- A concerning surge in illicit capital inflows and fuel arbitrage is increasingly directed into Zimbabwe’s urban commercial property market
- Tigere REIT, a Zimbabwe Stock Exchange-listed entity, has noted significant volumes of undeclared or under-declared funds flowing into real estate
- The high occupancy is driven by strong demand for USD-generating assets, particularly in the mining and agriculture sectors
Harare - A concerning surge in illicit capital inflows and fuel arbitrage, is increasingly being channelled into Zimbabwe’s urban commercial property market, including the real estate investment trust (REIT) sector, as investors seek hard currency yielding assets.
Tigere REIT, a Zimbabwe Stock Exchange-listed entity, has highlighted this trend, noting that significant volumes of undeclared or under declared funds are flowing into real estate due to structural economic weaknesses.
Despite these concerns, Tigere maintained 100% occupancy across its prime commercial properties, Highland Park Phase 1 and 2 and Chinamano Corner for the six months ended 30 June 2025, driven by strong demand for USD-generating assets in sectors like mining and agriculture.
Tigere’s strong performance reflects sustained demand for hard currency yielding properties, particularly in the gold and tobacco sub-sectors, which generate significant USD cashflows.
“The property market has remained supported by strong cashflow generation in the mining and agricultural sectors, in particular, the gold and tobacco sub-sectors,” the company stated.
Net property income for the period reached US$769,885, with total income at US$777,473, including US$7,588 from other sources.
Operating expenses were US$245,473, resulting in a total comprehensive income of US$532,000.
Revenue grew to US$1.1 million from US$694,722 in the same period last year.
However, Tigere flagged the growing trend of illicit capital flows into USD-generating investments like real estate, including REITs, noting that these funds often originate from gold mining, tobacco trading, and fuel arbitrage.
Zimbabwe, a major gold producer, loses over US$1.5 billion annually due to the lack of modern gold refinery infrastructure, leading to smuggling of semi-processed or raw gold to destinations like Dubai or South Africa for refining.
These proceeds, typically in USD, are redirected into property rather than productive sectors. Similarly, under invoicing and side marketing in tobacco, along with pricing distortions in fuel imports, channel profits into real estate, where equity financed transactions, trusts, proxies, and shell entities obscure ownership and facilitate laundering.
The influx of illicit funds into real estate, including REITs like Tigere, poses significant risks. While it sustains demand and supports short-term profitability, it undermines transparency and regulatory oversight, potentially destabilizing the sector.
Real estate’s appeal as a shield from scrutiny, coupled with limited access to long term credit and distrust in financial intermediaries, makes it a preferred destination for informal capital.
For Tigere, this dynamic creates a complex environment, the cash inflows bolster occupancy and revenue but raise ethical and regulatory concerns.
Looking ahead, Tigere plans to exercise pre-emptive rights to acquire two additional yield accretive commercial properties in the second half of 2025, signaling confidence in its growth strategy despite the challenges posed by illicit capital flows.
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