Difficult macro-economic environment weighs on First Mutual Properties’ profitability

  • Profit for Q3 2020 was down 86.4% compared to Q3 2019
  • Revenue was 11.3% down
  • This was due to price volatility, inflation and other unfriendly macro-economic aspects

Harare – Zimbabwe Stock Exchange (ZSE) listed real estate, property development and management company, First Mutual Properties Limited has posted profits reduced by 86.4% and revenue reduced by 11.3% for the quarter ended 30 September 2020 compared to the same period in the prior year mainly as a result of macro-economic conditions weighing down on business operations.

In monetary terms, profit for the period under review in inflation adjusted terms was ZWL105.4 million compared to ZWL775.1 million recorded in the comparative period in 2019 while revenue was ZWL91.5 million against ZWL103 million in the prior year.

On a positive note, overall occupancy grew by 5% from 83% in Q3 2019 to 88% in Q3 2020.

In a statement accompanying the trading update, the company said business was largely affected by the macro economic climate in the nation which is heavily affecting demand for rental space.

“The property market fundamentals remained depressed due to the difficult macro-economic climate and low business confidence, the market remains susceptible to low demand for rental space, increasing vacancy levels and increasing defaults.”

At the end of the period under review, year on year inflation stood at 659% while the local currency remained stable against the United States Dollar, the rate recorded at USD1: ZWL81.50.

The company also lamented the seemingly developing trend of low uptake in commercial property especially in the CBD as compared to residential property which has led other real estate companies like ZimRe Property Investments into initiatives to repurpose their office and commercial spaces to other uses like student accommodation, boutique hotels and residential apartments.

“Transactions within the property market continue to be concentrated around the residential sector. Commercial transaction activity remains subdued due to constrained local currency liquidity.”

Furthermore, the company’s development operations have also been choked by price volatility and weak demand for space.

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