You do not need to be a market analyst to recognise the growing momentum in the REITs (Real Estate Investment Trust) space within our local capital markets.
Over the past few years, investor exposure to the property sector has steadily increased, largely due to its resilience against inflation and its potential to preserve value. In an environment where capital preservation and consistent gains have proven difficult, particularly as the Zimbabwe Stock Exchange has tended to reward short term timing over long-term holding, the property sector has stood out.
The widely accepted notion that “long-term investors outperform speculators” generally hold true in stable, low inflationary economies where share prices align with underlying business fundamentals.
This principle has been challenged in Zimbabwe except for a few months after the introduction of ZiG last year. However, this was short-lived.
Tigere REIT emerged as the pioneer in Zimbabwe’s REIT space, debuting on the Zimbabwe Stock Exchange on November 30, 2022, followed by Revitus REIT, which was listed on December 20, 2023.
Tigere REIT has consistently paid out quarterly dividends in US dollars, boasting of its full occupancy and rental income predominantly earned in foreign currency.
Despite its earnings being in hard currency, its units are priced in local currency, creating a compelling entry point for both institutional and retail investors seeking property sector exposure. This dynamic has helped Tigere REIT maintain its position as the most liquid and actively traded REIT on the market.
In contrast, Revitus REIT has struggled to gain traction, largely due to the location of its assets, such as Chester House in Harare’s central business district, which has seen occupancy rates of slightly above 50% amid a broader shift of tenants towards suburban areas.
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Eagle and Pfuma REIT attracted notable attention last year, prompting analysts to draw comparisons with Tigere REIT. Key questions emerged around why investors should favour these newer offerings over Tigere, particularly given differences in trading currencies and the historical underperformance of the Victoria Falls Stock Exchange (VFEX) in unlocking value for investors.
However, sentiment on the VFEX has already started to shift, fuelled by a surge in gold prices amid global trade tensions and a strong performance by Padenga, whose share price nearly tripled on the back of robust gold output. This marked one of the first meaningful uptrends on the foreign currency denominated exchange since its inception.
As Eagle REIT lists today with trading set to begin on May 19, 2025, the key question now is whether it will deliver capital gains, steady dividends, or ideally, both, thereby offering a compelling new avenue for investors seeking value.
Amid ongoing local currency shortages driven by tight liquidity conditions, and with over 80% of transactions now conducted in US dollars, proponents of continued dollarisation have strong grounds to be optimistic about Eagle REIT’s listing on the VFEX.
On the other hand, those who believe that the ZiG will gain wider acceptance and anticipate renewed inflationary pressures may continue to prefer Tigere REIT, whose structure aligns more closely with the local currency environment. So, are these new REIT listings beneficial?
From a market development perspective, they certainly are offering a positive step for the VFEX by boosting trading activity and expanding the range of investment instruments available to both local and foreign investors.
Nevertheless, structural challenges in Zimbabwe’s equity markets persist and warrant close attention. A property market bubble is unlikely, given the significant backlog in real estate supply, but investors must still conduct thorough due diligence, as some assets remain overvalued and rental yields are a more reliable indicator of underlying returns.
For example, Pfuma REIT, like Tigere REIT, targets an annual yield of around 7%, while Eagle REIT’s Mazowe Walk Mall aims for a 6% entry yield placing all three REITs within a similar yield range.
Eagle REIT presents some compelling advantages for investors, particularly institutional ones such as pension funds and insurance companies.
These entities, which are heavily invested in listed equities and property, are required to allocate a portion of their portfolios to prescribed assets (PA), a mandate that has often led to value erosion during the hyperinflationary era, such as in 2008.
As a PA-designated instrument, Eagle REIT offers a way to enhance compliance while mitigating concentration risk.
Looking ahead, Eagle REIT plans to channel investments into resilient sectors such as hospitality, healthcare, and mixed use developments combining retail and residential components.
Notably, its current portfolio includes commercial properties located in high potential areas such as Victoria Falls and Mazowe.
Moreover, the fund is ideally suited for investors with appetite for long-term horizons whilst seeking consistent, foreign currency-denominated dividend income.
Taimo is an investment analyst with a talent for writing about equities and addressing topical issues in local capital markets. He is an active member of the Investment Professionals of Zimbabwe community, pursuing the Chartered Financial Analyst charter designation.
