Property sector feels pinch

HARARE - Local property firms say the country’s tough economic conditions are affecting occupancies, knocking rentals, driving voids and in some cases leading to downward reviews of lease agreements.

In the past two weeks, Zimbabwe Stock Exchange-listed property groups have revealed that the prevailing economic conditions have also led to a decrease in rental incomes.

Listed realtor Zimre Property Investments (ZPI) last week announced it had posted a $3 million loss for the year to December 2015 from a prior profit position of $252 862, attributed to a difficult operating environment.

In a statement accompanying the group’s financials for the period under review, ZPI chairman Buzwani Mothobi said the year had seen the group posting a 33 percent nosedive in operating profit to $680 000 from $1 million on the back of depressed revenue performance.

Mothobi said as a result of the prevailing economic conditions in the country, ZPI had seen weak demand for leased space and other real estate products.

“This resulted in rising voids and debtors as well as falling revenue due to reduced uptake of leased space and falling rental rates,” he said.

Another property firm, First Mutual Holdings subsidiary, Pearl Properties (Pearl) also recorded a 3,5 percent drop in revenue in the year to December 2015 from $8,7 million to $8,4 million on the back of a 4,1 percent knock in rental income to $8,3 million from $8,6 million.

“The decline in property values was driven by declining rentals and decreasing occupancy levels especially in the Central Business District (CBD) office and industrial sectors,” group managing director Francis Nyambiri told an analyst briefing in the capital recently.

The developers’ occupancy levels were down to 78,54 percent from 79,93 percent in 2015 with vacations largely attributed to the Central Business District properties as tenant arrears increased 0,25 percent to $2,3 million on the back of tight liquidity forcing tenants to default on leases.

The group’s George Square Mews (Kamfinsa Cluster Homes) also failed to rouse market interest as uptake was very low in the year to December 2015.

“Therefore, we have re-looked the project with regards the initial stance of developing then disposing the properties...

“We had 16 shell units that are being worked on targeted to be installed by end of the first quarter for leasing,  we are doing this to arouse interest,” he said, adding that the units to be leased were going to be sold off eventually.

Meanwhile, mortgage lenders like FBC Building Society also revealed that they had been forced to dispose of upmarket land as stands instead of developing the areas into residential stands.

“An example, is our Helensvale land; we decided to sell it off as stands instead of housing units as an upmarket development may not attract the desired uptake. Instead, we will now focus of high density areas for development,” said FBC Holdings chief executive John Mushayavanhu.

Listed short term insurer NicozDiamond also told analysts recently that it had resorted to rental tenants at its Hatfield Diamond Villas project as the project’s uptake had been “below expectation on the back of low disposable incomes.”

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