LISTED property concern Mashonaland Holdings has decried weak commercial space demand and high void levels amid plans to diversify the business going forward in a bid to keep afloat.
Presenting the condensed consolidated financial statements for the 15 months period ended December 31 2021, board chairperson, Engineer Grace Bema said in comparison, residential space remains high in demand.
“Demand for commercial space remains weak resulting in rentals declining in real terms and high void levels especially within the commercial CBD sub sector.
“Whilst demand for residential properties remains relatively high, the falling disposal incomes valuations make it difficult to objectively appraise new investments. Faced with high inflation levels, of cost push in nature, the property asset class has smuggled to live to its inflation hedging attribute,” she said
Bema said the development submarket has been the most affected over the trading period as construction costs remain relatively higher than corresponding market values but expressed optimism that despite the shortcomings, the property market still presents viable opportunities in line with future corporate occupier demand.
During the review period, revenue increased by 80% in the 15 months under review to $61 million attributable to periodic rent reviews and increased occupancy from 83% to 79% due to increases in property expenses.
The Group implemented several property maintenance projects to improve and maintain the quality of space to attract new tenants as well as ensuring tenant retention.
“Operating profits increased by 62% from $185 million to $300 million. The group’s operating profit margin however decreased from 59% to 53% due to the increase in property and administration expenses.
“Notwithstanding the macro-economic challenges, collections percentage improved from 90% in September 2020 to 94% as at December 2021.The collections were improved through sustained credit risk assessments on tenants on boarding and continuous engagements with sitting tenants,” she said.
During the review period the company bemoaned the fact that the local currency depreciated by 33% on the Reserve Bank of Zimbabwe (RBZ) foreign exchange market and by over 90% on the parallel market over the course of the reporting period saying this resulted in sustained cost pressures despite the easing of inflation from 659% per annum in September 2020 to 60,7% per annum in December 2021.