The return on investment for real estate is very low at the moment with a lot of vacant homes and commercial buildings in Harare CBD. The international average return of investment of 10% per annum is difficult to reach for many due Covid-19.
One of the questions our forum tackled over the past few weeks was whether in Zimbabwe mansions are assets? If you fail to complete the mansion then it’s a total waste of resources as those with funds to buy mansions generally to prefer to build own homes.
A look at most of the wealthy Zimbabweans shows that they all live in homes they would have built! Few are buying incomplete mansions, complete them and move in,
Mansions are also difficult to rent out—few tenants are interested in renting +8 bedroomed homes as they also come with the extra burden of maintenance costs.
If you are thinking of building a mansion, then consider alternative uses for commercial purposes such as converting them into hotel and lodges, schools, colleges or offices. A lot of mansions for sale have been on the market for long with some risking being on the market for decades.
In the current environment, a mansion is a liability unless you are staying in it. In future banks may even refuse surety of mansions as they may not find buyers!
For rentals in the leafy suburbs of Harare, the cap is normally $3,000 per month for properties in areas such as Mt Pleasant, Avondale, Milton Park, Borrowdale, Chisipite and Highlands. The biggest spenders are diplomats and NGO expats who prefer living close to schools and other amenities. These areas also house many embassies and headquarters of NGOs and financial institutions. If you are considering investing in a rental property—this is the prime location for high returns provided the property is well maintained and also having good security.
High density areas have few vacant houses but rental income returns have nosedived from a high of US$400 per 7 roomed house in 2014 to US$200 in areas such as Warren Park, Kuwadzana, Kambuzuma and Glenview.
Student Accommodation
Sometime last year Prof Murwira mentioned on StarFm that the country had a student accommodation of deficit of more than 150,000! This includes all colleges such as UZ, NUST, MSU, CUT, BUSE and others. Investment in accommodation require huge capital outlays with low and relatively stable returns. However Zimbabwean investors do not have much patience as most prefer investing funds today, spin it around and getting +300% profit in a few days.
Therefore the student accommodation housing backlog is going to be a permanent problem and to those interested in this area—do a mapping exercise of all the colleges in the country and also include high schools as there is a rise in demand for boarding houses.
