Tourism presents investment opportunities – Mashonaland Holdings
Senior Business Writer
LISTED property firm Mashonaland Holdings, which is embarking on diversification and portfolio performance optimization, says the tourism sector presents attractive investment opportunities taking advantage of the sector’s strong rebound after Covid-19 global pandemic.
Investments into the tourism industry grew by almost 100 percent from a figure of US$96, 5 million recorded in the first six months of last year to US$192, 8 million in the same period this year as the sector continues to recover in the post-Covid-19 pandemic era.
According to the Zimbabwe Tourism Authority (ZTA), tourist arrivals also increased by 50 percent.
Post-Covid-19 pandemic, the tourism industry has witnessed huge investments exceeding US$300 million which has accelerated the recovery of the sector.
Tourism, which came out heavily scathed in the aftermath of the devastating Covid-19 pandemic, has made some impressive recoveries in terms of revenue and tourist arrivals.
The positive strides in the tourism sector is seen by Mashonaland Holdings as an opportunity to invest in.
“The tourism segment continues to record steady growth with increasing tourist arrivals in the first six months of the year thereby providing an attractive alternative investment destination for diversified property investors,” it said in its financials for the period ended 30 June 2023.
The firm noted that despite current headwinds in the economy the Group remains focused on its strategic objectives notably diversification and portfolio performance optimisation.
Major focus continues to be set on the completion of on-going property projects which for part of the portfolio diversification road map, it added.
According to Mashonaland Holdings, the property market remains constrained by the persistently low economic activity in the formal sectors of the economy.
The low economic activity has led to a lethargic space absorption rate affecting mainly the CBD office sub-sector.
“The market has however witnessed some pockets of growth in the retail and office park segments while the industrial segment has remained resilient with steady demand for strategically located industrial warehouse space.
“Office tenants continue to show a preference for suburban and out of CBD office space due to deteriorating public infrastructure among other inner city urban problems especially in the Harare CBD.”
It notes that the development submarket remains hamstrung by the high construction costs, limited long term financing and high costs of capital.
However, residential properties continue to present investment opportunities for property developers in view of the positive demand for housing.
The supply-side imbalance has led to an increase in property prices for medium to high-income residential properties.
In the period under review, revenue for the firm increased by 150 percent to $8,7 billion with rental income contributing to the improved revenue performance posting a 115 percent growth.
The Group now earns 74 percent of its rental revenue in foreign currency up from 35 percent at the same time last year.
The portfolio occupancy level increased from 83 percent in June 2022 to 87 percent contributing to the revenue growth.
Operating profit increased by 781 percent to $34, 6 billion and it attributes the increase to the 150 percent improvement in revenue performance as well as foreign exchange gains of $32, 4 billion realized on conversion of foreign currency balance on hand.
The financials note that an open market valuation of its investment properties as at June 30 was valued at $453 billion which represents a 117 percent capital gains from the inflation adjusted valuation done in December 2022.