Cluster clutter: New Knight Frank report doubts future demand for luxury complexes

(pic: Palm Golding Zim)

Cluster homes are all the rage in Zimbabwe, but property company Knight Frank says the trend may not be sustainable. The company has just released its analysis for the second half of 2023, which details the state of property developments, from residential to commercial sectors.

Here is what the company finds about property trends, including the average costs of buying and renting new properties.

Residential: Cluster future?

With low access to mortgages, “self-funded home construction continues to apace in low-income locations up to the affluent suburbs of the cities”, says Knight Frank.

In the last half of 2023, Marlborough, Sunridge, and Greencroft delivered some 59 three-bedroom units, while 30 more were being built. The company says over 100 two-bedroom and three-bedroom units were built in Meyrick Park, Greendale, and Newlands. Financial institutions and other corporations added over 400 units, from two-bed and three-bed homes across Zimbabwe.

Cluster homes in high-density areas cost between US$60,000 to US$80,000 per unit, and those in middle-density areas ranged from US$140,000 to US$250,000 per unit. Luxury apartments are in demand, and are being bought up “off-plan” – before construction starts. “Prices for these luxury properties can reach as high as US$500,000, reflecting the growing demand for upscale living options in the market.”

Knight Frank says of cluster properties: “The real estate landscape in Zimbabwe, particularly in Harare, sees a notable influx of cluster homes. However, the affordability of a single unit remains beyond the means of the average Zimbabwean, raising concerns about the sustainability of these projects in the near future.”

There is demand for low-cost housing, which Knight Frank says is an investment opportunity.

Offices: The CBD exodus

Companies are fleeing the CBD, now a mecca for small retailers, but construction of “new office development from both institutional and private entities in Zimbabwe remains low”.

Knight Frank says office complexes on Borrowdale Road are a model of where demand is. The Strand Corporate Office Park on Borrowdale Road, for example, has 10 subdivisions ranging between 7000 and just over 9,000 square meters. Rentals there are approximately US$125 per square metre.

Overall, suburban offices command monthly rentals of US$12 to US$15 per square metre.

Retail: Surprising demand

Knight Frank says in the CBD, landlords are adapting to demand from SMEs by subdividing buildings into smaller units ranging from 9 to 50 sqm. Monthly rental rates for such spaces have increased by 100% since 2022 to US$40 per square metre. For CBD spaces of 50 square metres, rentals range from US$ 17 to US$ 25 per square metre, Knight Frank says.

Up town, retail spaces are also in demand. The company notes the ongoing construction of Big Poppers Shopping Mall in Hogerty Hill. It will host retail – brands such as Bhola, Bathroom Boutique, and Transerv – plus fast-food joints and boutiques, all on 12,000 sqm. Developer African Horizon also plans a new complex in Rolf Valley.

Rental rates for the suburban retail space range from US$13 to US$ 17 per square metre.

Industrial: Repurposing in fashion

Knight Frank says there is “a growing interest from both local and foreign investors in warehouse space within Zimbabwe’s industrial market.” Demand is for storage, distribution, and logistics. A new development, says Knight Frank, is the Skyport Industrial Park near the airport, with 14 stands ranging from 7,000 to 31,000 square metres each, selling for an average US$60 per square metre.

Properties in Graniteside and parts of Willowvale are being repurposed for retail use. “No space is left idle, as makeshift shopping stalls measuring around 80 sqm have emerged, fetching monthly rental rates ranging from US$12 to US$15 per square metre.”