Zimbabwe's Commercial Property braces for Tenant Profile Shift

Demand for Harare Central Business District (CBD) property space has significantly increased since dollarisation in 2009. This has, in turn, led to improved returns for property market operators in CBDs.

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Zimbabwe's commercial properties are bracing for a shift in tenant profile, driven by a change in clients' taste and preferences, according to Old Mutual, the country's largest property market player.

Demand for Central Business District (CBD) property space has significantly increased since dollarisation in 2009. This has, in turn, led to improved returns for property market operators in CBDs.

But tenants have been feeling the heat as the rise in demand for office and retail space has led to increased rates.

Many have left CBDs in major cities, especially Harare, for cheaper suburban offices on the fringes of the city.

In the past few years rates for office and retail space in both suburban and CBDs have moved to parity due to the same level of demand.

Now, a new report by Old Mutual Investment Group suggests that a reconfiguration of the tenant profile has been taking place.

Businesses that interface with the public have preferred to remain in the CBDs, while those that do not shift to the quieter and more spacious suburban retail and office space.

Old Mutual is the country's largest property player with a footprint stretching across all major towns and cities.

Among its largest properties is the giant Westgate shopping mall in Harare.

"The Central Business District (CBD) retail sector property is arguably the most thriving property sector in Zimbabwe, partly due to macroeconomic recovery strides supporting increased consumer spending," Old Mutual said in an analysis of the property market released last week.

Demand for CBD retail space has supported high rentals in the sector, to the point of crowding out some businesses from CBD properties. This has given rise to the popularity of suburban office parks, both the CBD retail and suburban office park properties are likely to maintain their strong returns.

"The future outlook suggests an increased redistribution of tenants, with more client interfacing tenants filling up CBD retail while less front office orientated tenants fill up the suburban office parks as more players in the respective sector enter the market," Old Mutual added.