Property concern — Mashonaland Holdings is looking at smaller towns for property development as part of its growth strategy.
While the property sector is currently subdued, especially the Central Business District (CBD) commercial space, there are growth opportunities in office parks, retail, residential and emerging smaller towns.
“Demand for space is a bit weak in certain sectors, but there are certain areas like retail, suburban and office parks.
“There are also emerging towns and cities out of Harare like Zvishavane, Chiredzi and Victoria Falls. We think there are pockets of growth within the bigger market, especially in these smaller towns and our focus is to identify those and pursue them for future growth,” said managing director Gibson Mapfidza on the sidelines of the group’s annual general meeting.
Mapfidza added the group would revalue its properties to avoid distortions caused by inflationary pressures as well as to factor in the currency reforms effected by the Reserve Bank of Zimbabwe.
The central bank introduced RTGS dollars as well as liberalised the exchange rate.
“We are going to revalue our properties. We did valuations for September 30, 2018, which was our year-end, those values are reported in US dollars.
“We think valuations is a fundamental process which is not a translation of figures, so we have to wait for the next valuation cycle, which will be September 30, 2019 and we believe valuers need to look at
the fundamentals of the properties,” he said.
Mashonaland has been reviewing its projects on its land banks to take advantage of the opportunities that may arise while also ensuring proper timing of execution.
For instance, the Westgate Cluster housing delayed execution as it was not viable under the obtaining economic conditions.
The project was put to tender in October 2018 but the costs were not favourable. It was re-tendered in January this year and figures “came down slightly”.
Mapfidza said: “What we are looking at now are strategies to deliver the project within a good cause to make it viable.
“So what we are going to do is pre-purchase most of the materials and stuff like and supply the contractors. It is more cost effective that way.”
Its other project, Windsor stands in Ruwa will be put to the market next month.
Meanwhile, Mashonaland’s operating profit for the four months to January 31, 2019 totalled $1,1 million, which was 47 percent above same period last year and 22 percent ahead of budget.
Operating profit margins rose to 62 percent from 45 percent in the comparable prior year period.
Revenue for the four months grew 7 percent to $1,68 million compared to $1,58
million recorded in the same period last year.
Management attributed the revenue growth improved occupancy level which now stands at 76 percent compared to 71 percent during the prior year comparable period.
Property expenses went down 23 percent to $311 000, which was 31 percent below budget on the back of improved occupancies, which saw a reduction in cost of voids expenses.