Cluster clutter: New Knight Frank report doubts future demand for luxury complexes

Cluster homes are all the rage in Zimbabwe, but property company Knight Frank says the trend may not be sustainable. The company has just released its analysis for the second half of 2023, which details the state of property developments, from residential to commercial sectors.

Here is what the company finds about property trends, including the average costs of buying and renting new properties.

Residential: Cluster future?

With limited access to mortgages, Knight Frank reports that "self-funded home construction continues apace in low-income locations up to the affluent suburbs of the cities". In the second half of 2023, Marlborough, Sunridge, and Greencroft delivered 59 three-bedroom homes, with 30 more under construction. According to the firm, over 100 two- and three-bedroom flats have been erected in Meyrick Park, Greendale, and Newlands. Over 400 apartments were added by financial institutions and other organizations throughout Zimbabwe, ranging from two- to three-bedroom residences. Cluster homes in high-density locations cost between $60,000 and $80,000 per unit, while those in medium-density areas cost between $140,000 and $250,000 per unit.

Luxury residences are in high demand, with many being purchased "off-plan" - before construction even begins. “Prices for these luxury properties can reach as high as US$500,000, reflecting the growing demand for upscale living options in the market.” According to Knight Frank, cluster properties are becoming increasingly popular in Zimbabwe, notably in Harare. However, the cost of a single unit remains out of reach for the typical Zimbabwean, raising worries about the project's long-term viability. There is demand for low-cost homes, which Knight Frank describes as an investment opportunity.

Offices: The CBD exodus

Companies are departing the CBD, which is now a haven for small shopkeepers, while "new office development from both institutional and private entities in Zimbabwe remains low". According to Knight Frank, office complexes on Borrowdale Road serve as a paradigm for where demand is. The Strand Corporate Office Park on Borrowdale Road, for example, offers ten subdivisions ranging from 7000 to slightly more than 9,000 square meters. Rentals there are around US$125 per square meter. Monthly leases for suburban offices range from $12 to $15 per square metre.

Retail: Surprising demand

According to Knight Frank, landlords in the central business district are responding to SMEs' demand by subdividing buildings into smaller apartments ranging from 9 to 50 sqm. Monthly rental rates for such premises have climbed by 100% since 2022, reaching US$40 per square metre. According to Knight Frank, rentals for CBD spaces of 50 square metres range between US$ 17 and US$ 25 per square metre. Uptown, retail space is likewise in high demand. The corporation mentions the continuing building of the Big Poppers Shopping Mall in Hogerty Hill. It will have 12,000 square meters of retail space, including names like Bhola, Bathroom Boutique, and Transerv, as well as fast food restaurants and shops. African Horizon also aims to build a new facility near Rolf Valley.

Rental rates for the suburban retail space range from US$13 to US$ 17 per square metre.

Industrial: Repurposing in fashion

Knight Frank says there is “a growing interest from both local and foreign investors in warehouse space within Zimbabwe’s industrial market.” The demand is for storage, distribution, and logistics. According to Knight Frank, the Skyport Industrial Park near the airport is a new development with 14 stands ranging from 7,000 to 31,000 square metres in size, selling for an average of US$60 per square metre. Properties in Graniteside and Willowvale are being repurposed for retail. “No space is left idle, as makeshift shopping stalls measuring around 80 sqm have emerged, fetching monthly rental rates ranging from US$12 to US$15 per square metre.”