19 June 2020

RE I Z WE B I N AR

HOW WILL COVID AFFECT

THE ZIMBABWE PROPERTY
MARKET?
ORDER OF PRESENTATION

1. What was the base case BEFORE Covid?

2. What has been the market response?

3. What tactics are we deploying (Short term)

4. What strategies do we develop (long term)

5. What do we need to accept as the new normal?

CBRE EXCELLERATE 2 CLIENT NAME | PRESENTATION TITLE

THE ZIMBABWE REAL ESTATE BASE CASE PRE -COVID

THE MARKET WAS LOW AND SLOW

THE tumbling of the local currency against the greenback has significantly reduced
property stock levels in the country, as sellers are now targeting property seekers
mostly diasporas who are willing to pay in US dollars whilst landlords keep on hiking
rentals in the interest of cushioning themselves against inflationary pressures.
Alex Millin- REIZ President, The Standard Sept 2019

The property market in Zimbabwe is likely to see an increase in voids and

occupancy rates in the different properties sector, according to Integrated
Property’s Q1 2020 report.
Mike Juru – Integrated Property Report

The first half of 2019 was characterized by exchange rate depreciation, rising inflation, fuel shortages,
erosion of purchasing power, prolonged power outages and shortage of foreign currency affecting all
sectors of the economy.
The property market recorded a subdued performance
The current downturn has seen depressed rentals across the market alongside weakening demand for
space, reduced sales activity and downscaling by tenants.
Francis Chinjekure – Mid Year REIZ Research Report

CBRE EXCELLERATE 3 CLIENT NAME | PRESENTATION TITLE

HOW HAS THE MARKET RESPONDED

LEGISLATION ECONOMIC PSYCHOLOGICAL

1. Government 1. We dollarized 1. We drew back

implemented
unprecedented lock 2. We stocked up 2. We withdrew kids from
down school
3. We bunkered
2. Dollar Returned 3. We wondered what next
4. We negotiated with
3. Rents and mortgages suppliers and staff 4. We went online
were deferred 5.
6. We cut costs 5. We reassessed our
business model

CBRE EXCELLERATE 4 CLIENT NAME | PRESENTATION TITLE

WHAT TACTI CS HAVE WE DEPLOYED (SHORT TERM)

Source – EY “Helping CFO navigate Covid”

CBRE EXCELLERATE 5 CLIENT NAME | PRESENTATION TITLE

WHAT STRATEGI ES DO WE APPLY (LONG TERM)

Rent and
lease
reviews

Business Headcount
case for Uncertainty and
investment location

Valuation

• Valuation Uncertainty : What is a value with underlying uncertainty. What numbers are we inputting
into valuation models. EXPECT asset value write downs and softer cap rates
• Cashflow distress : Most tenants are already enjoying effective sub economic rentals, even these will
come under pressure. As a country we are underleveraged with only 16 000 registered mortgages so
effect to banks not a systemic risk.
• Occupancy : In reorganizing our corporate operations, how do we use real estate? In cost cutting can we
can cut back on fixed costs? Do we need to house everybody on one man: one desk?
• What do we invest in? : Are we taking individual asset risk…or diversifying into REITs?
• Shift in power between landlord & tenant : Dialogue will be imperative
• Diaspora Interest : The look to buy at home renewed but affordability under pressure

CBRE EXCELLERATE 6 CLIENT NAME | PRESENTATION TITLE

HOW DO WE RE-BALANCE – LONG TERM

CBRE EXCELLERATE 7 CLIENT NAME | PRESENTATION TITLE

GLOBAL RESPONSES

CBRE EXCELLERATE 8 CLIENT NAME | PRESENTATION TITLE

THANK YOU

KURA.CHIHOTA@CBREEXCELLERATE.COM