Paul Nyakazeya, Group Digital Editor 
THE property market remained depressed during the first half of the year due to effects of the Covid-19 pandemic, and a persistently difficult macro-economic environment, First Mutual Properties (FMP) has said.
The Zimbabwe Stock Exchange listed firmsaid apart from the pandemic, the biggest challenge for the market during the period under review was liquidity and property owners’ desires to hold on to their assets.
“Transaction activity remains subdued, as property investors hold onto real estate to preserve value. There are limited options to recycle into new assets as the current stock in the market has relatively aged requiring significant capital to upgrade. Demand for quality real estate remains high, with investor appetite skewed towards real assets as high inflation expectations remain. Commercial development activity also remains limited due to the supply demand imbalances,” Elisha Moyo, FML chairman said in a statement accompanying the company’s financial results for the half year to June 30 2021.
The advent of the coronavirus pandemic had changed the dynamics of the country’s property demand dynamics, with office and Central Business District (CBD) office space suffering regressing rental yields versus warehousing and residential property developments, which have continued to see rising demand.
“Space absorption remained subdued during the period with continued supply demand imbalances, pending full recovery of the productive sectors to support demand for space. Despite the Covid-19 pandemic and a gradual shift to a hybrid of remote working and office presence, corporates have maintained leases,” he said.
The property sector’s performance took a knock following the onset of Covid-19, particularly for the CBD office space and for the retail segment as the number of walk-in clients has generally declined. The continued shifts in consumer patterns will continue to evolve the fortunes for this sector as developments tied to Covid-19 take shape not only locally but globally as well.
“The excess supply of space is mainly historical space redundancy, with the sectors worst affected being the CBD Offices, high density suburban shopping centres and the specialised industrial sectors. Demand for retail warehousing, light industrial properties and office park properties remains strong. Price discovery of rentals continues, with rentals predominantly indexed to foreign currency as landlords seek to preserve value of cash flows,” Moyo said
Moyo said the majority of development activity remains in the industrial and retail warehousing sectors, while limited owner occupied office park style buildings are ongoing.
“The residential sector development activity remains strong, mainly supported by the informal sector of the economy and the diaspora community,” he said.
During the period under review, FML’s inflation adjusted net property income after administration expenses grew by 11 percent to $43,14 million from $38,81 million driven by growth in inflation adjusted revenue of 45 percent to $204,23 million from 141,17 million. Revenue predominantly comprises rental income.
In historical terms, revenue grew by 369 percent ahead of inflation at 106 percent, driven by the repricing of rentals during the period, with the focus on indexing rentals to foreign currency in line with the provisions of Statutory Instrument 85 of 2020. Rental income growth has been sustained by a stable growth in the occupancy level, closing the period at 89,5 percent from 88,5 percent.
