Forex rentals risky, property owners warned

The Chronicle

Natasha Chamba, Business Reporter
DEMANDING rentals in foreign currency is not sustainable under the prevailing economic conditions and property owners who do so risk having their houses or offices lying idle, a real estate agency has warned.

In an interview with Business Chronicle, Property 101 chief executive officer, Mr Morris Hove, advised property owners to tread carefully in seeking a shift towards US dollar rentals as most Zimbabweans were not earning salaries in forex.

“People in the diaspora should be very careful of pushing their Zimbabwean properties up. When you sell a property for US$250 000 very few can get a mortgage for that in Zimbabwe,” he said.

“If you are expecting to get rentals of even US$500 on such a property, it will be quite hard because a few are willing to part with their US$ for rent. So you shall be stuck with a non-performing asset that is being misused and deteriorating.”

Mr Hove said due to loss of value for money, demand to buy property was high leading some to seek to grab the opportunity to sell their properties in forex in a bid to retain value.

“The unstable exchange rates have been affecting the real estate business in a major way during the past months as demand of late has been on a rise and supply limited,” he said.

“Numbers of sellers on the market have shrinked because they are better off holding value in brick and mortar. Now people in the diaspora are taking advantage of this, selling and renting out their properties in US$ and this has risks.”

Economist, Mr Richard Mawarire, said the country was slowly dollarising and noted that this was not only happening in the property sector but almost across the economy.

“It is not just properties that are adopting the green back but almost everything in the economy is now USD indexed. However, at times it does not help some businesses,” he said.

“There are more defaulting tenants than are paid up. Pride in a property is good but that is just it, pride. Property owners should make calculated decisions or they will risk losing than gaining.”

— @queentauruszw