First Mutual Properties reports five fold growth in top line
BUSINESS REPORTER
Listed properties management and development firm, First Mutual Properties (FMP) reported a more than five fold growth in revenue to ZWL$1.308bn in the quarter to March 31 2023 from ZWL$200.03m achieved in prior comparative period on the back of improved rental level and improved US dollar business.
In a trading update, FMP company secretary Dulcie Kandwe said revenue increased by 554.26% compared to the same period in the prior year despite the occupancy level falling to 84.55%, mainly attributable to net lettings in the central business district office sector.
“Net property income increased by 485.39% during the period due to improved levels of rental income which is the main component of the revenue,” Kandwe said.
She said a total of ZWL$51.59m was applied to property maintenance during the quarter.
Investment properties at March 31 2023 were valued at ZWL$137.007bn, a 25.31% fair value gain from the December 31 2022 value of ZWL$109.334bn, and the growth was driven by rental income growth.
Recent developments such as the Highland Park and Madokero have added to the available space.
Kandwe said rental returns would remain low.
He also said sustained growth and business confidence will rely on important macroeconomic and monetary policies.
“Rental returns are expected to stay low because of the protracted price discovery process for leases and the limited potential for rental prices to increase given the abundance of available space.
“Shortly, the primary objective is to safeguard the value and manage cash flow, as fluctuations in the market caused by currency devaluation have the potential to cause major disruptions.
“The group intends to achieve this by enhancing the quality of space to meet the demands of occupants, sustaining occupancy rates and earnings,” she said.
“Additionally, investments will be made in property developments to expand the property portfolio.”
Different players have resorted to, either using purely US$ rental rates or quoting in purely local currency, having converted the rentals at the alternative market rates.
Other players are reviewing the US$ currency base rentals upwards and indexing to the ZWL$ interbank rates rather than using the alternative market rates.
New lettings are mostly being concluded solely in the US$.
Purely US$ currency rentals are discounted when compared to ZWL$ rentals payable at interbank rates due to the different exchange rates used.
There continues to be limited development activity on the property market being affected by the depreciating local currency and limited access to financing, with the majority of developments being mainly in the industrial/retail warehousing sectors.
Kandwe said the owner-occupied office park-style buildings, high-rise flats, cluster houses and residential house conversions, and new commercial developments especially in suburbs just outside the CBD and on major arterial routes are on the increase as investors seek to hedge value in property and improve balance sheet positioning.
She said cluster house developments have been seen to be putting pressure on existing infrastructure being sewer and roads, which also needs upgrading.
