Published: 28 March 2014

PEARL Properties intends to spend as much as $100 million on the development of land it recently bought in Mt Pleasant in the medium term, a company official said yesterday.

The company paid $9,6 million for 24 hectares of prime land last year and the developed site will comprise a medical centre, retail space, office park, residential flats, cluster housing units and office space, Mr Christopher Manyowa, general manager (developments) of Qyster Real Estate, a division of Pearl told analysts.

"The approval of the mixed use of the land supports the price of the property," said Mr Manyowa.

He said the development of the land will be funded using a combination of debt and equity, and given its scale, it will be phased over an indicative period of five to 10 years.

"It is a long-term project which will have to happen over a period of five to 10 years," said Mr Manyowa.

The land can also be parcelled into various proposed uses and developments separately.

The group would raise between $40 million to $60 million for the initial phase, Pearl managing director Mr Francis Nyambiri said.

"We have received interests from regional financial institutions and some from the Far East region," said Mr Nyambiri.

Apart from the Mt Pleasant property, the group also acquired Harare Old Town House, a property on 1 200 square metres for $220 000, Juliasdale Cottage on 24 900 square metres for $135 000 and Brackenhill Cottage on 61 000 square metres for $150 000.

This brings to 57 properties owned by Pearl.

The acquisition of cottages was meant to "bring leisure portfolio within the group," said Mr Manyowa.

Construction of Kamfinsa Cluster Housing Development is in progress.

Fifteen home shells are already complete and will be sold upon the completion of the sectional title.

Additional 25 homes are targeted for completion in the second half.

In the year to December 31, revenue rose by 2,1 percent to $9,002 million compared with the same period last year, due to increase in rentals and other income from property services rendered to third parties, finance director Mr Peddy Chigunduru said.

Rental income increased by 2,06 percent to $9,012 million, driven by increase in the contribution of turnover-based rental income.

Net property income marginally rose 1,91 percent to $7,3 million as a result of rental reviews and new lettings.

Operating profit before tax and fair value adjustments declined by 1,42 percent to $4,4 million due to slower growth in fair value adjustments properties.

The market value on investments properties grew 6,5 percent to $128 million, underpinned by improving quality of the refurbished space and re-zoning to commercial of land previously zoned as residential.

Rental per square metre rose by 1,22 percent to $8,28  due to review in rentals, leasing of vacant space and new lettings.

Occupancy level fell by 3,3 percentage points to 76,3 percent as a result of decline in space demand due to economic challenges.

This was compounded by increase in vacations, evictions and company closures.

Tenant arrears significantly increased by 60,7 percent on tight liquidity and economic downturn.

Rentals from the CBD retail contributed 29,4 percent to rental income.

Arrears level declined by 21 percent, reflecting improved performance by retailers and occupancy level declined by 3,31 percentage points to 95,14 percent.

Under the office parks segment, rentals per square metre declined by 23,3 percent to $9,35.

This is despite occupancy level increasing by 16,02 percent.

The decline in income per square from office parks is because of discounts granted to clients who pay in advance.

CBD office contributed 20,9 percent to rental income while arrears increases by 26,4 percent.

Occupancy rate declined by 23,6 percent as tenants rationalised their space holding.

Industrial properties contributed 13 percent to rental income while arrears increased by 127,5 percent.

Occupancy level declined by 20 percent following the moving out of the anchor tenant in Birmingham.

Suburban retail contributed the least to rental income at 7,71 percent and arrears level grew by 90,04 percent.

Occupancy level improved by 35 percent following the letting of Mabvuku Supermarket.
- The Herald

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