Hopewell Chin'ono's Analysis Of FBC Building Society Houses Deal And Houses In South Africa
Zimbabwean journalist Hopewell Chin’ono has analysed the FBC Building Society houses in Glen Lorne, Harare and compared them to houses in South Africa. He concluded that the FBC deal was not a good one. FBC recently announced the sale of townhouses in Glen Lorne and Zvishavane. The Glen Lorne houses are situated in a gated complex and offer modern living with spacious bedrooms, an open-plan lounge and fitted kitchen, high-end finishes, a double carport, and access to a communal borehole.
According to FBC’s statement, the price for these townhouses is $375,000, including VAT. Interested buyers need to make a mortgage deposit of 25% and have a mortgage tenor of 7 years.
Chin’ono criticised the deal, stating that the mortgage interest rate offered by FBC is 17%, which would result in monthly payments of $6,000. He argued that paying a total of $597,750, including the deposit, for a 202-square-meter property doesn’t make economic sense. He compared the price to what one could buy in South Africa, where the same amount of money could purchase a mansion or multiple apartments.
Chin’ono warned about the potential for money laundering due to the high-interest rate and suggested that those considering the purchase should have a strategic financial mindset and a monthly income of over $20,000. He said:
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This is a 202 square meter property sitting on half an acre and selling for US$375,000 or R 7,125,000 in Harare’s Glen Lorne area after Chisipite. When someone sent this to me, I said I won’t comment about who owns the bank, but just on the deal on offer and what it means in value terms. This deal is a great pathway for money laundering because the mortgage interest rate being offered by FBC is 17% and you will be paying US$6,000 a month. Eventually, you pay US$504,000 or R9,576,000 plus the 25% deposit of US$93,750 or R1,781,250 making it a total of US$597,750 or R 11,357,250. You have to be high on first-grade cocaine to enter into such a deal, that is why I said that it is a great pathway for money launderers who buy cash to clean their money and not a doctor, lawyer, engineer, journalist or pilot who is buying it as their primary residence. It simply doesn’t make any economic sense…
I would never pay US$375,000 cash of my hard earned money for these town houses because in South Africa I would buy a mansion with side apartments for my African relatives when they visit or 8 3-bedroom apartments in Bryanston in Sandton. It is important for individuals to carefully consider all factors like the massive interest rate of 17% before entering into such significant financial commitments. You must have a strategic financial mindset and you must be earning more than US$20,000 plus a month to pay a mortgage of US$6000 a month after paying a down payment of US$93,750. The traditional rule in real estate is that you SHOULDN’T pay more than 28 percent of your monthly gross income to your mortgage payment.
He also commented on the current state of corruption in Zimbabwe, stating that the exorbitant prices are a result of massive looting and disproportionate sharing of national wealth. Despite his criticism, Chin’ono acknowledged that personal choices in real estate investments vary based on individual circumstances and preferences.
