After opening its new US$20 million Highland Park Mall in Harare, property company Terrace Africa has announced a plan to list a real estate fund on the Zimbabwe Stock Exchange by year-end.
The Real Estate Investment Trust (REIT), to be called the Tigere Fund, will issued on the ZSE by the end of the year. It will be the first REIT to be issued in Zimbabwe.
“As Zimbabwe grows, we as a company are positioning ourselves to be at the front of retail development,” says Terrace Africa MD Brett Abrahamse.
REITs allow a company to pool investor funds into real estate investments. Investors buy units in the trust and share profits from the investments. Government introduced a law to allow REITs in 2019, and added tax breaks for issuers the following year, hoping to add depth to the capital markets.
Highland Park, the first phase of which opened in June, has 27 retail shops on lettable area of over 6,000 square metres. It secured tenants such as Pick n Pay, the anchor tenant, plus Puma and Simbisa. Another Terrace Africa development, the US$3.7 million Chinamano Corner which will have 13 shops and offices plus Simbisa fast-food outlets, is almost complete.
Terrace Africa, which is also the developer of Village Walk in Borrowdale and the Marondera Mall, says it has a pipeline of at least 15 more developments. These include malls at the Zimbabwe Agricultural Showgrounds, Ruwa, and Chitungwiza. Beyond Zimbabwe, the company has developed and runs retail projects in Mozambique, Zambia and South Africa.
In 2020, the ZSE announced it was talking to property developers and pension funds to list REITs on the market. Datvest, the asset management unit of CBZ Holdings, is among those that have said they plan to list their own REITs on the ZSE in the near term.
Insurance regulator, the Insurance and Pensions Commission (IPEC), says REITs may help solve one puzzle that Zimbabwean pension funds face – valuation of property investments.
“We think the valuation dilemma is largely due to the absence of a secondary trading market for properties, particularly the unlisted property holdings. Therefore, we are convinced that REITs will go a long way in bringing transparency in the valuation of investment property,” says IPEC chairperson Grace Muradzikwa.