HARARE: Pearl Properties has recorded a 3,85 % drop in revenue to $5,6 million for the eight months ended August 31, 2015 due to a decline in rental income. In the same period last year, Pearl’s revenue was $5,8 million. Rental income declined to $4,258 million from $4,431 million in 2014, net property income grew by 5,59% to $3,9 million from $4,2 million in 2014, while administrative expenses declined by 6,38% to $1,7 million from $1,8 million in 2014.
Pearl Properties managing director Francis Nyambiri said the property market had remained subdued in the first half of the year with increasing defaults, declining occupancy levels, increasing evictions and voluntary space surrenders.
“These fundamentals adversely affected the prospects for upward rent reviews as landlords seek to retain existing paying tenants. Demand for space remained weak with the central business district (CDB) office sector being affected the most. However, the demand for retail space remains relatively strong in both CBD and suburban areas despite the subdued economic fundamentals,” Nyambiri said.
Occupancy levels declined to 77,37% from 79,93%. Rental yield declined to 7,09% from 7,33% in 2014. Cash yield went down to 4,63% from 4,73% in 2014. Rental per square metre declined to 7,51% from 7,78% in 2014.
“The market dynamics affected performance as we have seen rental stagnation and the rental income declined to $4,258 million from $4,431 million in 2014. The sector affected most is CBD offices due to the weak demand for that particular sector,” Nyambiri said. “The week demand for space within the CBD resulted in the decline for rental per square metre.”
During the period under review, office parks contributed 33,40% to the rental income followed by CBD offices (26,70%), industrial (16,30%), CBD retail (13,16%) and suburban retail with 10,39%. While in the CDB rental per square metre declined to $10,05 from $11,74, office parks improved to $10,09 from $10,04 in 2014.
Tenant arrears grew to $2 638 million from $2,393 million due to the liquidity challenges prevailing in the economy. During the period under review, the company committed a total of $142 000 towards property maintenance.
Commenting on property development, Nyambiri said the sectional titles for George Square Mews (Kamfinsa Cluster Homes) were now available and to date the company had received eight purchasing offers but these were subject to mortgage finance.
Nyambiri said the group was still looking for funding to finance the Fourth Street project. “The focus of the business is to ensure we have sustainable income and whatever we do we want to make sure we don’t lose what we already have. “We are also working on cost containment and we are analysing critically to ensure that at the end of the day the costs on tenants remain reasonable,” Nyambiri said.
