Financial Gazette (Harare)
Victoria Muringayi
10 July 2009
Harare — DAWN Properties Lim-ited plans to construct 264 flats in Marlborough in Harare and lease part of the 280 hectare land bank to niche farmers as the property concern considers property development under the current high-cost environment unviable.
A greater proportion of the land - all of which was initially earmarked for residential and commercial development - will be let out for urban farming activities.
The flat construction project, however, faces funding constraints, particularly the procurement of building materials, since building societies in the country are only providing short-term funding lasting between three to six months at present.
Property development by nature requires long-term capital commitments. "Unfortunately, the cost of construction is significantly higher than the market value of the development, mainly driven by high cost of building materials," the chairman of Dawn properties Farai Rwodzi said in a statement.
"Consequently, our board has decided to lease the land to niche farmers as an interim measure."
Rwodzi added that the company had identified a potential project partner and is now in the process of negotiating the terms of the deal, part of which, would clear the way for Dawn Properties to snap up a stake in that firm.
"We have identified farmers to do the farming. We create property and get rentals every month. When farmers harvest, we negotiate for a certain percentage of the produce," the company's finance executive Bright Magura said.
During the full-year period to March 31, Dawn Properties incur-red an operating loss of US$303 580 largely due to depressed management fees from hotels resulting from low occupancies.
Hotel operations suffered from depressed guest arrivals, stringent foreign exchange regulations and price controls for the better part of the year under review.
Although management consultancy incre-ased during the period under review compared to the year before, the work was executed at thin margins.
Profit before tax stood at US$769 900 and it came mainly from the disposal of part of the residential land bank the group serviced in 2008.
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