Covid-19 infects real estate sector

The prevailing Covid-19 pandemic has hamstrung economic activity with property firm — Zimre Property Investments (ZPI) reporting a decrease in project income as marketing of properties was hampered by the lockdown conditions.

Zimbabwe implemented a national lockdown effective March 30, 2020 in order to limit the spread of the Covid-19 pandemic after the World Health Organisation (WHO) and the Government declared it a global pandemic and national disaster respectively.

The pandemic has affected economies and businesses across the globe and the property sector has not been spared.

“The lockdown affected the majority of tenant operations and a decline in rental flows was therefore inevitable,” said ZPI in the 2019 annual report.

“Projects income took a knock especially in the months of March and April 2020 as marketing of properties remained difficult under lockdown conditions,” said the property firm.

Due to the economic meltdown now worsened by the Covid-19 pandemic, some businesses have been struggling with costs.

As a result, some tenants are facing difficulties meeting rental obligations while occupancy levels remain under pressure.

ZPI indicated that while a number of tenants requested for rent holidays or rent reductions, the company reviewed its approach to each tenant’s individual cases with agreement on settlement of rentals.

“However, rent reviews for the first quarter were successfully implemented,” said ZPI.

Collections for the four months to April 2020 averaged 90 percent of total monthly charges, which compares well with all prior years since 2016.

The challenge is not prevalent to ZPI alone.

Peers, Mashonaland Holdings also indicated the group implemented regular rent reviews in order to hedge against erosion of rental value due to inflation.

The country has been battling inflationary pressures with annual rate of inflation pegged at 785 percent in May.

Mashonaland also indicated a slowdown in the implementation of its projects, which will take off as soon as lockdown is lifted. The group has some projects lined up for development for instance, the Bluff Hill cluster housing development, Charter House and Ruwa projects.

Mashonaland acknowledged the challenging economic environment as not conducive for the sector but indicated they will continue with low risk projects to survive the economic uncertainties.

Although the property market has responded with regular rent reviews, the general reduction in economic activity makes it difficult for rental growth to match prevailing inflationary pressures.

Experts say periodic maintenance of buildings is relevant now in order to retain some tenants and increase their space uptake.–

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