Dawn Properties’ Marlborough project to boost revenue
DAWN Properties is planning to roll out its US$8 million housing project in Marlborough, Harare by March next year, a development which is expected to contribute significantly to both revenue and profitability of the group.
The company says major milestones had been achieved with regards to the development of the land bank in Marlborough.
The project is part of the group’s efforts to maximise the value of its land bank and the project will consist of 72 two and three-bedroomed garden flats.
This project is expected to improve the company’s revenue, which was down by 13 percent to US$1 million during the first quarter of the year.
Speaking at the company’s annual general meeting last Friday, chief executive officer, Justin Dowa, said the company was optimistic of recording a profit by the end of the current financial year as changes at the shareholder level means the group is on a growth phase.
Dawn Properties continues to face challenges as the operating environment continues to deteriorate. The local property market is experiencing a significant downturn, with values having been hugely eroded and properties are at a substantial discount to replacement cost.
Additionally, the rate of defaults and voids in the sector has increased. However, unlike its peers, Dawn says its arrears and bad debts were still low.
“The group has now stabilised and all ingredients are now in place for management to deliver and for the business to succeed,” Dowa said.
He said the group now had a good working relationship with African Sun and anticipates unlocking value with that connection.
Dowa said trading conditions remained harsh but rent income from owned assets was four percent ahead of last year.
“The operating environment was characterised by declining rent collection rates.
“However, investment made in improving systems together with robust cost control measures have started to show positive results and it is anticipated the group will retain a profit this year,” he said.
Despite the mortgage drought that has hit the property market, affecting uptake of residential stands, Dawn is optimistic the Marlborough project will have a pleasing update.
The number of people requiring housing in Zimbabwe has been growing, with estimates indicating that the housing backlog reached 1,3 million by December last year.
Since the economy was formally dollarised in February 2009, only a few building societies and banks have been offering mortgage. Mortgages so far available on the market are short-term, restricting residential market development.
Residential stands, however, continue to sell though at a slower pace. The few housing loans available have both been expensive and short term. Borrowers are expected to repay within 10 years, in contrast to 25 to 30 years in some markets. As a result of the slide in mortgage finance provision, the country’s housing backlog ballooned.
Some financial institutions have been able to secure external lines of credit to support mortgages, but the loans have been for relatively small amounts over short periods, for instance 10 years, at rates of between 15 and18 percent per annum.
These rates are expensive for borrowers, many of whom have lost jobs due to company closures in a liquidity starved market. Salaries for the majority of Zimbabweans average US$300.
Property companies have also hinted that rentals for both residential and commercial units will remain subdued until the end of the year as cash strapped tenants battle to pay, while companies close.