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Enacy Mapakame Business Reporter
Despite the Covid-19 induced challenges on businesses, property firm Zimre Properties Investments (ZPI) recorded rental income growth of 27 percent to $24,21 million during the half year to June 30, 2020 compared to $19,05 million attained in the corresponding period last year.

According to ZPI, rental income was boosted by regular upward reviews and improved turnover rental on retail space.

“Notwithstanding the challenges, the portfolio performed well with rentals remaining resilient in the face of mounting pressure on rental rates,” said the group in a statement accompanying financial results for the period under review.

“Month-on-month rent collection averaged 100 percent for the period under review, a decent performance considering the challenging operating environment,” said ZPI.

Despite the regular reviews, the depreciating exchange rate and hyperinflation negatively affected portfolio incomes and hence fair values.

According to ZPI, investment properties were valued at $2,25 billion by independent valuers as at June 30, 2020, representing a 75 percent growth from December 2019.

However, in US dollar terms, the portfolio value declined reflective of the discount on portfolio rental income in US$ terms and the deteriorating exchange rate.

Profit for the half year of $946,67 million was realised compared to $580,67 million in the same period last year.

Total revenue for the half year declined by 29 percent to $27,06 million from $37,96 million achieved in the first half of 2019.

The pandemic paralysed performance of tourism related assets, student accommodation and project sales while it negatively affected office space. However, retail remained somewhat resilient and management’s view is that in the medium to long-term these assets will recover.

During the review period,  commercial real estate sales market has been dormant as investors are not prepared to sell in local currency. Sales on the market, albeit at a slow pace because of liquidity challenges, are mostly of residential properties.

As a result, sales went down 87 percent to $2,38 million, down from $18,13 million achieved in the previous half year.

“Projects income significantly declined during the half year mainly as a result of the Covid-19 induced lockdown which restricted marketing of the stands and movement of potential purchasers,” said ZPI.

Average portfolio vacancy rate marginally worsened to 23 percent from 22 percent over the review period.

Harare CBD office, Bulawayo CBD office and the Gweru industrial facility recorded the highest void rates.

Plans are underway to change the uses of some of its CBD properties, as the performance of that segment continues to weaken. Some of the indicated alternatives uses include student accommodation, boutique hotel and even residential apartments.

A general trend in the office space segment is that businesses and other organisations now prefer suburban office as there is less traffic congestion and no expensive municipal parking space, among other factors.

And the CBD office space segment is expected to take a further hit from the pandemic as work-from-home routines take hold.

“The company is pursuing possibilities of converting Harare CBD properties to alternative uses. The First Street and Nelson Mandela corner is the immediate target area,” said ZPI.