Property companies struggle

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Zimbabwe Stock Exchange (ZSE) listed property and construction firms have constituted the bottom 10 performers since the beginning of the year. The property companies have felt the economic pinch as voids, especially in the central business district (CBD) commercial properties increased, affecting the sector.

According to ZSE statistics, Mashonaland Holdings let go of 34,97 percent of value to 2,25 cents while peers, Zimre Property Investment (ZPI) lost 29 percent of value to 1,7 cents.

First Mutual Properties lost 8,52 percent of value since the beginning of the year to 5,58 cents while Dawn lost 20 percent to 1,6 cents.

Building and associated industries firm Masimba Holdings, eased 30 percent to 5 cents.
At 0,6 cents, brick making firm — Willdale Limited was 17 percent lower than its year opening price.
However, for Willdale, sales volumes during the first five months of the financial year 2018 were 13 percent above same period in the prior year and 1 percent above budget on firm demand.

Growth will also be underpinned by the anticipated increased demand for bricks driven by individual residential developments, construction of schools and university accommodation.

Willdale anticipates this demand to continue in the foreseeable future and capitalise on it although production volumes will also be determined by availability of utilities.

Regional cement maker PPC, saw its share price jump 17 percent to $1,22. In March last year, PPC commissioned an $82 million plant in Harare ,which is expected to bring the cement makers capacity to 1,4 million tonnes annually while allowing the company to increase exports in the region.

In June this year, the group reported more than two – fold jump in earnings, thanks to strong performance in African operations including Zimbabwe.

The property industry has of late been marred by challenges such as low rental income and yields as companies look for cheaper alternatives, downsize operations while other closed.

Apart from the increase in voids, tenants have also been negotiating for downward rental reviews, further straining the sector.

Real Estate Institute of Zimbabwe (REIZ) president Mike Juru, said the sector also needed to adapt to the new economic order.

“Beyond that, we are faced with a situation where agility in adapting to the demands of the market is resulting in mismatches in the market.

“A higher rental charge is being compensated by higher voids rates, however, we have major players in the real estate industry failing to attract tenants even at lower rentals. The reduction of revenue can also be attributed to downward rental reviews as more companies embark on cost cutting measures and low rental charges on new leases,” he said.

There still is hope for the sector.
Mr Juru said the number of developments that were dotted around the country were not out of the world but an indication investors were prepared to tie their money in tangible assets.–herald.co.zw

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