CHAIRMAN’S STATEMENT
Overview of Operating Environment
Inflationary dynamics remain mixed across global economies. Despite noticeable progress on disinflation, inflation remained “sticky”, mainly outside the policy targets. Global central banks took a cautious approach to monetary easing. Against this, the interest rates remained relatively high. Given Zimbabwe’s level of import dependency, these factors had a knock-on effect on the country, including the property sector.
Zimbabwe’s agricultural production was negatively affected by the El-Nino-induced drought. Further, the mining sector, particularly platinum group metals (PGMs), faced headwinds from low commodity prices. However, other sectors performed relatively well, particularly infrastructure and construction. Thus, the economy grew by 2% in 2024 compared with 3.5% in the prior year.
The local business environment underwent significant changes that materially impacted the property sector. While the multi-currency system was maintained, introducing the ZWG on 5 April 2024 led to notable shifts. Before its introduction, the local currency had depreciated by about 72%. The new currency, however, depreciated by 48% during the year against its introductory value. Exchange rate volatility and an unsustainable parallel market premium adversely affected formal sector activities, including retail. In-store US dollar pricing became uncompetitive, which constrained performance based rentals as activity shifted to the informal sector. Contractionary fiscal and monetary policies adopted by the authorities also negatively affected liquidity during the year.
Property Market Overview
Zimbabwe’s real estate sector is navigating both challenges and opportunities. Both public and private sector investments are driving growth. Nonetheless, investment in infrastructure is required to sustain the property market.
High vacancy rates persist in the Central Business District (CBD) as tenants relocate to suburban offices and office parks. Businesses are moving away from traffic congestion, parking space shortages and unsatisfactory building conditions, such as malfunctioning elevators and air-conditioning systems in the CBD. Recent local plans, such as the Avondale and E.D. Mnangagwa Road Local Development Plans, have also influenced demand as they permit mixed-use developments along major arterial roads.
There have been noticeable real estate developments in the country. In the tourism and hospitality towns, including Victoria Falls, there has been an elevated activity in new hotels, lodges, and resort developments. Further, private developers are increasingly investing in gated communities, town houses, and apartment complexes, particularly in affluent Harare suburbs. Mixed-use developments combining residential, commercial, and retail spaces are also gaining popularity. The commercial property sector is experiencing moderate growth, driven by major cities’ demand for retail and office spaces. Sustainable construction practices, including green building technologies, water recycling systems, and solar energy, are gaining traction. However, high construction costs and limited financing options remain key challenges. Public-private partnerships that leverage private sector expertise for large-scale projects are key to the sustainable development of Zimbabwe’s property sector.
Rental payments are mainly in US dollars, reflecting broader market trends. In contrast, operating costs, particularly utilities such as electricity and municipal rates, are settled in local currency, in line with the country’s legal framework.
Business Performance Review
The Group’s Net Property Income increased by 62% to US$4,842,676 (FY2023: US$2,984,485), while revenue was up 31% to US$9,027,117 (FY2023: US$6,896,240). Rental income remains the main source of revenue.
Revenue growth was driven by growth in property services income, predominantly project management fees, an upsurge in pure US dollar rentals, and timely rental reviews.
Due to tenants’ financial challenges, rental collection rates fell from 85% in 2023 to 75% in 2024. Management is working closely with tenants to resolve the arrears. There has been an elevated focus on tenant and portfolio diversification. Management is committed to providing quality and secure facilities through targeted upgrades and maintenance. Against this, US$945,231 was spent on infrastructure maintenance during the year.
Property Valuations
An independent property valuation conducted by Knight Frank Zimbabwe valued the property portfolio at US$132,948,000 (FY 2023: US$179,772,504) as of 31 December 2024. The decline in value was due to the adoption of the US dollar as a functional currency. The prior year’s Investment Property value was determined by converting the December 2023 local currency value using the official closing interbank rate of US$1:ZWL5,935.4572.
Developments
The Group is strategically advancing shareholder value through various projects at different execution stages.
The flagship development, the Arundel Office Park extension, features a double-storey building with a basement, providing 2,616.5 square metres of total lettable space. This project has been completed and is valued at US$5.1 million. In Zvishavane, First Mutual Properties is a co-investor and project manager of the development of mixed-use duplex cluster houses, three to four-storey apartments and student accommodation. The project’s first phase comprises six duplex flats, which are 90% complete and 20 blocks of double and triple storey flats, which are ready for commissioning. Construction of the student accommodation is progressing well.
Sustainability
First Mutual Properties remains committed to integrating sustainability across its operations. Sustainable practices are vital for long-term business success and stakeholder value creation. Our 2025 strategy focuses on enhancing environmental, social, and governance (ESG) initiatives, aligning with global standards to ensure future-proofed properties.
Dividend
At a meeting held on 20 February 2025, the Board of Directors recommended that no dividend be paid for the fourth quarter of 2024 and the available cash be directed towards the expansion programme.
Acknowledgements
On behalf of the Board, I sincerely thank my fellow directors, management, and employees for their unwavering dedication and contributions during the year. I also thank our strategic partners, tenants, and service providers for their continued collaboration and support. Your support remains invaluable to our success.
Business Outlook
The business environment remains uncertain. Management will continue to adapt its strategies to protect shareholder value and sustain business operations. Prudent capital management, stakeholder engagement, effective utilisation of the available lettable space (occupancy levels), quality and ambience of our property portfolio will be prioritised.
Elisha K. Moyo
Chairman of the Board
20 February 2025
FMP 2024 Abridged financial results (USD).pdf
FMP 2024 Abridged financial results (ZWG).pdf
