Published: 27 June 2025

The Public Service Pension Fund's (PSPF) move to acquire the iconic Monomotapa Hotel underscores the persistent hunger among Zimbabwean pension funds for commercial real estate investments - even those considered risky - amid a constrained investment landscape.

If successful, the acquisition would position PSPF as one of the country's most influential institutional property investors. The Monomotapa Hotel, a landmark on Harare's skyline, is currently on sale as part of African Sun's ongoing strategy to divest underperforming assets.

"Independent valuations conducted by licensed property consultants and international hotel valuers have placed valuations within scope and acceptable range with the sellers, African Sun," said Farai Gaba, PSPF's Chief Investment Officer.

Despite challenges such as declining occupancy rates and reduced conferencing business — partly due to cuts in NGO foreign aid and tight liquidity — PSPF sees the purchase as consistent with its strategy to diversify holdings across sectors and asset classes while securing stable returns for pensioners.

"The fund maintains a diversified portfolio across asset classes including real estate, infrastructure, equities, fixed income and offshore investments, which are designed to reduce risk and enhance long-term returns," Gaba explained.

PSPF manages assets exceeding US$600 million, with approximately 15% held offshore as a hedge against currency fluctuations. The fund targets an average annual return of 7.5%.

Recent property investments by PSPF include the Madokero Creek residential estate, the adjacent Madokero Mall, Madokero Industrial Hub Warehouses, and the Varsity Heights student housing project in Chinhoyi. The fund is also a co-investor in the Bulawayo Student Accommodation Complex.

This pattern reflects a broader trend among Zimbabwe's institutional investors, who are increasingly turning to real estate amid limited capital market options and inflation risks. According to the Insurance and Pensions Commission (IPEC), real estate constitutes about 47% of pension fund assets.

Further data from the Securities and Exchange Commission of Zimbabwe (SECZIM) shows that real estate comprised 48.45% of assets managed by asset managers in Q1 2025, up from 47% in the previous quarter.

Meanwhile, African Sun continues to trim its portfolio. It recently sold the Great Zimbabwe Hotel to the Mewame Trust, owned by businessman and City Link bus operator Jackson Makarachi, for US$4.2 million. A prior deal involving former Reserve Bank governor Gideon Gono's TD Hotels collapsed.

African Sun is also in the process of selling the Caribbea Bay Hotel in Kariba, intending to reinvest proceeds into renovating its remaining properties. Last year, it refurbished the Hwange Safari Lodge, with major upgrades planned for Holiday Inn Harare, Elephant Hills, Troutbeck Timeshare Lodges, and the Victoria Falls Hotel, co-managed with Meikles.

African Sun has further hinted at potentially buying out Meikles' share in the Victoria Falls Hotel joint venture.

PSPF's pursuit of Monomotapa Hotel signals how pension funds continue to see real estate — even challenging assets — as a cornerstone for portfolio growth and long-term financial stability.
- NewZwire

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