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Enacy Mapakame Business Reporter

Financial services group, FBC Holdings Limited, says it will leverage on the property sector as one of its strategies to preserve value in a hyper-inflationary environment.

In unstable and economic turbulence, market watchers opine property is a store of value and wise investment option to hedge against inflation.

While the economy remains challenging due to foreign currency shortages, high inflation and a general erosion of incomes, management at FBCH remain upbeat strategies such as digitalisation, diversification of revenue streams will be the way to go and property remains one of the key strategies.

This is despite the sector has also been under pressure due to the obtaining economic challenges which saw net profit from property sales decrease by 51 percent to $5,5 million during the half year to June 30, 2020 compared to $11,2 million achieved for the same period last year.

“The sector’s potential has been slowed down by a number of factors, key among them, the general economic slowdown and lack of suitable funding. The real estate sector, however, remains a viable hedging option given the inflationary environment.

“FBC Holdings Limited has earmarked this sector as a strategic target in its quest to preserve value and enhance revenues,” group chairman Mr Herbert Nkala said in a statement accompanying the half year financial results.

Mr Nkala highlighted that activity remained largely confined to residential property development at the expense of commercial real estate as occupancy levels have dipped significantly.

During the half-year period, the group embarked on the Kuwadzana housing project despite a challenging economic environment. The Kuwadzana   project is expected to deliver 266 housing units.

The group however, acknowledges that funding remains a challenge as funds are largely short-term yet this sector requires patient and long-term funding.

The real estate sector has not been spared from the economic challenges obtaining in the country that have been worsened by the Covid-19 pandemic.

The commercial real estate in particular has been hardest hit in the past years as companies downsized operations or move to suburban areas leaving voids in CBD properties.

Meanwhile, the group reported a half year profit after tax of $1,6 billion which was 117 percent above the $742 million recorded during the same period in the prior year.

This came as the business continued to benefit from its diversified business model in addition to its strong risk management culture and the early adoption of digitalisation in spite of the unprecedented challenging environment ignited by the Covid-19 pandemic.