THE property sector has over the past five years experienced a severe strain to maintain value of property portfolios amidst serious shortages of foreign currency to replace and service equipment.
ZimRe Property Investments (ZPI) however believes in a hyperinflationary environment, their business revolves around their asset column as opposed to income column. For the group, “profit is made when you buy and not when you sell”.
Announcing their financial result for the year ending December 31 2008, ZPI this week said it foresees real growth in the sector that had been on a downward spiral over the years.
“With the all inclusive governmentÂ finally in place —— a national budget dollarised but balanced, a monetary policy regime that essentially liberalised exchange control with dividend and profits remittance decontrolled —— we see brighter prospects for real growth of the business,” said ZPI chairman Buzwani Mothobi said.
Mothobi said the property market will experience a time lag before it responds to real growth.
“For possibly the next six months, activity on the property market will remain slow as the market adjusts to the dollarisation and attempts to align with regional markets, depending on political and economic development in the country,” said Mothobi.
Due to the absence of inflation figures, the group announced their results in historical terms, which in a hyperinflationary environment does not give a clear picture of the company’s performance.
The figures are “meaningless” as they are also reported in local currency. The group does not compare the December 31 2008 figures with the previous period as they were reduced to nil after the Reserve Bank revalued the currency removing 13 zeros.
ZPI said the company experienced one of its worst operating periods during last year.
Their operating environment was marked by rapidly rising inflation which necessitated currency reforms in August, spiralling business and service costs, a crunching cash crisis for the greater part of the year, excessive regulation of prices and a distributing market-wide flight of both skilled and unskilled manpower.
“Coupled with this was the rapid decay in business ethics and what amounted to extortionist and predatory pricing structures for both goods and services across the economy,” Mothobi said.
ZPI said whilst costs escalated, particularly during the second half of the year when they tracked the US dollar on the parallel market exchange rates, rental income remained subdued in Zimbabwe dollars.
As a result, rentals continued to be sub-economic and trailed far behind comparatives.
The group said an eight year ambitions project blueprint for large scale commercial, industrial and residential developments which was in line with future outlook of the sector had been put in place.
A total of 136 low density residential stands in Parklands, Bulawayo were completed last year at an estimated cost of US$1,5 million.
The US$30 million Pabasa Industrial Park in Bluffhill, Harare, is said to be at an advanced stage on a 3,2 hectare to accommodate 36 factory shells.
The Rhodene residential development in Masvingo is said to be in progress and comprise of 300 low-density stands.
“To date all roads, water and sewer designs are complete and were approved by the City of Masvingo. An Environmental Impact Assessment commenced in early 2009 to complete the preliminary works for the project, essentially launching the project to take off,” ZimRe said.