BY MISHMA CHAKANYUKA
PROPERTY investment firm, Mashonaland Holdings Limited (MHL), says the property market is likely to remain depressed in the short-to-medium term due to economic challenges.
MHL in its trading update for its third quarter ended June 2019, said the operating environment during the quarter continued to be challenging; characterised by rising inflation, depreciating exchange rate, shortages of electricity, fuel and foreign currency.
“The property market is likely to remain depressed in the short-to-medium term. The group will continue with its strategic positioning thrust through scouting and acquisition of strategic landbanks, and preserve value. The challenging operating environment may delay the timing of development projects that the group has in the pipeline,” MHLsaid in a statement accompanying its results.
“Cost management measures will be employed for all projects underway. The company will, however, continue looking for strategies to ensure that projects
commenced will be delivered as planned.”
In light of these challenges, the property investment firm reviewed rentals for the period May 2019 to July 2019, which achieved a weighted average increase in
rentals of approximately 62% from the previous rent reviews of 50%.
“In line with market practice, the group is reviewing rentals on a quarterly basis,” MHL said.
Despite economic challenges, revenue increased by 40% to $4,9 million in the period under review from $3,5 million in the comparative 2018 time-frame.
Profit before tax, during the same period, also improved by 623% to $9,4 million from 2018’s comparative of $1,3 million.
Occupancy levels in the quarter under review also improved to 77% from 73% recorded in the comparative 2018 period.
During the quarter under review, MHL leased additional retail and office space of approximately 600 square metres.
Property expenses declined by 64% to $400 000 in the third quarter, driven by the recovery of long outstanding tenant debtors. The decrease was from a 2018
comparative of $1,1 million.
MHL said as at June 30, 2019, more than $500 000 had been collected from long outstanding tenant debtors.
However, administrative expenses increased by 44% to $1,3 million from $900 000 recorded in 2018.
“The increase in administrative expenses reflects the impact of inflationary pressures on prices of goods and services consumed by the group. In line with
market practice, the group awarded a cost of living allowance to cushion staff during the third quarter,” MHL said.
MHL said it will revalue its investment property portfolio at year-end.