REITs to underpin ZSE 2024 prospects

Real Estate Investment Trusts (REITs) are predicted to support this year's development hopes on the Zimbabwe Stock Exchange (ZSE) even though real US dollar terms would slow down in 2023. With the launching of the Revitus Property Opportunities REIT Fund last December—the second REIT to list on the exchange—the ZSE saw a notable change in the REIT environment recently.

After listing in November 2022, property developer Terrace Africa's Tigere Property Fund became the first REIT on the exchange. By the end of the year, the Tigere REIT's performance on the exchange had dropped by 34% (in US dollars).Despite this downturn, analysts think the REIT is still a profitable alternative for the main exchange that is worthwhile to pursue since it gives investors more investment options and a way to get exposure to the Zimbabwean real estate market.

Mr. Justin Bgoni, the CEO of the ZSE, recently stated that one industry offering short- to medium-term development prospects for the exchange is the REITs market.

Because of currency concerns, we see REITs as our primary development area; the VFEX side has considerably more. However, we believe that the REITs will account for a large portion of ZSE growth in the near to medium term," he stated.

Income-producing real estate investment trusts, or REITs, give investors an opportunity to get into the market without having to buy actual buildings.

This can be especially appealing to people who don't have the money or experience to invest directly in real estate.

The ZSE's support of REITs is in line with its strategic objectives of promoting capital market variety and growth, particularly at a time when several counters are moving to the US dollar-denominated Victoria Falls Stock Exchange (VFEX).

The emerging REIT market on the exchange is encouraging for investors and the economy of Zimbabwe as a whole. Through the addition of a new asset class to investment portfolios, REITs can help investors by diversifying portfolios and possibly lowering total portfolio risk. Due to REITs' usual requirement to pay out a sizable amount of its taxable revenue to shareholders in dividends, investors may also get dividend income on a regular basis. Compared to directly buying properties, REITs open up real estate investing to a greater number of investors.

On the other side, a growing REIT market can support more investment for the economy as a whole since REITs can draw capital into the real estate industry, which could support growth and job creation. They also raise liquidity because more trading activity in REITs can make the real estate market more liquid, which facilitates investors' entry and departure from positions, and because a regulated market encourages efficiency and transparency in the real estate industry.