By Bernard Mpofu, HARARE, March 3 (The Source) – Property group Mashonaland Holdings has engaged local and foreign banks to finance the group’s expansion programmes and is shifting its focus to smaller office parks to contain costs as major companies downsize, chief executive Manfred Mahari told The Source on Tuesday.
He said in the current economic environment, which has seen some companies winding down or scaling operations, it was not viable to roll out high-rise buildings in the central business district due to sharply declining demand for office space, reflected in high voids and vacancy rates.
Following a dip in rental income resulting from an underperforming economy and low uptake of office space, the company said it will use own funds with local and offshore facilities to roll out new projects.
“We see ourselves doing the smaller office parks to cater for medium sized organizations which are what we have now,” said Mahari.
“We are talking to various funders—local funders and international funders. The schemes will depend on the values. Mabelreign (housing project) will be mostly funded from our cash flow because it’s a small project. We purchased a piece of land in Ruwa which is a fairly big project that definitely would require funding from outside the company.”
Mahari did not say when the office parks would be built or their location.
In the same interview, senior property manager David Mutemachani said the company is expecting to generate an additional $400,000 annually from the completed office building along Natal Road in Avondale.
The group’s revenue for the four months to January was down 12 percent but the recovery rate is currently at 80 percent with voids at nearly $1,2 million.
Mahari said despite the underperformance of the economy, the company would not engage in any staff rationalization exercise soon as it was operating on a lean workforce.
“What led to the decline in our revenues is because our major revenue streams have been rentals. We embarked on a rental reduction exercise,” he said.
“Given the activity in our economy, it was now fit that we also review the rentals downwards. In doing that the revenues came down. Companies are also downsizing and letting go some office space. The downsizing that is happening is due to many factors. The major on is lack of economic activity.”