May 4, 2024
Property sector sees green shoots in Q4
LISTED property firms with a strong presence in residential assets and building materials say the sector is expected to register a “steady growth” during the fourth quarter of the year.
This comes as property and construction also registered growth during the first half of the year after the economy opened up as Covid-19 infections waned.
The companies said developments in the property sector have continued to show steady growth as investors diversify portfolios into property developments in predominantly the retail, residential, warehousing and specialised property development space as a hedge against high inflation.
Commenting on Mashonaland Holdings’ outlook last week, board chairperson Grace Bema said authorities expected inflationary pressures to subsist over the short term before measures being implemented by the government to grow the economy and the property and construction sectors begin to bear fruit.
“Despite these developments, the group remains focussed on delivering on its projects pipeline, which will support cashflow generation to enable portfolio diversification. The group’s strategic focus will also remain targeted at portfolio performance optimisation, portfolio diversification and increasing operational efficiencies to ensure sustained business growth,” she said in a statement accompanying the groups’ financial results for the six months to June 30, 2022.
In an outlook for the five months to August 2022 released recently, PPC Zimbabwe said it anticipated a recovery for the balance of the financial year.
“The cement market in Zimbabwe continued to show robust high single-digit growth as a result of both residential construction and government-funded infrastructure projects. PPC Zimbabwe implemented planned maintenance at the beginning of FY23 and recorded a seven percent decline in cement sales volumes period-on-period.”
However, the resumption of clinker manufacturing at the end of May 2022 enabled improved sales volumes in the second quarter of the full year to 2023.
“PPC Zimbabwe implemented US$ price increases of five percent in March 2022, two percent in April 2022 and a further five percent in August 2022. PPC noted increased availability of foreign currency in the Zimbabwean economy, with more than 70 percent of cement sales during the period under review occurring in foreign currency.
PPC received a US$4,4 million dividend in June 2022 and anticipates an additional dividend to be declared upon the publication of PPC Zimbabwe’s interim results in November 2022,” the company said.
Commenting on the company’s outlook, First Mutual Properties company secretary Dulcie Kandwe said the commercial real estate segment is expected to remain an occupier’s market due to excessive supply of space.
“The relaxing of Covid-19 protocols will improve business activity across the key productive sectors, however key macroeconomic and monetary policy will be critical to driving further growth and business confidence. Rental yields are expected to remain weak due to the slow nature of price discovery process for rentals, coupled by limited upside on rentals due to excess supply of space,” Kandwe said.
She said the key focus area remains value preservation and cash flow management in the immediate to short term as market volatility driven by currency depreciation can significantly disrupt the market.
“To this end, the group will actively improve space quality in line with occupier requirements to sustain occupancy levels and earnings, and focus on property developments to further add to the property portfolio,” she said.
Willdale company secretary Mavuto Muninga said increasing demand for bricks to meet the high demand for housing will drive revenues in the fourth quarter of the year.
“Plant capacity utilisation, which is currently averaging above 80 percent, should provide sufficient stocks to meet targeted sales volumes for the ensuing quarter, provided electricity supply remains reasonable. We hope the monetary and fiscal policy interventions by the government will bring stability to the exchange rate and inflation and a better operating environment,” Muninga said.
Turnall chairman Bothwell Nyajeka said management was optimistic that the business will continue to be profitable and maximise shareholders’ wealth.
“Key focus areas are to re-capitalise the plants, improve production efficiencies, improve our product offering and reduce production costs. Cost containment and business rightsizing will remain top priorities to enhance profitability,” he said.
Lafarge Cement Zimbabwe chief executive officer, Geoffrey Ndugwa, said his board was encouraged by the positive trajectory of the economy and anticipated that collaborative dialogue between government, industry and other stakeholders will be maintained to restore and safeguard business confidence as well as preserve value and restore macroeconomic stability.
