MASHONALAND Holdings Ltd (Masholds) intends to transform it-self into a dedicated property investment and development company using its Zimbabwe Stock Exchange (ZSE) list
ing, says chairman Godfrey Gomwe.
The move comes as local firms begin to invest in the lucrative property market sending prices sky high as they try to hedge against spiraling inflation.
Zimbabwe’s inflationpresently stands at 300,1% but economists predict it will continue soaring and bash the 500% mark by year-end.
Gomwe told shareholders on March 31 that the new initiative would offer investors an opportunity to make sound returns as the property sector was paying high dividends.
The chairman, who sits on several company boards, has seen loss-making Masholds turn its fortunes around.
The company’s turnover for the six months ended March 31, at $15,1 million, was generated from rentals received.
Masholds’ operating loss from continuing operations of some $27 million was reduced to $12,5 million. The company has a market value of $7,8 billion on the ZSE.
“The outlook remains difficult under current economic conditions,” Gomwe said in his statement accompanying the results. “However, the board feels optimistic about the long-term prospects for the company if suitable properties can be acquired. Property investment portfoliosgenerally represent a sound hedge against inflation and a new initiative in this regard would offer investors an opportunity to make sound returns.”
He said only the Masholds properties division continued to operate, the rentals from which along with investment interest, provided current revenues for the company.
“These are insufficient for long-term sustainability and the board has decided, in principle, to actively pursue the transformation of Mashonaland Holdings into a dedicated property investment and development company, using its listing on the ZSE to this end. Considerable interest has been shown in this concept and shareholders will be advised of progress in due course,” Gomwe said.
Property markets last year registered high growth levels with residential housing prices increasing more than three-fold, largely due to demand-push effects of depreciated parallel market rates. The rates saw most Zimbabwean nationals working abroad seeking to acquire properties locally.
Analysts said contributing to this growth were the portfolio-rebalancing effects of high inflation, as economic agents sought to protect their wealth from negative real returns in money markets by ploughing their savings into the “self-indexing” properties market.
In an interview First Mutual Life Assurance Society of Zimbabwe chief executive officer Norman Sachikonye said his company was also eyeing the property sector to increase shareholder funds because the sector is lucrative.
First Mutual intends to list on the ZSE during the third quarter of this year.
“One of our objectives when we demutualise is to increase shareholder value by venturing into various sectors, which bring in money such as the property market,” said Sachikonye. “This should help us retain shareholder confidence and value.”
He said First Mutual would embark on a capital raising exercise before listing.
The society currently has assets valued at more than $50 billion – $17 billion being in prestigious office properties such as Arundel Office Park.
Zimsun Leisure group chief executive officer Shingi Munyeza’s company has issued a cautionary statement because it also intends to venture into properties separately from its core business of the hospitality industry.
In an interview Munyeza said this was the international way of doing business as property was considered a safe way to increase shareholder confidence and value.
“We have some of the best properties in the country,” he said. “We intend to enter the real estate business and manage our properties separately from the leisure business. We want to grow our property portfolio.”
Munyeza said for many years the value of the real estate owned by Zimsun had not been reflected in the company’s market value.
Zimsun is currently valued at $36,6 billion on the ZSE.
Property agents con-tacted this week meanwhile said the market was however “very dead” as far as the residential market was concerned.
A spokesman for Red Fern and Mullet (Pvt) Ltd said: “Everything we get we can now sell. It is discouraging because we are not getting real value for money as far as the exchange rate is concerned. Sellers want more money.”
Seeff Zimbabwe (Pvt) Ltd agent Nick Masaya said the market was quiet and slow.
“Zimbabwean expatriates are still our major customers because of the parallel market. I can say 70% of our sales are to Zimbabweans living abroad,” he said.