THE PROPERTY market continues to sing the blues as the harsh economic environment takes a toll on the sector, dimming growth prospects.
By Fidelity Mhlanga
According to results from three listed property companies, the sector is swimming in troubled waters as evidenced by weakening aggregate demand, declining occupancy levels, increased evictions and defaults.
Pearl Properties, which recorded a US$1,1 million loss in the short term, said prospects for growth and improvement in occupancies are minimal due to the weakening economy.
“The property sector fundamentals remained depressed due to weakening aggregate demand, increasingly affecting the ability of tenants to service their lease obligations. Increasing defaults, declining occupancy levels, increasing evictions and voluntary space surrenders continue to prevail in the market,” said the company in a statement accompanying its financial results.
Zimre Property Investments (ZPI)’s rental income was negatively affected by the economic challenges and recorded a 9% decline to US$1,65million from US$1,81 million in 2015.
“The property sector experienced amongst other challenges, declining rental rates which affected revenues, rising voids and debtors. Tenants continued to reduce leased space in order to manage business costs,” ZPI said in a statement accompanying its financial results.
Voids rose to an average of 25% for the period to June 2016 from an average of 21% in the prior year with portfolio debtors increasing by 5% to US$2 million from US$1,9 million over the same period last year.
However, the company’s profit after tax for the period was US$571 907 from US$366 164 the prior year.
Another market giant, Dawn Properties venue fell from US$2,2 million from US$1,8 million due to lower revenues in the hotel rental business.
Hotel operating lease rentals were 22% down to US$865 000 compared to US$1,1 million in the same period last year.
The company said the hotel lease business contributed 46% to group revenue while the remaining 54% came from the property consultancy business.