Publications
Partners
Harare - Property companies in Zimbabwe are battling declining occupancy levels for retail and office categories, with owners terminating leases for defaulting tenants as the country's economy continues to battle a prolonged economic crisis that is wilting business volumes for companies.
Masawara recently completed a deal that saw Sanlam's [JSE:SLM] emerging markets unit snap up a 40% stake in the company's insurance units in Zimbabwe.
Other South African investors in Zimbabwe including Nedbank [JSE:NED], Standard Bank [JSE:SBK] and platinum miners have shown strong interest in sinking money into the Zimbabwean economy, in contrast to apprehension among investors from other world markets.
Insurance premiums for the financial services units amounted to $24.1m while fees and commission income stood at $10.1m.
Heinie Werth, chief executive officer of Sanlam Emerging Markets said earlier this year that Sanlam was “optimistic about the prospects of Zimbabwe’s insurance industry, which is expected to show reasonable growth in 2015 and the years thereafter”.
Mauritius-based Masawara has interests in Zimbabwe spanning property, agro-chemicals manufacturing and hospitality, and said on Wednesday that its retail building company - Joina City in Zimbabwe, which owns a towering office and retail complex in central Harare - has seen occupancy levels fall by 14%.
The office category had also significantly declined by a massive 43%.
"The decrease in the retail occupancy was due to termination of leases for defaulting tenants. The office occupancy decreased due to the termination of a lease by one of the tenants and the office space is yet to be taken up," said Masawara on Wednesday.
Profits for Masawara in the first half of the current year rose, with pre-tax profits surging to $7.3m compared to $4.4m in the prior year period. Revenues for the same period rose to $42m compared to $999 000 in the previous contrasting period.
Revenues from its hotels division under the brand Cresta Hotels was $6.8m. Masawara also has hotel operations in Botswana although the Zimbabwe hotels did not perform well although its agro-processing division, Sable Chemicals is still battling the government to strike a deal for a lower power tariff.
Executives at the company are expecting “further” deterioration of economic conditions in Zimbabwe.
Masawara said “the deterioration of the economic conditions has manifested itself in the declining financial results of some of the leading listed clients on the Zimbabwe Stock Exchange” although it is undertaking initiatives to ensure that the business floats the current turbulent environment.
The Group is still optimistic that a viable electricity tariff will be finalized for Sable Chemicals.
Sable Chemicals is currently engaging in studies to explore the use of Coal Bed Methane as an alternative feedstock in the manufacture of hydrogen.
Increased revenue for Sable Chemicals is usually expected in the second half of the year as opposed to the first six months as more sales are made in the rainy season.
The insurance businesses have been growing and this growth is expected to continue in the next six months and budgets for the 2015 financial year are expected be met. This will be achieved through the implementation of aggressive growth strategies.
