18 April 2019

Zimbabwe: First Mutual Occupancy Levels Rise

First Mutual Properties (FMP) occupancy levels for full-year 2018 increased 5% to 76% in 2018 from 70% in 2017, but was 2,5% below target as overall industry experienced subdued space absorption with CBD office and industrial sectors struggling to attract occupiers.

The company was targeting 78% occupancy levels buoyed by its office park in Harare's Arundel Park and industrial units as the firm banks on its diversified portfolio which pushed volumes to 95,45 in FY18 from 80,6% in FY17.

FMP's CBD retail fell 11,5% to 80, 07 from 89,33% in 2017, while urban retail occupancies remained stagnant at 99,88 %, but FMP managing director Chris Manyowa told an analyst briefing that the property market is expected to remain an occupier's market in the short term due to the excessive supply of space.

Manyowa said in 2019, active asset management is required to sustain and grow portfolio value while capital recycling and reallocation of capital to areas with sustainable demand is key.

During the period revenues increased 9% to US$8 million from US$7,4 million while net property income fell 2% to US$6 million from US$6,1 million in 2017.

Profit increased 140% to US$4 million from US$1,6 million in 2017 as performance across its units remains strong.

Manyowa said the company will also prioritise provision of new product offering to reposition and diversify its portfolio, while cost management and customer-centric approach will ensure sustainable earnings," he said.

For the sector, Manyowa said, rental growth is expected in the medium to long term as property investors strive to preserve the value of property assets and cash flows. However, development activity in the commercial sector was expected to remain subdued as demand for new space remains limited.

Development activity in the residential sector is expected to remain strong.

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