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Old Mutual splashes on real estate

BY MISHMA CHAKANYUKA

Old Mutual Zimbabwe Limited (OMZL) has come up with projects to hedge investments against escalating inflation, which will see the financial services firm putting money into real estate in resort areas across the country.

The firm’s CEO Jonas Mushosho told Standardbusiness that the company was focusing on the real estate sector to cushion itself against resurgent inflation.

“Given the high levels of inflation in this country, it is important that we focus on investing in real estate because real assets have greater capacity to cushion our customers
against the loss of value or minimise the loss of value,” he said.

“Having gone through hyperinflation and customers having lost value, less than 10 years later, to have a second loss of value is very hard for customers.”

Zimbabwe’s inflation rate skyrocketed to 175,66% in June, stoking fears of a repeat of the 2008 hyperinflationary era where the country broke world records.

The period saw Zimbabweans losing their entire savings even as financial services companies tried to invest in real estate to protect their balance sheets.

Mushosho said Old Mutual had learnt its lessons from that period.

“As the largest financial services group, we believe we have a responsibility towards our customers, to do as much as possible and within our power to minimise that loss of value, but I
underline that in a hyperinflationary environment it is never totally possible to protect and foolproof against the loss of value,” he added.

Although the group did not divulge how much it sought to spend on new projects, the company’s cash and cash equivalents recorded at the end of the half year which closed on June 30,
2019 was ZWL$390,4 million from ZWL$117,05 million in 2018.

Old Mutual said it acquired two pieces of land in Ngezi and Victoria Falls where it intends to construct a hospital, industrial park and hotels.

“We acquired two pieces of land in Ngezi, one is where we are going to construct an industrial park and the other one we are going to construct a hospital,” the company said.

“The tenanting of these properties is in line with the economic activity in that area, which is basically mining.

“Then in Victoria Falls we acquired two pieces of land as well and our target is to construct tourism hospitality assets there.

“We are still going through various processes in line with the other developments that are happening in Victoria Falls before we can start on the project.”

The government’s decision to end a decade of dollarisation in June this year has pushed prices through the roof.

Inflation has since emerged as one of the biggest challenges to the business sector in the country.

Meanwhile, Old Mutual said its housing projects in Bulawayo were nearly complete with 1 092 stands having been sold to date.

“So we did two projects in Bulawayo, one was in Khumbula South and the other one was in Nkulumane and we have largely completed,” Mushosho said.

“We have serviced land there and we have sold 1 092 stands and a lot of the construction has already started.

“We will wait until we complete Khumbula South and Nkulumane before we go for the next lot of houses.”

Old Mutual’s profit after tax for the financial year ending June 31 went up to ZWL$452,54 million from ZWL$53,91 million recorded in the prior year.

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