ZPI sees profitability in Tynwald project

ZIMRE Property Investments (ZPI) says work on Tynwald high-density project is expected to commence mid-November at a total project cost of US$2 million, MD Edson Muvingi said.

Report by Staff Writer

Muvingi told guests at the official opening of their new sales office the project would have 285 stands with an average size of 200 square metres.

He said regulatory approvals had already been obtained for the project, which is situated close to the Kuwadzana traffic circle.
The group had already gone to tender, he noted.

Muvingi said 165 of the 285 stands had already been subscribed, adding high-density areas were generally high-yielding.

He also said a number of banks and building societies had also expressed interest in the project. Of the 338 stands measuring 2 000 square metres at ZimRe Park Masvingo, 124 had been sold.

The current selling price inclusive of VAT is US$10,35 per square metre.

Muvingi said uptake had been slow, but the group was not uncomfortable with that as the sales were giving them significant cash flows.

Parklands Bulawayo, which the group started before dollarisation, has 46 stands yet to be sold from 156. The average size of the stands are 1 000 square metres with a current selling price of US$18 per square metre.

On the new offices, Muvingi said the move had been necessitated by the need to have a place which was self-marketing.

He said the move was a significant improvement from the previous offices which were in the wrong side of town.

In the six months to June, ZPI reported a 52% jump in revenue from US$1,9 million in 2011 to US$2,81 million in 2012 driven by business and office rental segment,which contributed 66% of the total revenue.

The company recorded an operating profit of US$1,4 million, a 75% growth from US$0,84 million over the same period in the prior year and a profit before tax of US$1,44 million compared to US$0,70 million for the same period last year, a 105% increase.

The group lamented the inability of the property sector to access long-term debt and the lack of effective demand for new space, saying this had the effect of curtailing new large-scale property developments confining most projects to refurbishments and small re-development.

“The tight liquidity situation continues to affect the performance of the property company especially on the disposal of developed properties. Management remains vigilant in collecting rental income reflected by the increasing collection ratio of 94% on average in the half year period,” the group said.

“Rental yields slightly declined from 8% to 7% due to increases in voids in the period under review and we expect the voids to continue as the ZPI restructures its property portfolio.”

Analysts said given the company has a limit in terms of price adjustments and slow uptake of serviced properties especially in Masvingo, it can weather the fluid economic environment as it now has a very lean structure and are aggressive in rental collection.