First Mutual Properties revenue marginally up in Q1
Harare, (New Ziana) – First Mutual Properties (FMP) saw it’s inflation adjusted revenue jump to $90.1 million in the first quarter of 2021 from $71.6 million in the same period last year as the firm bemoaned low demand for space in the sector.
In a trading update, the firm said Harare’s central business district is the worst affected while retail and industrial space remained resilient even in the face of the Covid-19 pandemic.
“The office park sector continued to display its resilience with steady demand,” the Zimbabwe Stock Exchange listed company said.
“Pricing of space continues to migrate towards inflation and currency indexed models to preserve value, while there is an increase in foreign currency denominated leases as property owners seek to benefit from the provisions of SI 85 of 2020.”
FMP said the increase in revenue was on the back of rent reviews and rising occupancy in some sectors.
Occupancy levels were up two percentage points to 89 percent while rental collections improved to 57 percent from 46 percent.
“The lockdown early in the year delayed rent review efforts, hindered collections and planned maintenance initiatives,” FMP said.
FMP said development activity remained strong in the residential sector, while commercial development activity was low due to subdued demand for space.
The company spent $7 million during the quarter on property maintenance.
In the outlook, the firm said the commercial real estate segment was expected to remain depressed due to excessive supply of space.
“Despite expected growth in economic activity, the property sector is traditionally the slowest to react due to the nature of the asset,” FMP said.
“Rental yields are expected to remain weak due to the slow nature of price discovery of rentals, coupled by limited upside on rentals due to excess supply of space, while recent revaluations of properties will apply pressure to any growth in yields.”