FIRST Mutual Holdings’ property unit, Pearl Properties, will not rush into its proposed low cost housing scheme, but will focus on its high- returns mixed property development at Golden Stairs in Mt Pleasant, MD Francis Nyambiri says.
At its 2013 half year results presentation, Pearl hinted on a huge low cost housing scheme, but Nyambiri last week told businessdigest the company will channel all resources towards the US$100 million development works at its new land parcel in Mt Pleasant. He said low cost housing schemes are not that profitable in the current environment.
“Under the current environment low cost housing is not that good because you need a situation where the local authorities provides supporting infrastructure like roads, sewer and so on or when you have access to cheap funding as in the days of World Bank funded projects in the 1980s. If that doesn’t happen then the houses are out of the reach of the low income earners,” said Nyambiri, adding property companies are torn between reducing their margins or making a killing on the low cost housing schemes.
A snap market survey shows 200 square meters (sqm) to 240sqm of developed low cost high density residential land is going for about US$10 000 or at least US$41,60/sqm.
Zimre property Investments late last year announced its 288 stands of 200sqm in Tynwald would be sold for US$10 000 each.
This is in line with Fidelity life’s Southview park project which also values its land at US$10 000 though it is paid in installments over a period of up to 10 years.
Old Mutual Zimbabwe, through CABS, late last year also unveiled a low cost housing scheme in Budiriro which has 3 100 stands of between 200 and 300sqm. The scheme builds a two roomed housing unit on the stand and is valued at between US$20 000 and US$30 000 over ten years depending on the size of the stand and type of unit built.
Nyambiri said Pearl acquired about 24 hacateres of prime land from a private company in Mt Pleasant at a cost of US$9,6 million. The land was rezoned by city council to commercial.
Pearl’s current plan for the land is to develop housing units, a shopping complex and medical facilities.
The company said development will be done in phases with the first phase expected to gobble as much as US$60 million.
“The beauty is that because of the mixed land use we can do the shopping mall first or medical facility and cluster homes first,” said Nyambiri during the company’s annual results presentation for the year ended December 31, 2013.
“The project will be funded through a combination of internal funding and external borrowings.”
In the period under review, Pearl revenue increased by 2,18% to US$9 million, from US$8,83 million in the prior year due to an increase in services offered to third parties. After tax profit was US$9,8 million, up from US$49 million in 2012.
Rental income increased by 2,06% to US$9 million from US$US$8,83 million in 2012 due to an increase in turnover based rental, the company said.
Average rental/sqm increased by 1,22% to US$8,28 after rental reviews were made following refurbishments on some of the properties.
Occupancy levels however declined by 3, 3% following evictions and voluntary space surrender due to economic challenges.