Commercial rents to drop?

Rents for commercial and industrial space are likely to drop in response to the current economic downturn while residential rents will continue to be high because there is still a shortage, an analysis of reports by the National Property Association suggests.

In Harare, for example, office space is expected to increase by about 17 000 square metres within the next six months when three buildings, at 99 Jason Moyo Avenue, 101 Union Avenue and Construction House, are completed. This is expected to have an impact on the current rentals.

In the industrial sector, there is already significant letting space available with one agent currently having 18 300 square metres. This, the NPA says, could either result in prices going down or remaining static since the question of selling on the open market is out of question because of lack of financing and high interests rates.

Rented residential accommodation, on the other hand, seems to be going up because of its scarcity. The NPA says that the shortage and the high inflation rate which has eroded the purchasing power of those in the middle income group making them unable to afford rentals in areas meant for them is pushing up rents in the high density suburbs because of “downward raiding” by the middle income earners.

The NPA also notes that 30 percent of the houses in Harare are now in the $1 500 to $2 000 a month rental. Most tenants are therefore forced to sublet to afford the rents.

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