Business Reporter
WESTPROP Holdings Limited CEO, Ken Sharpe this week unraveled the vast untapped mortgage potential lying idle in the country’s Real Estate sector.
Locally, the mortgage business remains subdued with very limited uptake due to limited flexible terms and high interest rates. The major businesses in the mortgage market in Zimbabwe are Building Societies which are registered under the Building Societies Act (Chapter 24:02) and regulated by the Reserve Bank of Zimbabwe.
Very few of the available institutions offer flexible facilities ready for consumption by the ordinary citizens with the bulk of available products skewed in favor of a very small proportion of the market.
But speaking at the 11th Annual CEO Africa Roundtable currently underway in the resort town of Victoria Falls, Sharpe said his company has managed to deliver quality and remain afloat by tapping into the Real Estate market’s potential.
“It’s not only about the billion bricks vision .It’s about the value those billion bricks give. The topic today is about unlocking those bankable opportunities. The value of a billion bricks, a brick is about 14 cents by the way .So between US$120 and a US$ 140 million will be the cost of bricks which are found locally in Zimbabwe.
He said once one has the cement and mortar, they can build a house up to completion which is an eay task.
“The value that this US$140 million brings in todays’ economy is US$5 billion .So a US$140 million worth of bricks creates US$5 billion worth of property, almost 50 times,” he said.
Turning to the huge potential in the country country’s Real Estate market, Sharpe said after reading a book titled , The Mystery of Capital by Hernando de Soto revealed that real estate assets owned by the poor in the world in the Year 2 000, were Nine and a Half trillion USDs, a value Sharpe said is hovering between US$20 and US$25 trillion to date.
“If that value of capital could be unlocked , in fact if only 10% of that value or even 5% , let’s take a trillion US$ just a return on that at 10% a year creates a US$100 billion a year. That is a requirement of money to eradicate poverty from this continent entirely. That means that the poor whom we think of as being poor actually hold the assets to make themselves unpoor,” he said.
The WestProp CEO said since 1945 to date, the total value of foreign aid received the world over , is 55 times less than the assets of the poor.
He said currently, Zimbabwe has a million residential homes that are titled plus another three million homes that are unregularised.
“Let’s take the titled properties of 1 million and a US$100 000 per home, that is US$100 billion .Where is the problem? .In the meantime the money is right here.Investments in other sectors just go into such specific areas .They don’t filter to the rest of the economy.
“But with mortgages, in the US for example, they have proven that the single most important thing in funding a new business is a mortgage. On that entrepreneurs’ home .When starting a business let’s say in Kuwadzana, I have a US$40 000 house.
“If I have a business that needs US$20 000 capital which is 50% value of my house , today I cannot access that mortgage, but if I could access that mortgage and get that money, even at 20% interest which is too high .I know I will make enough profit every day to repay the mortgage, to service the loan and to have enough working capital for a productive company,” he added.
Follow the link to view Ken Sharpe’s live presentation:
https://www.facebook.com/reel/
