Property firm, Mashonaland Holdings Limited, says it will continue its thrust on diversification and growth with several property development projects ready to take off as soon as lockdown is lifted.
The group has some projects lined up for development for instance, the Bluff Hill cluster housing development, Charter House and Ruwa projects.
Chairman Mr Ron Mutandagayi, acknowledged the challenging economic environment as not conducive for the sector but indicated the group will continue with its low risk projects.
In line with this, the Bluff Hill cluster housing project is expected to commence soon after lockdown as major building materials have already been secured.
“Whilst the property development sub-market remains unsupportive of new stock creation, the group is proceeding with some of its low risk projects.
“The group will continue to scout for strategic land banks to support its diversification and growth thrust,” said Mr Mutandagayi in a statement accompanying the group’ financials for the half year to March 31, 2020.
According to the group, the Charter House reconfiguration designs are complete. This project will see the building being converted into an upmarket boutique hotel, a move that fits well with the new property market dynamics. CBD properties are continuing to bear the brunt of the economic downturn as tenants scale down operations, close or move to cheaper premises or office parks to avoid the congestion in the CBD.
As such, experts in the property market have also been suggesting new uses or multiple uses of properties in the CBD, which will cut on voids.
“Feasibility studies are ongoing to determine the viability of a co-working hub in order to optimise the group’s CBD portfolio,” said Mutandagayi.
Mash Holdings also secured a mixed use development permit for its 42 hectare site in Ruwa.
The property sector as a whole has suffered the economic challenges currently obtaining in the country and worsened by the Covid-19 pandemic.
In addition to this, policy inconsistencies have also added weight to the property market’s distortions.
During the half year to March 31, 2020, the group performed an internal full scope valuation of its properties. According to the group a 40 percent increase in investment property value to $1,8 billion from $1,2 billion as of September 30, 2019 reflects the suppressed rental income growth against inflation, and the worsening real estate investment risks. A comparative valuation performed in USD resulted in a 12 percent decline in the portfolio value to US$77,8 million from US$88,1 million as at September 30, 2019.
Meanwhile, revenue for the half year rose 44 percent to $30,1 million, an increase that reflects the positive impact of rental reviews. The group implemented regular rent reviews in order to hedge against erosion of rental value due to inflation.
Net property income came in at $25,1 million representing a 45 percent growth on prior year comparable period.
At $4,98 million, property expenses were 36 percent above prior year comparable period reflective of increase in voids related costs, insurance costs and expenditure on repairs and maintenance work compared to 2019.