Real Estate Investment Trusts (REITs) hold immense potential to propel property development and accelerate urban renewal. This has been a key talking point ahead of the ZimReal 2024 conference, Zimbabwe’s premier property investment conference. This year’s conference is being held under the theme “Driving Growth, Seizing Opportunity” and is set to take place on 28 August 2024.
Christabel Shava, Group Legal Manager for Terrace Africa, the asset manager of Zimbabwe’s first listed REIT, Tigere Property Fund, says the Fund continues to see significant demand from both retail and institutional investors, indicating REITs’ value proposition.
“With the limited financing options in the country, REITs are a viable source of financing and liquidity for property developers. They also serve as a capital preservation vehicle for retail and institutional investors,” she says.
“Furthermore, REITs are attractive because they enjoy corporate tax exemptions, which also increase net returns, promote liquidity and lessen the tax burden.”
Zimbabwe currently has six licensed REITs. Two are listed on the Zimbabwe Stock Exchange and three others are expected to list on the Victoria Falls Stock Exchange (VFEX) by year-end.
REITs, consistently featured on the ZimReal programme, are expected to be a topical discussion issue again this year as stakeholders plan to navigate the regulatory environment to speed up project implementation and attract investment into other subsectors.
“There is an undeniable shortage of quality retail infrastructure in our country. REITs will serve a great purpose in terms of closing this supply gap,” Shava explains.
“The retail sector offers healthy rental yields of between 5-7%, so developers will naturally gravitate towards it. There are, however, increasing developments in the hospitality, industrial and residential sectors, which could culminate in more diversified REIT structures,” she adds.
The Tigere Property Fund has concentrated on retail developments such as the successful Highland Park retail centre which will form part of a groundbreaking 200,000 square metre mixed use retail and residential Highlands Precinct which will dramatically change the face of the area, while Revitus, the other listed REIT, is focused on revitalizing the Central Business Districts (CBDs) in Zimbabwe’s major cities.
Welcome Mavingire, an investment advisor with Intellego Investment Consultants, says “the market is likely to see more REITs focusing on hospitality and medical assets which adds a social impact to the REIT development story”. He calls for some of the regulations to be refined to unlock more capital and maximise investor value.
“As a start, great work has been done. There, however, needs to be more clarity on the tax incentives and more comprehensive REIT rules to ensure consistency, proper governance, and a better operational framework,” Mavingire says.
Mavingire added: “Whilst it’s important for regulators to promote the development of REITs, they also need to safeguard the markets’ integrity by ensuring that REIT developers are carefully screened so that only those with projects that reach full development and deliver returns for investors are registered.”
Mavingire will be sharing the stage with several local and international experts at the ZimReal Property Investment Forum on 28 August, 2024. The annual conference will bring together over 250 stakeholders, including property developers, hospitality and tourism players, and financial institutions from across Africa. To register to attend, delegates can visit the website: www.zimreal.com.
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