Corporates leaving CBD in favour of suburbs – First Mutual

By Alois Vinga

FIRST Mutual Property (FMP) has seen a considerable number of corporate tenants leaving the CBD in favour of nearby suburbs, which now offer better convenience and facilities.

Presenting the group’s performance for the period ended December 31 2024, FMP board chairperson, Elisha Moyo, described the country’s real estate sector as navigating both challenges and opportunities.

He said both public and private sector investments are driving growth and underscored that 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,” he said.

Moyo said 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.

During the period, the Group’s Net Property Income increased by 62% to US$4,842,676, while revenue was up 31% to US$9,027,117 as rental income remained 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.

“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 prioritized,” added Moyo.