Real estate company, Zimre Property Holdings Limited was not spared by the harsh economic challenges that faced Zimbabwe this year.
Demand for real estate products declined due to light liquidity situation and waning consumer purchasing power in the company’s third-quarter ended 30 September 2019 according to Zimre Company Secretary, Nyasha Zhou.
“Rentals revenues declined in real terms and debtors remained a major problem for the business as the general economic environment increased overall tenant default risk,” Zhou said. In real terms means the change in a financial number after correcting for the effect of inflation according to economists.
“Building costs escalated, driven by the price increases witnessed in the market.”
Despite challenges, Zimre achieved an operating profit of $5.91 million for the nine months ended 30 September 2019.
Rental income for the nine months amounted to $3.27 million compared to $1.63 million during the same period last year. The increase is attributed to the quarterly rent review according to the company secretary.
“Stand sales performed better than prior year, realising revenue of $2.93 million compared to $0.46 million in the prior year,” says.
“Voids declined from 28% to 22% in the quarter under review. New lettings were achieved during the quarter and this, together with continuous space reconfiguration, resulted in an improved voids situation.”
Zimre focussed on defending both income and capital values through diversification in order to preserve value.
“As part of value preservation the company is implementing quarterly rent reviews and reconfiguring some of its space for other uses in line with market demand,” Zhou says.
“The company has taken the approach of making timely disposals of stands in line with its cash flow requirements while intensifying debtors’ recoveries.”