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Conrad Mwanawashe and Tinashe Makichi
LISTED property concern Zimre Property Investments plans to restructure its portfolio with a bias towards office parks and residential presence and to dispose of properties located in the central business district.

ZPI managing director Mr Edson Muvingi said the rapid informalisation of the CBD “irritates” corporate tenants who are moving out in droves and this has necessitated the decision to hive off properties in the area.

“We have very nice buildings in very wrong places,” Mr Muvingi told the company’s analysts briefing for the full year to December yesterday.

ZPI owns the Zimre Centre located at corner Leopold Takawira Street and Kwame Nkrumah Avenue, Harare among other notable properties.

Mr Muvingi said with the rise of the informal economy in the CBD many tenants have stormed out of town preferring office parks.

“We are in negotiations with potential purchasers for our properties in the CBD because with the rise of the informal economy in the city centre many tenants have opted out of town. Such a move has somehow left us out of business. We then reached a position that disposing some of our properties will be a good move.

“With the rise of the informal economy, demand for real estate products declined and the market experienced a significant increase in voids and debtors,” said Mr Muvingi.

Due to the prevailing liquidity environment, tenants are failing to pay current rental rates and re-negotiating existing lease agreements. This has resulted in declining revenues as well as the average rental rates.

ZPI total revenue for the year to December 2014 was down 15 percent to $5,70 million from $6,67 million achieved in 2013.

Rental income for the period went down to $3,62 million from $3,87 million in 2013, a seven percent drop.

Projects income for the year recorded a 26 percent decline to $2,03 million down from $2,76 million achieved in the prior year.

Due to subdued revenue performance, operating profit was $1,10 million, four percent lower than $1,96 million achieved in the previous year.

Total administration costs increased to $2,95 million compared to $2,55 million in the previous year which is a 15 percent increase.

On the Rhodene project in Masvingo, the MD said the disposal of stands is progressing well.

He said the company expects to see an increase in uptake following the recent electrification of Phase one.

To date 220 stands of the project at a value of $4 million have been sold representing approximately 58 percent of the project. At current prices the project has an estimated total market value of $6,96 million.

On the Tynwald project, Mr Muvingi said uptake has been good and all the stands put up for sale have been sold.

“What remains are few institutional stands and those reserved for further development. Registration of title deeds to the stands is in progress with the first purchasers already having been issued with title.

“Several houses have been completed and the project is quickly becoming an established suburb,” said Mr Muvingi.

He said the Zimre Park Extension project was supposed to commence in October last year and has been delayed by regulatory approvals. The project located some 20 kilometres east of Harare CBD comprises 238 residential stands averaging 600 to 800 square meters size.

Capital value of properties for the company was negatively affected as valuations were largely based on capitalisation of net income receivable.

Portfolio voids went up 19 percent for the year compared to 14 percent in 2013. There were significant downward rent reviews which began in 2013.

As a result average portfolio rentals were $6,59 per square meter down from $9,16 of the prior year.

Mr Muvingi said an increase in voluntary lease surrenders was experienced contributing to the rise in both portfolio voids and debtors.

Investment properties were valued at $50,3 million for the year compared to $50,8million in 2013, a decline of 0,9 percent.