Masholds turns to retail, suburban office parks
BUSINESS REPORTER
Listed property investment and development company Mashonaland Holdings (Masholds) has turned to retail and suburban office parks to hedge against inflation.
The shift to retail and suburban office parks comes at a time when the rental growth for the central business district (CBD) office lagged behind inflation.
“The retail and suburban office park sectors have proved to be a safer bet in the past year. The CBD office sector has seen rental growth significantly lagging behind inflation.
“The ability to hedge however shifts between different sub sectors as economic conditions and structural factors come into play,” Masholds board chairperson, Grace Bema said.
She said demand-driven inflation in the past has boded well for real estate in terms of hedging against inflation, supply side shocks, such as an increase in food and oil prices are more difficult to hedge as tenants’ rent paying capacity is invariably impaired.
“The occupier sub-market is expected to continue endearing itself with the informal sector, through among other measures, reconfiguring of low-rise buildings in the central businesses district into small to medium enterprise miniaturized retail facilities as demand for such facilities remains positive.
“Demand for warehousing and purpose-built industrial space, as well as suburban offices, has been steady though there is the very limited potential of rental growth in real terms,” Bema said.
She said frequent rent reviews, indexation, and charging of rentals in US$ as the redollarisation in the economy increases, are some of the measures the occupier submarket has adopted to ensure inflation hedging.
It is believed that this attribute has attracted more investments toward specific pockets of the property market such as the small suburban retail sector as opposed to the traditionally large and capital-intensive centrally located retail malls.
Masholds swung to a profit of ZWL$17.2bn in 2022 from a loss of ZWL$4.8bn in the previous year due to improved operating profitability and capital gain recorded on investment properties.
Revenue for the year increased by 98% to ZWL$3.8bn in 2022 from ZWL$1.9bn due to revenue from Mashview Garden Cluster housing development amounting to ZWL$1.2bn, which contributed 30% of the revenue performance.
Rental income increased by 34% to ZWL$2.6bn, despite the comparable period being longer following the change of the financial year in 2021, thereby contributing to the improved revenue performance.
The group’s investment properties were valued at ZWL$68bn on December 31, 2022, the valuation represents a 39% capital gain for the year.
The capital gain was achieved through the group’s periodic rent reviews to hedge against rising inflation as well as firming values for the group’s strategically located land banks.
