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group managed to increase rentals, the company said in a statement this week.
ZPI said it managed to implement rental increases to US$7 per square metre for office space, US$15/m2 for retail and US$2/m2 for industrial.
This was up from US$6,50/m2 for office, US$12/m2 for retail and US$1,50/m2 for industrial in the previous year.
Rental income contributed 77 percent to revenue while 21 percent came from project sales and the balance from ancillary items, such as finance and other income.
But the operating profits declined significantly by 13 percent to US$1,7 million.
The group attributed this to higher provisioning for doubtful debts, which went up from U$344 000 to US$583 664 due to problems with debtors.
Administration expenses also rose by 23 percent to US$1,7 million. In terms of portfolio performance, average rental collections improved from 77 percent to 90 percent, void levels moved up from 9 percent to 10,7 percent due to removal of non-performing tenants and strategic emptying of properties targeted for renovation.
Meanwhile, management told analysts on Monday that the dominance of rental income is not ideal and has indicated a strategic focus on projects in the outlook period.
Zimre property manager Mr Stephen Kapfunde said the company was looking to expand its projects portfolio because of the noted positive returns from previous investments.
“Projects will remain a strategic focus for Zimre, especially those with a relatively short cash cycle due to the lack of suitable long-tern debt financing,” he said.
“We are looking to acquire significant land banks in Harare for project development.”
Most of the residential projects that the company has been developing have been outside the capital, however, this is set to change in the outlook period.
Zimre property managing director Mr Edson Muvingi said one of their key projects in Harare this year, the Adyllin cluster project in the Westgate area, awaits approval from the Harare City Council.
“We are finalising the necessary statutory processes for a sizeable cluster development around the Westgate area, which will consist of 80 units that we are expecting to sell at an average price of US$80 000 per unit.
“At least three institutions have already indicated interest in taking up the units wholesale,” he said.
The project is expected to start in May. The company’s projects in Masvingo (Zimre Park Masvingo, formerly Rhodene Extension) and Bulawayo (Parkland Extension) have reflected significant returns.
Zimre Park Masvingo, which was completed at a total cost of US$4 million has seen a total of 65 stands (out of 124 stands in the first and second phases of the project) with a
realisable value of US$1,22 million being sold.
With phases three and four yet to be sold, the entire project is expected to earn US$7,5 million.
At the same time, phased disposal of stands in the Parklands Extension project, which has a realisable value of US$1,7 million is also progressing well.
The selling price for stands in this project has increased from the initial US$8 per square metre to US$15 currently.
Management expects that debt financing and mortgage lending for completed projects will remain critical to the overall success of future property developments.
Despite the somewhat depressed performance, ZPI has a substantial asset base, indicating extensive potential to perform once the global and local economic dynamics come right.
Online Reporter