Zimre Holdings Limited (ZHL) says conversion of proceeds from sale of Zimre Centre in Harare towards construction of the Victoria Falls Sawanga Mall, will enhance revenue growth for the firm in the financial year 2019.
Conversion of Nicoz House in Bulawayo into student accommodation is also expected to boost the firm’s numbers going forward.
Its property subsidiary – ZPI – has already made a $6 million investment towards the shopping mall in a move to diversify income.
The mall is being financed largely from disposal of Zimre Centre in Harare, which was sold for $10,8 million
ZHL chief executive officer Stan Kudenga, told shareholders the insurance giant had a good start to the year 2018, but earnings that were lower than last year slowed down the property division among other factors.
“The property subsidiary, ZPI, experienced challenges in rentals income growth due to adverse market conditions, which resulted in high voids and rental collection challenges.
“However, the conversion of the proceeds from disposal (of Zimre Centre) to construction of Sawanga Shopping Mall in Victoria Falls, as well as the conversion of Nicoz House in Bulawayo to students’ accommodation and other value adding initiatives are expected to enhance rental revenue growth in 2019,” he said.
ZPI managing director Edson Muvingi, said the mall whose completion is expected in January next year, is on course to meet its timelines with construction at 21 percent.
Total estimated cost for the shopping mall, which is also expected to change the face of the Victoria Falls town, is $13,5 million.
The mall will have over 5 000 square metres of retail space with 24 shops.
“Above $6 million has already been invested,” said Mr Muvingi in a trading update.
Meanwhile, rentals for the five months to May 2018 fell 28 percent to $844 000 compared to $1,168 million recorded in the same period last year as voids increased.
Commercial properties in Zimbabwe, especially in the central business districts have been affected by low occupancy levels as companies look for cheaper options while other tenants negotiate for downward review of rentals.
This has also been driven by the rapid informalisation of the economy, with more informal small to medium enterprises on the rise.
At $306 000, stands sales fell 61 percent compared to $787 000 achieved in the same period last year. Revenue for the period was 41 percent weaker to $1,176 million while total income retreated 42 percent to $1,262 million.
Disposal of the Zimre Centre also contributed to the subdued rental income performance.
Management, however, remain upbeat of the sector’s prospects going forward on the back of property portfolio diversification and restructuring to enhance rental income.