Covid-19 hits ZPI


The Covid-19 pandemic has paralysed the performance of Zimre Property Investments Limited (ZPI) after its tourism related assets, student accommodation and other projects which recorded subdued performance with renting spaces recording high voids.

Real estate projects came to a near halt during the Covid-19 pandemic.

The lockdown period restricted movement.

Currency depreciation and high inflation impacted on the property sector.

“The Covid-19 pandemic paralysed performance of tourism related assets, student accommodation and project sales while it negatively affected office space,” ZPI chairman Jean Maguranyanga said.

“The commercial real estate sales market has been dormant as investors are not prepared to sell in local currency.

Sales on the market, albeit at a slow pace because of liquidity challenges, are mostly of residential properties.”

She said projects income significantly declined during the half year mainly as a result of the Covid-19 induced lockdown which restricted marketing of the stands and movement of potential purchasers.

Maguranyanga said a significant number of real estate development projects in the market have been put on hold.

Property yields significantly decreased as they are income and value driven.

The average portfolio vacancy rate marginally worsened to 23% from 22% over the reporting period.

Harare CBD office, Bulawayo CBD office and the Gweru industrial facility recorded the highest void rates.

Investment properties were valued at ZWL$2.25bn by independent valuers Knight Frank as at June 30 2020, a 75% increase from December 2019. In US$ terms, however, the portfolio value declined.

Cost indexation also adversely affected property developments.

Despite the regular reviews, the depreciating exchange rate and hyperinflation negatively affected portfolio incomes and hence fair values.

Maguranyanga said despite challenges retail remained somewhat resilient and the company’s view is that in the medium to long-term these assets will recover.

Zimre Property profit jumped 61% to record ZWL$936,694m during the H1 2020 period from ZWL$580,672m recorded during the corresponding period in 2019 due to inflation and shareholding issues.

Total revenue for the half year declined by 29% to ZWL$27.06m from ZWL$37.96m achieved in the first half of 2019.

Rental income grew by 27% to ZWL$24.21m from ZWL$19.05m attained in the corresponding period in 2019.

Sales amounted to ZWL$2.38m, down from ZWL$18.13m achieved in the previous half year, an 87% decline.

Investment properties achieved a fair value gain of ZWL$963.02m for the half year compared to ZWL$639.72m in the first half of 2019.

Cost control measures were adopted throughout the reporting period which saw total administration costs at ZWL$19.96m compared to ZWL$21.75m in the previous half year.

Maguranyanga said the company was pursuing possibilities of converting Harare CBD properties to alternative uses with the First Street and Nelson Mandela corner as the immediate target area.

She said ZPI intends to convert some of its CBD properties to alternative uses such as boutique hotel, residential apartments and student accommodation.

A collaborative and syndicated development approach of the First Street and George Silundika Avenue block is also being pursued, Maguranyanga said.

 She said the process of securing development permit for construction of a lodge in Victoria Falls was at an advanced stage.

The project involves construction of a 40-roomed lodge facility at an estimated cost of US$1.6m.

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