Following the decade-long economic free-fall precipitated by political squabbles between the country’s main rival parties, a number of companies closed down while skilled personnel left the country en-masse, resulting in the proliferation of informal and mostly illegal small businesses.
The huge gap in skilled professionals resulted in the frenzied mushrooming of property brokers and consultants eager to make quick money as more people bought and sold properties in the country.
Integrated Properties managing consultant Mike Juru said most property sellers were being misled and prejudiced of the actual value of their properties by making use of unregistered real estate agents.
“In the majority of cases last year, we noticed major climb downs from the original price that the seller would have advertised. Consequently, one loses out on the actual value of his or her property as they are inclined to eventually sell at a pre-determined rate,” said Juru.
Property analysts say that real estate assets reportedly provide security for some 70% of bank lending in the country. Juru said that a valuation report needs to be prepared by registered professionals who can give an accurate assessment of the value of a property rather than relying on an advertised price.
He pointed out that 2011 was marred by the presence of too many unregistered players in the real estate sector as up to five or six agents would be involved in the marketing and sale of a single property.
Towards the end of last year, some property companies reported that debtors have remained a major challenge in the property sector and posed as a business risk. This resulted in companies making substantial provision for bad debts in their books of accounts.
Empire Properties registered agent Fambai Shasha explained that property valuations were increasingly becoming important so that people gain a reasonable return on the final sale.
“The valuations are not cast in stone but are usually done using a reliable comparative method. We also have scientific and quantitative methods to ensure that the whole process is credible,” said Shasha.
“However, with the advent of the multi-currency regime, there should be a marked improvement in sales for this year as more people are accessing mortgage loans and buying stands and properties,” he said.
Southgate and Bancroft (Pvt) Ltd sales manager Portia Mapfumo said liquidity constraints dampened sales for properties worth over US$100 000 in 2011.
“The property sector performed fairly well last year as a number of properties were sold mainly through bonds,” she said. “Properties worth US$50 000 and below were the main movers.”
Inaccurate valuation reports flooded banks
He said that a number of banks in the country have not been spared either as they rely on valuation reports that are not reflective of the real value of a property.
“A proper valuation report is usually a pre-requisite for one to access a substantial loan from a bank. Banks are consequently exposed because they would have relied on an overvalued property as the bank then registers a bond on the property,” he said, adding that this results in a serious mismatch as current liabilities risk outweighing current assets.