Zimbabwe

Suburban office boom

In the CBD, the office market continues to experience subdued activity, with major corporates opting to relocate to suburban locations instead. This exodus to the suburbs is being driven by traffic congestion in central Harare, dilapidated infrastructure, poor parking provisions, high operational costs, and noise pollution. Unsurprisingly, high vacancy rates have ensued across the CBD and range from 40-60%.

In the CBD, demand mainly stems from the SME sector, with the bulk of requirements under 100 sqm. Monthly rental rates in the CBD vary between US$ 6 and US$ 10 psm, while the average office yield hovers around 8%.

Conversely, suburban offices continue to record increased demand, with occupancy rates averaging between 90-100%. Subsequently, suburban offices command relatively higher prime rents ranging from US$ 12-15 psm.

Resilient retail sector despite challenging economic conditions

Despite the challenging economic conditions, occupancy rates across malls and newly constructed suburban shopping centres continue to edge upwards, with the latter segment of the market exceeding 80%. This is contributing to rising rents, with larger and centrally located retail units in Harare commanding monthly rents of between US$ 17-25 psm. Monthly rents in suburban locations hover between US$ 13-17 psm.

Demand is notably rising from informal traders, who dominate market activity and tend to focus on securing smaller units. In response, landlords are subdividing space into smaller units, particularly ground floor units, by offering space ranging from 9-50 sqm. Consequently, monthly rental rates for smaller shops have surged by 100%, jumping from US$20 in 2022 to US$40 psm as at the end of Q4 2023.

Paradoxically, the pace of new retail development remains sluggish, with only a handful of projects underway, including the Big Poppers Shopping Mall 12, 000 sqm) which is expected to be completed by 2025. Some notable recent completions include the Harare Drive complex (2, 000 sqm) and the first phase of Madokero Shopping Mall (11, 000 sqm).

Prime residential rents rise

The influx of expatriates into the country, drawn in by increased business opportunities has fuelled demand for prime residential properties for lease. In turn, this has driven up rents. For instance, monthly rents for 4-bedroom apartments have risen by 10% (or about US$ 200) since the beginning of 2022 to US$ 3,500 at the start of 2024.

The Zimbabwean residential market in 2024 is a tale of two segments. While high-end properties like these 4-bedroom apartments see rising demand and rents, the market for affordable housing remains a major focus. The government, along with private developers, is prioritizing the construction of smaller, more affordable units to bridge the widening gap between supply and demand, especially in high-density suburbs and satellite towns around major cities. This trend is driven by a growing population and a need for housing solutions that cater to the average Zimbabwean income.

Heightened demand for grade A warehousing

The escalating demand for grade A warehouses in Zimbabwe is prompting developers to accelerate speculative projects. This surge in demand is primarily driven by the country's increased imports, which totalled US$ 9.2 bn in 2023—a 6.99% increase from 2022. Key import commodities include mineral fuels, machinery, vehicles, electrical machinery, and cereals, with South Africa being the largest source of imports at 38%, followed by China at 14.9%.

Recent examples of warehouse construction projects include the Madokero Business Park warehouses by Exodus & Co., slated for completion by 2025/6. Additionally, new warehousing projects have emerged in areas such as Westlea, Sunway City, Msasa, and Mt. Hampden. These developments reflect the growing need for high-quality storage solutions to accommodate the rising volume of imported goods and enhance logistics capabilities across the country.

Despite the increasing level of demand, monthly rents have remained relatively unchanged over the last 12 months, hovering at c.US$5 psm, for warehouses under 1,000 sqm and at US$1.50 psm for much larger warehouses (> 1,000 sqm).