daniel chigunwe
Michael Tome
Business Writer
MASHONALAND Holdings posted a 15 percent revenue increase to US$3,6 million for the six months to June 2024 from the comparative period last year, with a profit after tax of US$2,4 million, representing a 72 percent improvement.
The group’s positive performance is attributed to enhanced revenue, a decrease in project expenses following the completion of the Mashview Gardens project, and a capital gain on investment property of US$1 million.
Completion and handing over the Mashview Gardens cluster housing development saw the group earning US$542 227 in revenue from the project thereby contributing to the revenue performance for the half-year period.
Generally Rental income contributed to the positive performance having improved from US$2,3 million in 2023 to US$2,7 million in June 2024, according to Engineer Grace Bema the Mashonaland Holdings Board Chairperson.
In the period under review, the group performed an open market valuation of its investment properties as at 30 June 2024 and the investment property portfolio was valued at US$85, 9 million compared to US$80, 7million in December 2023.
The asset base experienced growth as a result of property capital gains amounting to US$1 million. An additional US$4,2 million allocated towards ongoing development projects, further contributed to the increase in the asset base.
Meanwhile Eng Bema said performance of the local real estate sector continues to be adversely affected by low liquidity and persistent foreign currency shortages in the formal sectors of the economy.
The Board Chairperson said low liquidity is inhibiting the number of freehold property transactions being concluded in the market.
As a result of these challenges, sector players are now focusing on low to medium-scale investment projects that have the potential to offer better returns on investment, according to Eng Bema.
This comes as the sector is recording growth in voids, particularly in the Harare Central Business District (CBD) office segment which has been significantly affected by growing tenant preference for out-of-CBD space.
CBD is grappling with high void rates and declining demand as major corporations are now relocating to suburban areas, leading to increased vacancy rates and subdued activity in central business districts.
This trend has largely been driven by challenges that include traffic congestion, poor infrastructure, inadequate parking, high operational costs, and noise pollution which now characterise the CBD.
While the office segment is facing difficulties, the retail segment remains buoyant, showing signs of growth with an increasing number of tenants seeking space in strategic locations that offer visibility and access to ready markets.
Despite the increasing cost of production, the residential segment continues on a growth path, providing better investment opportunities for developers.
These developments come as Mash Holdings recently concluded and handed over 24 housing units at Mashview Gardens to the beneficial owners.
“The real estate market has been impacted by persisting foreign currency shortages in the formal sectors of the economy. Low liquidity has restricted the number of freehold property transactions concluded in the market. In the development space, to manage market risk, property developers have opted to implement low to medium scale investment projects which offer compelling returns,” said Engineer Bema.
The Group indicated that it remains focused on some strategic objectives with eyes mainly set on the completion of ongoing property development projects which form part of the Group’s portfolio diversification roadmap.
One such programme is the construction of Pomona Commercial Centre which has now reached 65 percent completion and is on course for delivery in the fourth quarter of the year.
The development concept consists of wholesaling and flexible warehousing with 14,000 square metres of lettable space. The anchor tenant has been secured and 60 percent of the development has been successfully pre-leased.
Furthermore, the Van Praagh Day Hospital Project has been completed and handed over to the tenant, with the development starting to earn rentals under a long-term lease from January 2024.
Bongani Ndlovu