The Game Plan | Location, Location: Tigere’s plan to build property portfolio to US$100m

The Tigere Fund plans to more than double its property portfolio to US$50 million by the end of 2025 – and push on to US$100 million over the next three years.

Tigere’s listed real estate investment trust (REIT) holds Highland Park and Chinamano Corner, but it has property developments lined up that it believes will bulk up the fund in future. Tigere currently has US$22.4 million worth of property.

In our Game Plan series, where we hear from company heads speaking on strategy, Brett Abrahamse, MD of Terrace Africa Asset Management, which manages Tigere, has been talking about his company’s ambitious property rollout. He also speaks on why Highland Park has succeeded where other retail complexes have struggled, and shares his views on trends in Zimbabwe’s property market.

After Highland Park, what’s next?

In December, Terrace Africa completed the second phase of Highland Park. Now, across the road, boots are on the ground to start a new, ambitious project – the Highland Park Precinct. This will be a mixed-use office and residential project. Construction has also started at Greenfields, a new complex at Showgrounds in Harare. The company is also developing a property in Ruwa, and has started looking beyond Harare.

“Because of these exciting projects coming in, we will see a target of US$50 million (net asset value) by the end of 2025, and US$100 million in the next few years,” he says.

A digital render of the planned Highland Park Precinct project

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Location: Highland Park’s success

For Abrahamse, it’s easy to measure a shopping centre’s success. “With other businesses, you have to wonder what’s going on behind the scenes. With shopping centres, you come here and see people at Café Nush, shoppers in Pick n Pay, and a full car park. You can easily tell how it is doing,” he says.

Old spots are rotting away, at a time when there’s demand for quality properties. For new developers, the age-old property gospel is proving true – location, location, location. Tigere says “Well-located real estate on busy arterial roads will continue to attract tenant demand”.

In addition to Highland Park, the “arterial road” that is Enterprise – now ED Mnangagwa Drive – will also see new separate developments; the NRZ Pension Fund hopes to develop Chisipite Shops, while another retail project is going up on the corner of Enterprise and Harare Drive.

How’s the property sector looking?

Because of inflation, demand for quality property is high, says Abrahamse. A notable trend is that many companies now want to own their own buildings. Still, there’s a demand to rent for retail.

Says Abrahamse: “What you are seeing is that you’ve got strong demand for rental, but you also have a certain category of corporate occupier that wants to own the property. So, they are keeping that demand for well-located real estate very buoyant.”

Currently, banks such as First Capital Bank, Stanbic and Ecobank are their building head offices. NMB has recently completed its own. Why are they doing this? Property owners are struggling to make enough money from their existing properties to build new ones.

Abrahamse explains: “What you find is that a law firm sitting in town (CBD), says, ‘Mr Landlord, please can you build me something in Alex Park or Highlands’. But because of that negative value that’s being created in the existing building, they won’t be able to roll it over into a new investment.”

And the currency puzzle?

Tigere’s properties are 100% occupied, and rentals are 88% in USD. But the fly in the ointment is that its anchor tenant, Pick n Pay, gets most of its revenue in Zimbabwe dollars. Like other formal retailers, the shop is forced to use the formal exchange rate, which makes it more expensive and drives customers away.  However, the company sees USD usage remaining strong in 2024.

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