A LOCAL financial advisory firm, Global Renaissance Investments, last week hosted a smart cities and devolution 2024 master class in Nyanga that brought together industrial experts to discuss and proffer solutions to the smart cities puzzle in Zimbabwe. Our senior business reporter Melody Chikono spoke to Real Estate Institute of Zimbabwe (REIZ) past president Alexander Millin (AM, pictured), who touched on a number of issues in the real estate sector. Below are excerpts of the interview:
MC: Can you share your views about devolution in Zimbabwe?
AM: Devolution is a welcome development. The devolution programme can be successfully rolled out in all corners of the country. It is for all of us and we must be seen as supporting the government in this regard. Devolution is a golden opportunity for unlocking capital to develop communities. But remember, whatever happens, devolution must be for the benefit of the citizenry, not for the few. Everyone should benefit from devolution. Housing can be funded through devolution funds and so should industry. We want manufacturing everywhere, not in Bulawayo and Harare. It must be decentralised, it must spread out to smaller places.
MC: What is your comment on housing finance in Zimbabwe?
AM: The housing finance in Zimbabwe is absolutely critical. However, it is disheartening to note that there is inadequate affordable mortgage funding, and as a result, this has stifled the abilities of people to own homes.
MC: What needs to be done?
AM: We cannot expect mortgage funding to be the burden of the government alone. The private sector needs to play an active role in the provision of mortgage funding. This may be through pension funds, insurance companies, and even what we may call employer-assisted mortgages. This is has been a major problem for quite a while now. And I also feel that a think-tank should be created where professionals and stakeholders have an endeavour to discuss the lack of mortgage funding in Zimbabwe. It is crucial that this endeavour takes place now. Without mortgage funding there can be no real estate development, including housing. Mortgage funding is the oil that runs the engine for housing. I think what we must understand is that shelter is a constitutional right. People have been deprived of a home. If you look at time some years back, people coming out of college or getting their first job, they were able to go to their banks and get a mortgage or a building society. Now they do not have that.
MC: How best can you then quantify an opportunity cost for not having a roof over your head?
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AM: It is a lot. Not only is it inconvenient. There are security issues, some children are burdening their parents. They stay at home. They have not left home because they cannot afford a house. So, the opportunity cost of this is really huge.
MC: You spoke about a sizeable number of cases involving bogus real estate agents that are before the courts. Can you shed more light on that?
AM: I know several cases are now being investigated. The exact number, unfortunately, I am not aware of. That will be answered by the Estate Agents Council of Zimbabwe (EAC) but I know there have been a couple of convictions. However, I would refer that to EAC. They are the ones who are handling it. I included that in my presentation because it is important to show that something is being done by the regulator about bogus estate agents.
The Estate Agents Council is not just sitting back. They are also trying their best to curb the effects or the impact of bogus estate agents.
MC: So, there is also this thing to do with land barons and the government has indicated that it is making frantic efforts to resolve it. Do you think we have the capacity to fight land barons at the moment?
AM: I believe so and why do I say so? Once a problem is identified, it is half the solution for the problem. Some of the land barons are known, some are unknown. That is where the difficulty could be. But those that are known can be dealt with. And we must also appreciate that the people who are victims of land barons are helpless. It is our duty with the government of Zimbabwe to deal with them. And how do we do it? Identify them and shame them. And where cases warrant, litigate and have them dealt with by the courts of law.
MC: What other challenges are you facing in the real estate sector?
AM: The issue of archaic rules and regulations and also what we may call archaic by-laws. As I alluded to earlier, the model of building by-laws was last reviewed in 1977. That is a crying shame because how much time we have, we moved with building technology to the extent that now you are forced to build a house in a certain way. Not only the by-laws but even the issues of things like the Mines and Minerals Act. They do not really settle the issue to do with land rights. But the main thing to understand is that the government is the holder of the land. The private sector needs to play its part.
MC: You also spoke about the Land Developers' Bill? What is it about?
AM: It is still a Bill, which was crafted, if I am not mistaken, four or five years ago. It is still having its reading, still being considered. But the main objective will be to regulate the practice of land developers, like how you have the Estate Agents Act of 27:17 that regulates the practice of estate agents. The Land Developers' Bill will regulate the practice of land developers.
MC: You indicated that we have almost a perfect system in the whole world but it has hiccups?
AM: We take pride in the deeds-related system of Zimbabwe. A lot has been said about the good side of it. Let us be honest, the Deeds Office has been the custodian for properties for over a century. It is no joke, but we have got to look at some of the inherent problems that are there. Now, I want to make this very clear. We are not saying that the entire system has got problems and there may be some isolated shortcomings in the system. But I am happy to say that it seems like something has been done about it. But the main thing is that we must make sure that it goes back to its glory days. What do I mean by that? It must be the reputable custodian of deeds that it has always been.
MC: You said we are not yet there in terms of the registry system. What are the issues around that?
AM: The issue is that we are supposed to put them (deeds) online. They are supposed to be automated. They are still manual. So that is taking a long time because I think it needs quite a bit of money. I am not so sure how much, but it needs money to actually convert from hard to soft copy. What am I saying? To actually input all and capture all the deeds, scan them and capture them onto an electronic system. The challenge is funding.
MC: You also touched on Real Estate Investment Trusts (Reits) and last year there were issues around taxation as being a setback on their uptake. What do you have to say now?
AM: Reits are what we call Real Estate Investment Trusts. It is a vehicle for indirect property ownership and there are some tax incentives. The good thing about it is that you have a multiplicity or a number of investors investing in one property. Also, there are some tax incentives that come there. I think what I was saying last year was that there are some tax incentives because you do not pay tax. You only pay tax if you want to sell your unit or your trust to someone. So that was a misperception. Actually, there is a benefit for tax because you do not pay tax.
MC: So how do you see the real estate sector going forward given all these challenges you talked about?
AM: I will say with confidence that the real estate sector is arguably the safest vehicle to invest in. It has, it is and it always will be because time and inflation are kind to property. It is very rare to see the inherent value of an asset, property depreciating with time. If anything, property appreciates with time. Property investments act as a hedge against inflation. And that hedge means that it is a safe cushion against inflation. So, we can say to a large extent, real estate investment is immune to inflationary pressures.
