, the market was characterised by space surrenders with landlords losing their bargaining power as tenants’ negotiated rentals went downwards thereby lowering returns on properties,” the report said.
Invariably, this impacted on property capital values.
For listed entities in the construction sector, trade was subdued for the better part of the year, but fortunes changed as volumes increased around the middle of the third quarter to end of year as demand for their product and services improved.
However, other players in the sector such as cement manufacturers took advantage of the few available national construction projects to push their sales volumes as demand for their products surged.