Economic hardships drive companies out of the CBD

Growing economic hardships are driving a number of business owners out of the central business district (CBD) into suburban areas due to inability to afford rentals.

This has resulted in low occupancy levels in the CBD, according to Gilbert Gumpo, Old Mutual Property general manager. Old Mutual Property, like all other property managers, is dealing with low occupancy levels as a result of the prevailing depressed economic activity.

"Across the property industry, arrears stand at about 20% as at March 2015. This represents a deterioration compared to 2013 from around 16%," Gumpo said.

Rentals within the CBD currently stand at $14 to $20 a square metre and with low turnovers this was a hard figure to match every month with direct competition outside the premises of these businesses.

"Financial results for listed property companies show that there has been a decline in basic rentals ranging between -2% to -7%. Rental increases have been few and far between, limited to sectors that can afford these increases," Gumpo said.

Liquidity challenges, which have been exacerbated by high operational costs, such as utility bills, have resulted in high rental arrears in the property market.  

Gumpo said the cost of doing business was affecting every economic sector in Zimbabwe, including the property market.