Zimbabwe is developing a first-ever real estate property databank and incentivizing mortgage companies to offer more financing in the hopes it will attract foreign direct investment, according to a report in TheHerald.

The plan is to benchmark Zimbabwe property with South Africa, the U.S. and most countries in Africa, OPPConnect reports. The African Centre for Real Estate and Land Economics is responsible for compiling the property databank and price index to benchmark real estate values.

Financial institutions will be exempt from paying income tax accrued on mortgage finances, according to Zimbabwe’s 2014 national budget, said Patrick Chinamasa, minister of finance and economic development, in a ZBC report.

Analysts say the trend will help grow and transform Zimbabwe’s property market.

“We have been struggling to get the required finance for the construction industry hence slow growth in the property market for the past two years. This initiative by government will see more developments taking place,” Dudzai Madzima, a property analyst, told ZBC.

Lack of a data bank hampers property investment, said Munyaradzi Nyamagodo, ACRELE’s head of business development, in a Herald interview.

“Zimbabwe does not have a property price index for corporate analysis,” Nyamagodo said. “There is need to have a well-structured process of attracting foreign direct investment in the country’s real estate and infrastructure sector involving players in the real estate sector.”

Growth in Zimbabwe’s real estate market is expected to be insignificant in 2014 due to a lack of investors, default rates of up to 60 percent and inability of many tenants to pay rent, the Herald reported in December 2013, according to OPPConnect.

The government said it expects a 5 percent growth in real estate by 2018, according to the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

More financial institutions in Zimbabwe have started offering 10-to-20-year financing, which is expected to boost the subdued market.

Property analyst Mennard Chekayi said there is an information gap in real estate
investment, according to TheHerald.

The rental market has been stabilizing since the multi-currency era began four years ago but the property market is deteriorating with little construction activity. In the residential market, private developments dominate. Industrial developers are mainly redesigning rather than building new construction and going to warehousing.

In the commercial market, institutional investors are doing small-scale developments.

It is still cheaper in Zimbabwe to buy an existing building rather than build from scratch, Chekayi said. Agents are no longer “chasing new space but refurbishing the properties they already have.”

“Retail estate … is still amongst the most attractive (investments) especially for commercial agents,” he told TheHerald. “Residential is lucrative to an upturn, industrial is still in a slump, demand is falling and rentals are falling also.”