Listed property firm, Mashonaland Holdings (MashHold) has reached the half way stage in the development of its mega project, the Pomona Wholesale Centre, ahead of targeted completion during the fourth quarter of this financial year.
The development concept of the project, which started in July last year, consists of wholesaling and flexible warehousing with 14 000 square-metre lettable space.
Company secretary Egnes Madhaka indicated that 46 percent of the project has been completed with installation of roof structural steel on the main block now in progress.
The property firm has already secured its anchor tenant and 60 percent of the development has been pre-leased.
The group's other project, the Milton Park Hospital, was completed in the fourth quarter of the past financial year and the development has been handed over to the tenant under a long-term lease with effect from January 2024.
During the fourth quarter last year, MashHold completed the construction of housing units under all phases at Mashview Gardens while it finished site clearance in the first quarter of 2024. Final handover inspections are in progress to enable project handover.
Meanwhile, revenue for the first quarter to March 31, 2024 increased by 30 percent driven by an increase in portfolio lettable space.
"The group added the Milton Park Day hospital into the investment property portfolio following completion and handover of the development in Q4 2023. Revenue performance was also supported by the launch of an SME retail facility at Chiyedza House," said Ms Madhaka.
During the review period, the company earned 74 percent of its rental income in US dollars, a development that allowed the company to preserve value from its leases.
Operating profit increased by 55 percent driven by the revenue growth.
Investment property increased by 2 percent due to capital expenditure incurred on the ongoing Pomona Commercial Centre development project.
During the review period, occupancy remained flat at 87 percent while rental yields improved to 8,5 percent from 8 percent.
Operating profit margin improved to 50 percent from 42 percent during the same quarter in the prior year.
The property sector was not spared from the challenges experienced during the quarter under review characterised by uncertainties. The first quarter of the year was characterised by market anticipation of monetary policy changes amidst inflationary pressures and Zimbabwe dollar currency depreciation.
In its 2024 monetary policy announcement, the Reserve Bank of Zimbabwe (RBZ) introduced a new currency and several measures to support its use. Interest rates have subsequently been reduced in view of a lower inflation outlook.
"The market however continues to witness foreign currency shortages worsened by the low output from the agricultural sector.
"These challenges have led to market uncertainty over the medium to long term effectiveness of the new monetary policy measures," said Ms Madhaka.
In terms of the real estate sector, it remains constrained by persisting currency volatility amid other macro-economic challenges, which has had a bearing on the availability and pricing of real estate development finance.
The occupier sub-market has witnessed constant growth in voids particularly in the CBD office segment which has been affected by migration of corporate tenants to the northern suburbs of Harare among other locations.
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The retail and industrial segments continue to show signs of growth with tenants looking for space in strategic locations which offer visibility and access to markets.
The development sub-market continues to witness growth in property investments in the retail and warehousing market segments supported by positive space absorption rates and prime yields.
For MashHold remains focused and confident on implementing its portfolio diversification strategy which will enable the group to deliver shareholder value.
"The group will continue to put measures in place to manage the risk associated with new developments while also enhancing tenant experience in order to increase portfolio occupancy," said Ms Madhaka.
