WESTPROP Holdings Limited (WestProp) chief executive officer Ken Sharpe says Zimbabwe’s real estate sector contributes just 2,8% to the economy, far below the African average of 12%, urging the government to prioritise its growth.
Sharpe made the remarks during last week’s annual Zimreal Property conference, which, for a second year in a row, was sponsored by WestProp, a leading local property developer.
With the attendance of more than 300 property developers, owners, pension fund executives, banking executives and other professionals, these groups all came together with the aligned purpose of improving the real estate sector’s contribution to gross domestic product (GDP).
This comes as the Zimbabwe Investment and Development Agency reported that investors are showing increased interest in real estate.
“I believe that the government needs to give us more attention, and needs to give this industry more incentives. We haven’t been seen in the budgets of Zimbabwe ever. There is absolutely no budgetary support for our industry. Why can’t the government start with budgetary support for mortgages?” Sharpe said during the conference.
He revealed that the statistics for mortgage contribution to the economy stood at just 0,04%, far below the global standard of between 50% and 80% for developed countries and 30% for developing ones.
“Those thinking about investing or returning home, my clarion call to all of them is that please look deeply, carefully at the real estate industry,” Sharpe said.
“Because today, according to ZimStat [Zimbabwe National Statistics Agency], we are only 2,8% of the GDP of this country.”
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He said globally, the contribution was between 15% and 20%.
“And even in developing countries, including Africa, we should be around 12%. So that represents at least six times more value than we currently have,” Sharpe said.
“Now to put that into dollar figures, if we were to look at our rebasing economy as a US$50 billion GDP, we are probably around US$1 billion at base.
“And yet, if we are supposed to be around 12%, that’s US$6 billion. That represents US$5 billion additional revenue per year.”
NewsDay Business reached out to Sharpe for further comments, who reiterated his message for the government’s involvement.
“I think now is the time where the government needs to start paying attention to us as a sector,” he said.
“How can the government support this sector, real estate? There are many ways. Firstly, they can remove the prohibitive costs of doing business in Zimbabwe through the local council because the local council is charging too many fees for developers.”
He said a developer could not submit a development plan at a cost of US$100 000 and called for a cap.
“The second way, the government can be saying, let’s lower the interest rate for developers. Let’s give them access to capital that doesn’t cost 15% or 20% a year, but maybe costs 10% per year,” Sharpe said.
“That way, they’ll be encouraged to borrow, to use that capital to develop. Then there can be tax incentives. The government can be saying, ‘these are the tax incentives we can give to developers in the real estate sector to lower the tax’.”
He suggested that new developers could be exempted from taxes for the first five years to encourage development.
“To say, for the first period of five years, there’s no tax on new developers or anyone in development can have a lower tax rate than the other companies. Then more people will be encouraged to go into development,” Sharpe said.
“We have to build our country. The time to tax will come in five years, in 10 years, when we catch up to the economy, when we catch up to where we should be.”
Fine and Country Zimbabwe chief executive officer Karen Nyenga said the sector needed to work together.
“We need to be very much more involved in terms of our Legislature,” she said.
“Involved in terms of what’s happening with our local councils, and see how we can work together to assist in the terms of getting our permits approved, getting the costs of those certain things to be a lot more affordable, and to just remove all the complexity.”
During the conference, Public Service, Labour and Social Welfare minister Edgar Moyo reaffirmed the government’s commitment to partnering with the private sector to drive economic growth.
“As government recognises its central role in creating jobs and building a resilient national economy,” he said, “we remain committed to fostering an enabling environment where partnerships between the public and private sectors can thrive, so that together we cement growth and create lasting value for all Zimbabweans.”
