HomeBusiness DigestNicoz stops sale of cluster homes

Nicoz stops sale of cluster homes

Tight market conditions and economic uncertainty rocking the property market have forced listed short-term insurer, Nicoz Diamond (Nicoz), to hold the sale of its cluster homes, the company has said.

Taurai Mangudhla

The group’s Diamond Villas in Hatfield, previously meant for disposal, are now being leased out in light of prevailing market conditions as a means to preserve value, Nicoz managing director Grace Muradzikwa said in a trading update for the period to May.

“The company has put the disposal of the units on hold to maximise on rental returns, while preserving value until the market conditions present lucrative opportunities to dispose,” Muradzikwa said.

So far, she said good rental yields are being obtained from the Diamond Villas. The final phase of the project was completed in 2016, but leasing was delayed by the connection of key utilities.

The units are now expected to be fully leased out by July 1, 2017. The Diamond Villa project features 58 three bedroomed cluster homes on
60 000 square metres of land and was estimated at about US$6 million on completion.

This comes after listed property firm Pearl Properties in March also announced it had resolved to reverse a decision to dispose of residential units under its multimillion dollar George Square Mews Kamfinsa cluster homes to avert a potential loss of value apparently stemming from fears of roaring inflation driven by introduction of bond notes.

Zimbabwe’s acute cash shortages have posed a threat on business, particularly the informal sector which largely depends on cash transactions. Even the big players are not spurred, with Nicoz indicating it faced challenges collecting premiums.

To avert a decline in business owing to the cash crisis, Nicoz has invested in mobile money and plastic money solutions.

“In an environment with incessant liquidity problems, premium collection has remained a challenge. To facilitate ease of payments, the company has point of sale machines throughout its branches nationwide and also mobile transfer payment options have been put in place,” said Muradzikwa.

In terms of financial performance, Mudzaikwa said the company recorded a 15 growth in revenues for the first four months of the year to April. May GPW figures stood at 19,6%, 11% above the same period in 2016.

Gross premiums written for the group as at April 2017 was US$15,7 million from US$15,6 million the previous year. “The insurance industry continues to face a protracted soft market cycle that has seen clients continuing to negotiate for reduced covers and lower premium rates,” she said.

This is further exacerbated by the extended payment terms being negotiated.
In terms of the claims, the company had a favourable loss experience at 43% during the first four months of 2017.

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  1. The decision to lease instead of disposing is not necessarily about the need to preserve value. Pearl Properties wasted a valuable piece of land next to Kamfinsa Shopping Centre in Greendale by building too many units each with only one parking space and the units being too close to each other making it look like some kind of gated high density low income compound rather than the upmarket gated complex that it was mean to be. As a result the units were not attractive to would-be buyers also for the price asked for them. There are plenty of alternative garden cluster homes or flats with ample private yards for similar costs. The Nicozdiamond units have the same problem of pricing. At roughly US$6m for 58 units it means that each unit cost some US$103,500.00. Add mark up the selling price does not make sense for these kinds of units. Anyone with that kind of money is better off buying a stand-alone house in places such as New Malborough, Cranebourne, Hatfield etc and enjoy more yard space and privacy which lack in the Pearl Properties and Nicozdiamond cluster units. That is the real reason for the failure to sell the units.

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