The property market woes have been worsened by the Covid-19pandemic which has hit collections and roImage from The property market woes have been worsened by the Covid-19pandemic which has hit collections and ro

The property market woes have been worsened by the Covid-19pandemic which has hit collections and rocked the boat with thefuture remaining uncertain for the industry, players say Currently suffering from a currency crisis that has madepricing of the product difficult and hit hard on tenants’ pockets, thesector has not been spared by the economic slowdown and growinginformalisation Pressure is mounting on players to diversify income streams.The Covid-19 pandemic saw some businesses deemed to be nonessential shutting down and the essential ones operating at below capacity, adding to the woes of the property sector Zimbabwe Stock Exchangelisted property firm MashonalandHoldings said the lockdown,introduced effective March 30 and was last week extended indefinitelywith periodic reviews prevented over 70% of the group’s tenantsfrom being physically present in the leased premises as they wereclassified non-essential

Mashonaland Holdings recorded a drop in collection levels for April2020, which closed at 70% down from an average of 95%.“The group has also engaged all its service providers and reduced levelsof service in line with requirements, without compromising quality, toreduce building operating costs during these difficult times,” Mashonaland Holdings said in a trading update for the second quarter ended March 31, adding the forecast assessment of solvency for the quarter showed reducedinsolvency risk under the worst-case scenario To adapt, Mashonaland Holdings commenced with its businesscontinuity plan, with all essential services working offsite.It said the operating environment is likely to remain challenging in theshort to medium-term “In light of the surging inflation, the company will continue toexplore opportunities to preserve shareholder value primarily throughthe implementation of preleased developments and revitalisation ofexisting buildings to ensure futurefit,” the group “Despite the development sub-market becoming riskier, the company will put in place measures to enable implementation of some of its construction projects.”In the period under review, Mashonaland Holding’s rental income went up 40% to ZWL$20.1m compared to the same period last year while occupancylevel grew 3% to 79.2%

Another listed property company First Mutual Properties (FMP) warned demand for real estate products will be hit by an uncertain economic outlook due to climate change, power supply, foreign currency challenges, low productive sector capacity utilisation and the further potential adverse effects of Covid-19 “These factors have ramifications for the country’s recovery prospectsand will affect demand for various real estate products,” said FMP inits annual results FMP said it will continue to pursue and implement various strategies to preserve shareholder value and position the group for growth with a focus in the short term on driving rental growth, managing operating and maintenance costs to ensure the going concern and sustainability of the property portfolio “With changing local and global and real estate trends, the groupwill target investment opportunities in non-traditional real estateasset classes and provide property services to third parties to furtherdiversify income streams,” FMP said, adding the group will alsofocus on developing new products and tailoring existing stock to thechanging requirements

While FMP believes the depth and breadth of the economic impactof Covid-19 on the real estate sector remains uncertain, it acknowledgesthat long term behavioural changes will define market direction, asimmediate reactions and changes may not be long term “The ability to ensure real estate products are agile and adaptableis critical The focus for property investors will be on determiningthe right balance between capital preservation and furtherstrengthening the competitive differentiation of existing products,”FMP said “Covid-19 has accelerated the need to diversify revenue streams,pursuing digital strategies, and focusing on enhancing tenantexperience with owners and operators collaborating to protecttheir ecosystem to remain a going concern.”

Source: Business Times

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Source: Businesstimes

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