ZPI to construct 3 600 houses

HARARE - Listed Zimre Property Investment Limited (ZPI) plans to build 3 600 housing units in Harare as part of efforts to boost revenue and unlock shareholder value.

Edson Muvingi, the group’s managing director, said the realty firm was currently in negotiations with investors over the project’s funding.

“We have a land bank of about 30 000 square metres and we are looking at having a joint venture with one of the banks to construct high density houses,” he said.

Muvingi also revealed the group’s plans to construct a $2 million state-of-the-art food court in Tynwald.
“The company continues to actively seek and pursue opportunities to diversify and enhance the value of its property portfolio for the benefit of stakeholders,” he said.

Meanwhile, ZPI — owned by insurance giant Zimre Holdings — recorded an eight percent increase in operating profit to $1,6 million in the six months to June 30, boosted by the uptake of its residential projects.

Income from housing projects increased from 21 percent to 43 percent of the total over the half year period as rental income’s contribution plummeted from a high of 70 percent in December 2012 to 53 percent.

Total revenue was up 24 percent to $3.65 million from the $2,93 million achieved in 2012 but the company opted not to declare an interim dividend to fund ongoing projects and strategic asset purchases.

During the period under review, there was a significant increase in rent arrears, which, coupled with some businesses closing down or downsizing and poor liquidity on the market, affected its business model.

Muvingi noted that access to lines of credit for the sector remained constrained with both local and foreign lines of credit either too short or expensive for long-term property development projects or unavailable altogether.

Rental income however, was four percent higher on the same period in the prior year at $1,94 million from $1,86 million.

“Rental collections slackened to average 97 percent compared to 100 percent over the same period last year while the void ratio rose from 9,1 percent to 11,8 percent,” he said.

Portfolio debtors were up 19 percent in the six months period to June 2013 and the company said that has become a serious cause for concern, leading to the provision for doubtful debts of $612 780.

Total administration costs increased by 31 over the half year under review. The company has several housing projects running, notably in Masvingo where a total of 153 stands out of 338 about 43 percent of the entire project, have been sold at a value of $2,69 million.

The company has recovered 54 percent of the project cost of $4,96 million.

At Tynwald in Harare, the first phase of 151 stands has been sold out at a value of $1,64 million.

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