Sundaymail Editor
Enacy Mapakame
The Covid- 19 pandemic accelerated drastic changes in the economy and property firms were not spared. Businesses adopted remote working in line with lockdown regulations causing a decline in demand for office space especially in the central business districts (CBD). Rental incomes went down as voids increased.
Financial results from listed property firms have shown depressed demand for commercial CBD space in 2020 and 2021 while demand remained solid for residential, retail, industrial warehouse and office parks as well as suburban offices.
As the year 2021 opened under hard lockdown measures triggered by the steep surge in Covid-19 cases, the general business environment also remained challenging, which had a negative impact on tenant cash flows, also affecting collection rate.
Due to the challenging environment, commercial development activity also remained limited during the first half of 2021 as a result of the supply demand imbalances, according to property firm First Mutual Properties (FMP).
Rawson Properties Zimbabwe indicated the majority of development activity remained in the industrial or retail warehousing sectors, while limited owner occupied office park style buildings are ongoing.
With these uncertainties property firms were also forced to re-look at their portfolios for them to provide a relevant product in line with economic environment.
As such, they are increasing their focus on portfolio diversification to hedge against economic uncertainties and reduce concentration risks with attention being given to warehousing, hospitality, retail, residential as well as healthcare facilities that have experienced stable demand.
For Mashonaland Holdings Limited, the group has indicated they would maintain focus on portfolio optimisation and diversification to offset the capital losses associated with commercial central business district (CBD) concentration.
“The group’s strategy is premised on portfolio diversification to reduce the CBD office concentration while increasing investments in the emerging sectors of the market, which include healthcare, flexible warehousing and logistics, hospitality, retail and office park segments,” said group chairman Engineer Grace Bema in an update for the 15 months to December 31, 2021.
During the 15 months under review, the group’s investment property portfolio was valued at $13,9 billion, which represented a capital loss of 11 percent compared to valuation performed as at September 30, 2020.
“The capital loss reflects the current portfolio’s CBD concentration.
”The Harare CBD sector has been negatively impacted by a reduction in space demand due to the worsening urban problems such as deteriorating building infrastructure, street trading, congestion, noise pollution and the attendant high building operating costs among others,” she said.
She said the firm would also pay attention to office parks, logistics, warehousing, retail and healthcare segments in order to diversify risk.
Mashonaland is already working on various residential projects in Harare’s Bluffhill and Ruwa areas in addition to a healthcare facility in Milton Park, in which the group will develop and lease a hospital at one of its properties.
Market watchers have guided segments like residential and warehousing to continue performing well due to firm demand.
”The anticipated growth in agriculture production as well as mining is expected to buoy demand for warehousing facilities while the retail segment is already registering firm demand supported mainly by small to medium enterprises.
Another listed property firm, FMP has indicated an array of construction projects being undertaken from commercial, retail to residential and industrial warehousing facilities as they increase focus on their portfolio diversification.
The group is working on the expansion of the Arundel Office Park and has also commenced the development of a retail warehousing facility in Mbare, Harare.
This is in addition to the acquisition of a 4,3 hectares piece of land for residential development in Zvishavane as well as a US$390 000 worth of retail site in Chivhu.
The residential sector development activity has remained strong, and is expected to continue on a growth trajectory mainly supported by the informal sector of the economy and the diaspora community.
Online Reporter