RYAN CHIGOCHE
Listed property management and developing firm, First Mutual Properties (FMP), recorded a loss of ZWL$1.9bn in the quarter to March 31, 2022 from a profit position of ZWL$6.9bn in the prior comparable period owing to a low demand in commercial space as well as harsh economic environment.
In the reviewed period, the Zimbabwe dollar plunged 31% causing a surge in inflation and general uncertainty in the local economy.
“Activity on the property market continues to experience demand and supply imbalances affecting property pricing and rentals. The worst affected sectors remain the CBD offices, high density suburban shopping centres and the specialised industrial sectors where there is limited space absorption,’’ FMP secretary Dulcie Kandwe said.
She added: ‘’In addition, typically aging products are the most affected, as the cost of revamping and modernising these spaces and infrastructure requires significant investment.”
Property income in the period under review declined 8.5% to ZWL$98m from ZWL$107m reported in the prior comparable period. The plunge was attributed to investment in repairs and maintenance.
However revenue for the quarter increased 36% to ZWL$212m from ZWL$156m reported in the same period in 2021, largely driven by rent reviews, and the occupancy level, which rose to 89.99% in the reviewed period.
Albeit moving upwards by 11%, the rental collections remain relatively low at 68%.
On the outlook Kambwe said further growth of the company depends on key macroeconomic and monetary policy as they are expecting rental yield to remain subdued.
“…Key macroeconomic and monetary policy will be critical to driving further growth and business confidence. Rental yields are expected to remain weak due to the slow nature of the price discovery process for rentals, coupled by limited upside on rentals due to excess supply of space.
“The key focus area remains value preservation and cash flow management in the immediate to short term as market volatility driven by currency depreciation can significantly disrupt the market,’’ Kambwe said.
Meanwhile the commercial real estate segment is expected to remain an occupier market due to excessive supply of space.
Against this FMP expects commercial property development activities to remain constrained as there is limited new demand against a growing demand of owner occupied industrial , retail warehousing and office park style buildings.
