Zimre Property seeks to turn fortunes

Published: 06 July 2017

ZIMRE Property Investments (ZPI) suffered a 15 percent revenue decline and 10 percent projects income dip during the first quarter of 2017 compared to the prior period the previous year, as the Zimbabwe Stock Exchange-listed property concern grappled with economic uncertainty that has forced diversification of its property investments.

The under-performance of the property operations mainly due to persistent economic hardships has remained a fundamental factor determining the group's performance this year.

"The total revenue ($6,52 million) achieved in the first quarter was below expectations mainly due to the underperformance of property operations, due to economic hardships," a first quarter trading update delivered last week said.

The property concern forecast subdued rental income from office space, putting pressure on property returns.

ZPI managing director, Edison Muvingi, told the Financial Gazette there was no reason for panic yet.

"We have registered revenue decline of about 15 percent, rental decline of about one percent and also projects income decline of about 10 percent. These are part of the reporting zones and I don't think it would be a cause for panic," said Muvingi.

He said ZPI would now focus on small projects, chief among them student accommodation.

"The future is not clear as far as the property sector is performing. What has been carrying us are the small profitable projects that we have been doing," said Muvingi.

With the office space wing, where voids are at 26 percent, failing to boost revenue, ZPI has set sights on providing 1 000 beds for the National University of Science and Technology (NUST).

"We continue with the diversification that we have been talking about, from commercial to student accommodation in order to capture that revenue. We are at an advanced stage; we have done our applications and there are no objections. Soon we could be going for tender," said Muvingi.

The property sector has continued to experience weak demand as tenants either rationalise their current space or vacate buildings leading to a surge in property voids.

ZPI property voids jumped from 13 percent in 2013 to 26 percent by May this year.

Muvingi said cost cutting measures would continue as the company seeks to rationalise operations amid harsh economic conditions.

Diversification into smaller projects would counter economic challenges as more companies have joined the great trek out of town for cheaper office space in residential and industrial areas.

"We are working on Victoria Falls where we got a commercial piece for retail space. We are working on a joint venture in Harare which would see significant office development in the Borrowdale area. We are also working on residential stands where we service and dispose, under Meved in Snake Park," Muvingi said.

- fingaz

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