eBusiness Weekly
Enacy Mapakame
Business Writer
ZIMBABWE Stock Exchange (ZSE) Listed property firm Mashonaland Holdings Limited is targeting portfolio performance optimisation and diversification as the group seeks to cushion itself from the potential negative impact of a volatile property market.
During the past financial year, the business suffered capital losses associated with concentration in the commercial central business district (CBD) assets.
Sector-wide demand for commercial CBD space has remained subdued in the past few years. This has resulted in declining rentals and high voids levels, which were worsened by the Covid-19 pandemic, which saw businesses adopting remote working.
The CBD, especially in Harare, has become associated with a number of social ills, including informal trading, drug abuse, general criminology and lawlessness, disorder and crowding, making it an unsightly and unattractive place for discerning and high net worth clients.
Now businesses in the real estate sector are looking to diversify their portfolios and expand segments such as residential where demand has remained high, together with office parks, retail and warehousing segments. Mashonaland Holdings is also eyeing the healthcare segment.
“The group’s strategic focus will also remain targeted at portfolio performance optimisation, portfolio diversification and increasing operational efficiencies to ensure sustained business growth,” said chairman Grace Bema.
While inflationary pressures are likely to persist and weigh on businesses, Bema said the group will also remain focused on delivering on its project pipeline which will support cashflow generation to enable portfolio diversification.
Experts in the sector have predicted the residential and warehousing segment to continue performing well due to firm demand.
The anticipated growth in agriculture production, as well as mining, is expected to buoy demand for warehousing facilities while the retail segment is already registering firm demand supported mainly by small to medium enterprises.
Mashonaland Holdings is working on various projects with two residential projects namely Mashview Gardens in Harare and Windsor in Ruwa. Mashview Gardens phase one was scheduled to complete this year while phase two and three should be completed in the last quarter of the year.
As for the Windsor project, the group had concluded agreements of sale for 15 of the 24 fully serviced medium-density stands, with funds raised expected to increase the group’s liquidity to support other projects.
This is in addition to another project- a healthcare facility in Milton Park, in which the group will develop and lease a hospital at one of its properties. Construction works on the development commenced during the second quarter of the current financial year. According to the group, the project has a duration of 14 months and has a target completion date of August 2023.
Bema also indicated the group completed the acquisition of a four-hectare Pomona property during the first quarter of the year and has appointed a full project team to work on the designs and requisite statutory approvals. An anchor tenant has already been identified for the development project and has signed an agreement to develop lease (ADL).
Meanwhile, group revenue for the half year to June 30, 2022 rose 51 percent to $709 million attributable to periodic rent reviews and improved occupancy which grew to 83 percent from 79 percent.
Operating profit increased by 204 percent to $800 million on the back of foreign exchange gains of $503 million which were realised in foreign currency balances held by the group following receipt of deposits from Charter House.
Collections percentage for the half-year period remained resilient at 79 percent due to continuous credit control interventions which sought to ensure timely realisation of value.
