With inflation limiting property developers’ options, building large warehouses for retail and industrial clients is proving to be the sweet spot for the country’s biggest real estate investors.
First Mutual Properties, in its latest financial report for the half year, confirms what has already been reported by other key property players; there is little life left in the Harare CBD. But there is life elsewhere, according to First Mutual – warehousing for large commercial clients.
“In contrast, the retail, warehousing, and prime office space segments enjoyed relatively strong demand resulting in high occupancy levels,” the company reports.
“The country has seen some developments in the industrial and retail warehousing sectors. Further, there has been an increase in the development of owner-occupied office park style buildings, cluster houses and residential house conversions and new commercial developments especially in suburbs just outside the CBD and on major roads.”
To take advantage of this demand, First Mutual Properties has started construction on the extension of its key suburban office property, Arundel Office Park.
In the retail space, the company has just completed a retail warehouse in Mbare, which has now been occupied by Gain Cash and Carry.
Property company Mashonaland Holdings also said recently that demand for warehouses is strong. The company has bought a 4hectare property in the Pomona industrial park and appointed a project team. Construction starts in October and an anchor tenant has been secured. The company has also started building a private hospital in Milton Park, Harare, which will be completed in August next year.
Inflation continues to hurt property investors, as it erodes the value of rentals. Companies have had to increase rentals frequently to try and catch up with inflation.
Says First Mutual: “Further, pressure to preserve value of the local currency denominated rentals remained a top priority for property companies including the First Mutual Properties. Against this, quarterly reviews of local currency denominated rentals were being made in tandem with the prevailing business conditions.”