Zimre slows down property sales

ZIMRE Property Investments (ZPI) says it has slowed down property sales in order to safeguard against risks posed by the uncertain and volatile Zimbabwean market.
This comes as property sales in the country have declined lately, as both buyers and sellers have adopted a wait and see attitude in light of the worsening macro-economic fundamentals.
The past year and a half has been characterised by acute liquidity challenges and rising inflation, among other challenges, all of which has been worsened by rampaging parallel market exchange rates.
“In order to manage risk precipitated by market uncertainty and preserve value to the business, your board also took a deliberate decision to slow-down project sales,” Jean Maguranyanga, ZPI’s board chairman, said in a comment accompanying the realtor’s financials for the half year to June 30 2018.
“In order to preserve value, fewer stands were sold during the period under review. As a result, sales amounted to $400 000, down from $1,1 million achieved in the first half of 2017.”
“Once the market volatility normalises, accelerated disposal of stands will be embarked on to release cash from projects,” Maguranyanga added.
During the period under review, the property sector saw a higher number of debtors, declining rental rates and increased voids.
Office and industrial space occupancies decreased significantly, as tenants sought to contain operating costs.
ZPI reported a loss of $197 397 during the period under review, from a profit of $613 526 achieved during the same period in 2017.
Maguranyama said in addition to the sales hold off, the company’s performance during the period was also a reflection of its portfolio restructuring exercise.
The company disposed of its Zimre Centre in Harare earlier this year to finance the construction of a mall in Victoria Falls.
It also converted Nicoz House building in Bulawayo from an office to student accommodation.
“The two buildings together contributed more than a third of rental income. A significant dip in the business income was therefore unavoidable in the short-term. Full recovery by the end of the first quarter of 2019 is expected, as the project remains on schedule and tenant interest is reasonable,” the chairman said.
The company’s rental income for the period went down 25 percent compared to the same period last year.
Average collections for the period were 97 percent compared to 107 percent for the year ended December 31 2017, while average void rate for the portfolio went up from 26 percent to 30 percent over the period.
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