Mashold posts US$1,9m profit

recorded in 2010.
Operating profit for the group showed a 39 percent positive variance to US$2,5 million from US$1,8 recorded in the comparable period last year.

Group chairman, Mr Elias Mushayakarara said management was aware of uncertainties in the micro-economic environment and expects the future rent negotiations to be largely reflective of the operating environment.
During the period under review rentals were renegotiated to market levels.
“The macro-economic environment remained stable during the period under review.

“However, the persistent liquidity challenges coupled with lack of robust economic growth drivers slowed business growth,’ said Mr Mushayakarara.
The group’s average portfolio yield remained at 9 percent.
Office, retail and specialised health sectors posted a yield of 9 percent while the industrial and residential sectors achieved a yield of 11 percent and 7 percent respectively.

Vacancy rate for the group increased from 7 percent to 8 percent as tenants gave up space citing increased total costs of occupation.
The group also cited high costs of utilities, which resulted in a sharp rise in occupancy costs during the period under review.
Zimbabwe’s property market has been affected by tight liquidity on the market that has seen rentals per square metre narrowing.
This has forced some firms to consider diversifying they revenue streams.

Due to low disposable tenants are struggling to pay competitive rents with default risks being a major threat.
Largely, the property market as much as the construction sectors is affected by lack of access to capital, high costs of mortgage finance with short term repayment periods and land availability and increasing prices.

High costs of servicing and construction, investor confidence, absence of partnerships between financiers and developers and no significant supply of new stock for over 10 years continue to haunt the sector.

The rental market has seen rentals stabilising further since the beginning of the year. This is largely a result of most tenants having reached their limits in terms of ability to pay and since 2009, rent review periods have increasingly been getting longer and longer.
As a result, fewer leases are reverting to the market in any particular period.
Going forward, Mashold is planning for two property developments, an office park in Avondale and a residential housing project in Westgate.

The projects would be funded from the company’s cashflow and from borrowings.
Mr Mushayakarara said in addition to a number of development projects that are at planning stages, the company will continue to actively seek value-creating opportunities on the local property market.
“Growth prospects will be sought in both green and brownfields projects,” he said.