Zimbabwe Stock Exchange ( ZSE) listed company First Mutual Properties (FMP) continues to suffer from low demand for rental space in the Central Business District Office and industrial sector as a result of low productivity in the productive sectors, inadequate infrastructure, changing the structure of the economy and tenant preferences.
According to the group chairperson Elisha Moyo ,the low demand is also a factor of the quality of space on the market, some of which is no longer suitable for emerging businesses and small to medium enterprises.
“The property market was characterised by high rent default levels and also low absorption rates of rental space, despite the improving general business confidence.
“The inherent problems of low productivity in the productive sectors, inadequate infrastructure, changing structure of the economy and tenant preferences, continued to affect CBD Office and industrial sectors, as these sectors continue to have low demand for rental space.
“The low demand is also a factor of the quality of space on the market, some of which is no longer suitable for emerging businesses
and small to medium enterprises,” said Moyo.
He added that demand for an office park and retail space remains relatively strong, with voids slowly declining in spite of increasing competition from new developments on the market
“In the medium term, planned developments are expected to increase competition for quality space, driven by changing tenant preferences and technology trends,” he added.
“Despite the improving economic fundamentals, strong GDP growth is still required to significantly increase effective demand for space,”
The socio-economic dynamics of the economy are seeing property investors adapt the product offering, to meet the needs of the informal sector.
Due to increasing inflation risk, investors are actively seeking assets to acquire and also increasing allocation of capital to refurbishments and maintenance programmes to preserve value, as few quality assets are available to acquire on the market,” added Moyo.
Meanwhile, the group Rental income for the six months’ended June increased by 7% to US$3.949 million compared to US$3,704 recorded during the same period last year.