Listed property firm Mashonaland Holdings Limited’s revenue for the quarter to March 31, 2023 jumped 481 percent compared to the same period in the prior year driven by an increase in space absorption in the portfolio.
This comes as overall portfolio occupancy increased to 87 percent from 81 percent during the same period last year.
According to the group, the revenue growth was also driven by regular rent reviews being implemented to preserve value at a time inflationary pressures continue to weigh business performance across sectors.
The first quarter of the year was exchange rate volatility. During the quarter, the Reserve Bank of Zimbabwe (RBZ) interbank exchange rate depreciated by 40 percent on the back of an increase in money supply in the economy.
In addition to the local currency loss of purchasing power, the economy continues to be impacted by power supply challenges which have increased the cost of doing business.
Specific to the property sector, the occupier sub-market continues to suffer from high voids in the CBD office sector due to sluggish economic activity although pockets of growth continue to be witnessed within the retail and residential sectors with emphasis on quality offering.
“Consequently, development activity and sales transactions are skewed towards these two sectors attracted by encouraging space absorption rates and yields.
“The segment remains affected by power supply challenges which have impinged on the sector’s ability to improve its capacity utilisation, this, in turn, has affected the sector’s ability to generate optimal yields.
“Among other macro-economic pressures, the property sector remains affected by distortions in exchange rates and inflationary pressures. As a result, most property owners are engaging tenants with a view of converting Zimbabwe dollar-denominated leases to United States Dollars to enable value preservation,” said company secretary Egnes Madhaka in a trading update for the quarter.
For the quarter under review, Mash recorded operating profit increased by 1 247 percent driven by revenue growth. Included in operating profit are exchange gains.
Meanwhile, the Group has a lineup of projects cutting across segments amid efforts continue to diversify portfolio and risk.
“In spite of the challenging operating environment, the group remains focused on implementing its portfolio diversification strategy. The group will continue to put measures in place to manage the risk associated with new developments,” said Madhaka.
Among the projects lined up is the Milton Park Day Hospital. According to the group, the pre-leased project commenced in June 2022, and it is targeted for completion and handover in Q3 2023.
Another project is the Pomona Wholesale Centre, a development concept that consists of wholesaling and flexible warehousing with 14,000 square metres of lettable space.
The anchor tenant has been secured and 60 percent of the development has been successfully pre-leased while pre-construction works including demolition of existing structures and designing of the new buildings are complete.
On the residential side, the group has Mashview Gardens in Bluff Hill. Phase 1 of the housing development will be completed in December 2022. Construction of the housing units under phases 2 and 3 is on-going. According to the group, the units are due for handover in June 2023 in line with the project programme.