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Oliver Kazunga Senior Business Reporter
ZIMRE Property Investments (ZPI) recorded an 86 percent decline in after tax profit to $253,000 from $1,81 million for the year ended December 31, 2014, on the back of rising voids and a fall in demand for real estate.

The company’s board chairman Buzwani Mothobi reported in the audited financial results for the period that portfolio voids increased to 19 percent from 14 percent in the prior year.

“The business environment deteriorated further over the reporting period. As inflation declined into negative territory, aggregate demand for goods and services contracted under the very tight liquidity situation,” he said.

“As a result, demand for real estate products declined and the market experienced a significant increase in voids and debtors.”

Mothobi said most tenants were failing to pay current rentals and were re-negotiating existing contracts.

“Portfolio voids went up to 19 percent for the year compared to 14 percent in 2013. There were significant downward rent reviews, which began in 2013. As a result, average portfolio rentals were $6,59 per square metre, down from $9,16 per square metre in the prior year,” he added.

Mothobi said Zimre recorded an increase in voluntary lease surrenders, which contributed to the rise in portfolio voids and debtors with rental income going down seven percent to $3, 6 million from $3,9 million in 2013.

Total revenue for the year, he said, was $5,7 million reflecting a 15 percent decline from the $6,7 million achieved in the prior year.

“Total administration costs increased to $$2,95 million compared to $2,55 million in the previous year, a 15 percent increase. Included in administration costs are provisions for doubtful debts of $537,3 million and impairment of assets amounting to $$220,957,” he said.

Mothobi said other operating expenses at $1,76 million, which included the costs of stands sold, went down by 28 percent as less stands were sold last year compared to 2013.

Due to subdued revenue performance, he said operating profit for the period under review was $1,10 million and the figure was 44 percent lower than the $$1,96 million realised in 2013.

Turning to the firm’s projects update in Masvingo, Harare, and Ruwa, Mothobi said disposal of stands in the project was progressing.

“We expect to see an increase in uptake following the recent electrification of phase 1. To date 220 stands at a value of $4,00 million have been sold representing approximately 58 percent of the project. The project in Harare-Tywald has been very good. All the stands put up for sale have been sold.

“What remains are a few institutional stands and those reserved for further development. In Ruwa, the Zimre Park extension project as highlighted in my previous statement was anticipated to commence in October 2014. However, it has been delayed by regulatory approvals and will commence once these are in place,” he said.