Zim economic sentiment set stage for SA Property Companies

Published: 26 July 2013

Zimbabwe's economic growth for 2013 has seen a slight improvement from last year, offering scores of opportunities to South African based property companies.

The rapid Gross Domestic Product growth and poor business environment appear to be a paradox.

Between 2009 and 2011 GDP growth averaged more than 7%. By comparison, Hong Kong's economy grew 5%.

The country has been on a growth trajectory following the adoption of the multi-currencies in January 2009. Critics, however, contend that Zimbabwe is coming from a low base and hence the high growth rates.

Old Mutual, the country's largest property market player, says Zimbabwe's commercial properties are bracing for a shift in tenant profile, driven by a change in clients' taste and preferences.

Demand for Central Business District (CBD) property space has significantly increased since dollarisation in 2009.

This has, in turn, led to improved returns for property market operators in CBDs.

Despite the political instability, the steady improvement of Zim economy over the past few years due to the recent influx of resources coming out of the ground, has proven a catalyst for sound business opportunities, says Rudolf Nieman, MD of JHI Project Management, a member of the Excellerate Property Services (EPS) group.

"With a strong track record and aptitude for new retail development in Africa, the South African based Innscor Retail Africa has identified a few gaps in the Zimbabwean retail market - one of which is the fast food sector," he says.

Innscor, which owns Baker's Inn, Chicken Inn, Pizza Inn, Creamy Inn and the franchise rights for Nando's and Steers in Africa, has made full utilisation of this demand with the roll-out of over 3 300 square metres of new and refurbished food courts in Zimbabwe over the past year (August 2012 to June 2013). This represents a total investment by Innscor of almost R120 million.

To assist with the expansion, JHI Project Management, a wholly-owned subsidiary of EPS and a sister company to JHI Properties, was appointed the principal agent managing the development and execution of Innscor's projects. As a result, all 13 of these projects were completed within exacting timelines.

The projects completed in Zimbabwe included Baker's Inn Factory, which, when in full operation in 2014 will produce up to 900 000 loaves of bread per day (phase one has been operational since April 2013 and is producing 250 000 loaves of bread per day); a new-build, standalone food court in Chivu, which is owned by the recently established Ascendant Property Fund, and a number of refurbished food courts in Harare.

In Zambia's capital city of Lusaka, JHI Project Management recently project managed the newly constructed 5 568 square metre head office for Stanbic Bank on behalf of the landlord, Burnet Investments Limited, which is a Zambian based company. The cost of this construction project represented a total investment of some US11 400 000 (equivalent to approximately R114 million at the current exchange rate).
- sacommercialpropnews.

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