Nelson Gahadza
ZIMBABWE’S property sector is transforming, with firms prioritising repurposing in response to shifting demand, high vacancy rates in central business districts (CBDs) and limited access to capital.
Traditional office and retail formats are struggling with hybrid working models, the informalisation of trade and changing consumer behaviour.
In Harare and Bulawayo, CBD office vacancies remain high, eroding rental yields and forcing landlords to reconsider single-use commercial buildings.
Meanwhile, demand is shifting towards mixed-use developments, suburban office parks, logistics hubs and residential conversions, where occupancy and rental collections are more resilient.
First Mutual Properties (FMP) says the market is experiencing a structural shift, with weakening demand for traditional CBD office space and growing appetite for suburban offices.
FMP chairperson Mr Elisha Moyo said the office market was now clearly on low demand, with CBD properties struggling while suburban spaces continue to gain traction.
“The office market is showing a clear divergence. In the CBD, demand for large office space remains subdued, driving rentals lower and pushing vacancy rates to between 40 percent and 60 percent,” Mr Moyo said in a statement accompanying the group’s financial results for the year ended December 31, 2025.
“In response, property owners are increasingly repurposing space to cater for smaller office units, particularly for SMEs (small and medium enterprises) and startups.”
Mr Moyo noted that a growing number of corporates were relocating to suburban areas in search of modern facilities, better infrastructure and more reliable utilities — factors that have become critical in tenant decision-making.
“We are seeing a definitive shift within suburban office parks, especially in the northern corridor, where vacancy levels are low and take-up is significantly faster,” he said.
“Developments such as the head offices of Ecobank, Stanbic and First Capital Bank in Borrowdale are indicative of this trend.”
Diversified financial services group Old Mutual Zimbabwe says it is responding to these changes by actively developing and repositioning its property portfolio through its asset management business.
The group, which has long been involved in property development across commercial, retail and residential segments, is increasingly balancing new developments with the optimisation of existing assets.
In an interview after a recent analyst briefing, chief executive Mr Samuel Matsekete said the group’s strategy was anchored in aligning its portfolio with evolving customer needs while driving growth in assets under management.
“Our major focus in the asset management business is to grow the funds that we manage, and we do this through sales, as well as driving the performance of the funds, which in turn should support the growth of flows,” he said.
“This has resulted in growth in the alternative investment portfolio as we continue to develop the property portfolio through our wide land bank.”
Mr Matsekete said Old Mutual has stepped up efforts to develop parts of its land bank, while simultaneously investing in repurposing and regeneration initiatives within its existing portfolio.
“So, we continue to revitalise our property portfolio; granted, we would have liked to do it faster, but we are also careful to ensure that we are balancing our investment efforts between preserving what we have and channelling resources into new developments,” he said.
He added that the group’s property occupancy rate of 82 percent remains above the industry average, reflecting the effectiveness of its portfolio management strategy.
Across the market, CBD property owners are increasingly converting large office buildings into smaller, more flexible units tailored for small and medium enterprises (SMEs), which now dominate economic activity.
Revitus Property Opportunities Real Estate Investment Trust (Revitus REIT) says the broader property market remained resilient in 2025, supported by urbanisation, strong demand for affordable housing and increased diaspora investment.
However, the trust noted a widening performance gap between suburban and CBD assets.
“Suburban office and retail properties performed well, while CBDs in Harare and Bulawayo faced persistently high vacancies, with marginal growth supported by informal trade,” said Datvest managing director Mr Tendai Muzadzi, commenting on behalf of the fund for the year ended December 31, 2025.
“The property sector expansion in 2025 was driven by urbanisation, strong demand for affordable housing and increased diaspora investment.”
Despite these positive drivers, Mr Muzadzi cautioned that high borrowing costs continue to weigh on the sector by limiting access to mortgage financing and constraining broader real estate growth.
Market analysts say these dynamics are reinforcing the shift towards repurposing as a pragmatic strategy for unlocking value in an evolving property market.
According to FBC Securities, Zimbabwe’s property market is expected to remain segmented, with sustained demand for United States-dollar-linked leases in prime and suburban locations.
Industrial and logistics assets are also emerging as key beneficiaries of mining activity and regional trade flows.
In its 2026 economic outlook, the stockbroking firm said diaspora inflows were playing an increasingly influential role in shaping demand.
“Diaspora investors accounted for about 40 percent of Harare’s property demand in 2024, underpinning activity across multiple sectors,” FBC Securities said.
The report highlighted the impact of the informalisation of the economy, which is reshaping real estate demand and creating opportunities in asset classes that serve SMEs and informal traders.
FBC Securities noted that industrial and logistics properties remain standout performers, supported by mining supply chains, cross-border trade and distribution networks linked to the informal economy.
Analysts say the growing urgency around property repurposing reflects both cyclical pressures and deeper structural changes in the economy.
Mr Wafa Kuchera, an analyst with Trigrams Investments, said: “The urgency is largely cyclical, but also structural. On the cyclical side, persistently high vacancy rates in traditional CBD office spaces — particularly in Harare and Bulawayo — have eroded rental yields and forced property companies to reassess asset productivity,” he said.
“Structurally, there has been a clear shift in demand patterns: Tenants are moving away from large, formal office setups towards smaller, flexible spaces, while retail has been reshaped by informal trade and changing consumer spending patterns.”
Mr Kuchera said demand was increasingly concentrated in segments such as affordable housing, student accommodation, and light industrial and logistics space, putting pressure on listed property companies and REITs to realign their portfolios.
“Repurposing is emerging as the most immediate and practical lever to unlock value from underperforming assets without waiting for a full market recovery,” he said.
Economist Mr Walter Mapfumo echoed these sentiments, arguing that repurposing was the more rational strategy under current macroeconomic conditions.
“From a macroeconomic standpoint, repurposing is the more rational strategy under the current conditions,” he said.
“Zimbabwe’s cost of capital remains elevated and access to long-term funding is limited.
“In such an environment, projects with shorter payback periods and lower capital requirements are inherently more attractive.”
Mr Mapfumo said repurposing reduced exposure to inflationary pressures in construction and mitigates risks associated with long development cycles, while enabling quicker responses to shifting demand.
However, he warned that repurposing is not without risks. The risks can be grouped into structural, financial and policy-related factors.
“Structurally, not all properties are suitable for conversion, and forcing repurposing in unsuitable assets can destroy value rather than create it,” he said.