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Property Reporter
SHELTER Zimbabwe has so far serviced 700 stands out of the 1 500 Adelaide Park project, general manager Francis Mugandani has said. Mr Mugandani said the total cost of the project will amount to $31 million while revenue is expected to be approximately $40 million. “In total, the Adelaide Park project will have 2 800 stands ranging between 300 and 600 square metres,” said Mr Mugandani, adding that they expect to have completed the project in the next two to three years.

He also said selling of the stands also involve the mortgage type while corporates have also been keen on taking up some of the housing units.

“We have since delivered 85 housing units to Lafarge under the mortgage facility and we will be delivering another 300 to other companies under similar arrangements,” he said.

Mr Mugandani, however, said Shelter Zimbabwe and the property sector in general had been affected by the depressed economic environment that is seeing most customers defaulting on their instalments.

“We have since seen a high degree of default upwards of 15 percent on the back of job losses and non-payment of salaries,” said Mr Mugandani, adding that the formal sector which makes up the bulk of the clientele base has been the most affected.

Mr Mugandani also bemoaned the growing cost of providing fully serviced residential stands as there is now a lot of price undercutting within the sector.

“Quality is now being compromised and not prioritized and that affects demand for quality,” said Mr Mungandani, adding that the availability of poorly serviced stands has had a negative impact on the demand for quality.

“The other challenge we have is that financial institutions, our traditional providers of funding are also competing in the same space as us, making it difficult because they are more liquid and can get funding cheaper than us.

“This will affect the delivery process as well as the cost as we will then be forced to look for expensive money to finance the projects,” said Mugandani.

He added that this was at a time the industry is facing pricing challenges as reflected in the inflation figures.

Mr Mugandani also said players in the industry might end up resorting to cash pricing as they were losing out on payment terms.

“Our customers have been paying on installment basis, but the value of money has been falling and at the end of the term, what we charge today might not be enough to cover our costs.

“For instance, some of our suppliers are now charging a transfer premium upwards of 20 percent when we want to purchase materials and equipment to service the stands and this erodes our margins,” he said.