Zimbabwe’s current state of the property development market remains depressed due to the macro-economic climate and low business confidence.
The African country remains under lockdown with companies remaining closed, except for essential services, and this has affected property developer, Mashonaland Holdings development activity, which may include construction, repair, renovation, rehabilitation or conversion of buildings amongst others.
The company’s Managing Director, Gibson Mapfidza says, “The property market fundamentals have remained depressed due to the difficult macro-economic climate and low business confidence.”
“The occupier sub-market was affected by low demand for office space, this, in turn, had an impact on development activity. The limited development activity and sales transactions on the market have remained concentrated in the residential sector.”
The property developer was, last year affected by Statutory Instrument 96 of 2020 which allowed tenants to defer the payment of rentals during that year’s lockdown.
Mapfidza says, “In the occupier sub-market most tenants were able to pay-up the rent arrears that were deferred during the lockdown period. This propelled the sub-market, which had earlier in the year suffered lethargic rental growth and rent payment deferments.”
“Inflation, however, remained significantly high and, as such, the asset class failed to hedge against time value losses,” he went on.
“Rental income increased by 47.6% compared to the same period last year driven by quarterly rent reviews which the business has been performing in line with market practice. The improved revenue performance was also driven by new leases concluded during the quarter.”
Although Mashonaland Holdings operating profit increased by 18.9% due to the revenue growth, the operating profit margin decreased by 19.5% due to an increase in total operating expenses.
“Operating expenses increased by 59% to ZWL$30.7million driven by movement in unofficial market exchange rates which had a bearing on the Zimbabwe Dollar value of materials and services consumed by the company. Service providers have continued tracking premium exchange rates in the pricing of products and services to hedge against inflation.” Mapfidza says.