Zimbabwe to get first dollar-listed REIT as property heats up

Zimbabwe is set to get its first dollar-denominated real estate investment trust listing on Friday, as demand for property stocks grows.

Eagle REIT is seeking to raise $62 million from the listing on Zimbabwe's US dollar-denominated Victoria Falls Exchange, said Bevin Ngara, managing director of Fidelity Life Asset Management Co., the property company's fund manager. It has already secured $24.5 million through a private placement and will use the money for projects in the resort city of Victoria Falls and Mazowe, according to a pre-listing statement.

VFEX was chosen over the southern African nation's local-currency bourse in Harare, the capital, as it's easier to showcase "value creation" in dollars than in an emerging currency, Ngara said by text message on Wednesday.

The Zimbabwe Stock Exchange has two REIT listings - Tigere Property Fund and Revitus.

Institutional investors have been plowing into property stocks as a hedge against policy uncertainty, inflation and frequent currency crashes. Zimbabwe debuted the gold-backed ZiG last year, its sixth attempt at a functioning local currency since 2009.

Funds under management invested in property increased to 47% in the final quarter of 2024 from 43.6% in the prior three months, according to the Securities and Exchange Commission of Zimbabwe, the industry regulator.

REITs have "become more popular" than traditional asset classes, such as direct property ownership, listed equities and the money market, Ngara said.

They are particularly attractive as they can be sold much faster than physical property, said Lloyd Mlotshwa, head of research at IH Securities. They also frequently pay dividends, letting investors earn income from property without owning or managing it directly.

"Institutional investors are more concerned about consistent dividend payments than capital gains," Ngara said. "REITs guarantee consistent dividend payments."

These attributes have also made REITs popular in other destinations. Dubai Residential REIT recently drew demand for all units on offer within minutes.

VFEX Chief Executive Officer Justin Bgoni said the exchange expects another REIT listing soon, declining to provide further details.

The Tigere REIT, listed in 2022, whetted institutional investors' appetite for the asset class, Mlotshwa said. It will pay its 10th dividend to unit holders later this month.

In its first-quarter trading update, Tigere said, property remains the "favored option" for Zimbabwean investors seeking protection from currency shocks and foresees continued interest from individuals, corporates and pension funds looking for tangible exit options.

"Concerns of widespread price ‘overheating' within the sector are overstated," it said, noting "pervasive supply-side gaps" in key subsegments such as warehousing, affordable housing, quality retail infrastructure and office space.