Despite the challenging business environment property firm, ZimRe Property Investments (ZPI) recorded positive performance for the five months to May 31, 2020 as rental income exceeded budget by 49 percent.
The property sector has not been spared from the obtaining economic challenges which have seen some businesses downsize operations, close, or move to other cheaper options like residential areas resulting in voids especially in the central business district (CBD).
A trading update by the parent company, Zimre Holdings Limited (ZHL) shows that retail space contributed 56 percent of the total rental income at ZPI due to the ongoing reconfiguration of the property portfolio to meet market demands.
Total revenue for the same period at $12, 5 million on a historical cost basis was 778 percent above the prior year mainly due to the quarterly rental reviews.
Property firms in Zimbabwe have adopted quarterly rental reviews as one of the strategies to cushion against inflationary pressures.
ZPI achieved a 93 percent rental collection ratio.
Stand sales were however negatively impacted by the lockdown conditions and were 91 percent below budget.
During the period under review, building maintenance costs also increased as suppliers indexed their prices against the USD.
According to the group, operating profit performance and cashflows however remained positive in the five months to May 2020.
The listed property concern has not been spared from the effects of COVID 19, which have affected businesses across sectors, locally and at a global level.
“The downside risks to robust performance, include pressure on the uptake of space for renting worsened by the emerging trends and the new normal where employees work from home and delays in the resumption of classes at tertiary institutions resulting in increasing void levels which were at 23 percent against 22 percent during the same period last year for the overall ZPI portfolio, and declining rental and market values in real terms, ” said ZHL in a trading update.
Apart from commercial properties, ZPI is also into student accommodation in Bulawayo – Nicoz House which caters to students in tertiary institutions.
According to the group, the robust property development pipeline, the real estate investment trust funding (REITS) model that has been adopted by the company, coupled with the tax exemptions on infrastructure projects and domestic tourist accommodation, announced in the July 2020 Budget Review Statement, are expected to provide the necessary impetus to property development activities and boost revenues for the business.–chronicles.co.zw