Zimre puts measures for sustenance in place

ZIMRE Property Investments says it will retrench workers and effect a 30 percent salary cut for its executives as part of measures to contain costs as voids continue to increase.

Managing director Mr Edson Muvingi said the retrenchments and salary cuts would be effected next month following another rationalisation exercise that was carried out last year.

Operations in the five months to May 31, 2017 show numbers going southwards, but the firm managed to reduce personnel costs and total administration expenses.

Total administration costs remained flat at $0,8 million while the company managed to reduce its personnel costs by 4 percent to $0,4 million compared to $0,5 million during the same period last year.

Mr Muvingi indicated the challenging macro-economic environment was posing a threat to the business with tenants struggling to pay rentals, while others sought downward reviews.

As a result, there was excess supply of space in the market as well as increased debtors.

ZPI was therefore resorting to a staff rationalization programme to offset further losses.

“We have cut salaries, we retrenched last year and we have reduced our allowances. We are a very lean organisation. We will get down to 15 after we retrench eight workers.

“This is a sacrifice we should make to survive in this environment,” said Mr Muvingi.

Average voids have risen from 12 percent in 2013 to 26 percent in 2017 as tenants shut down operations or seek cheaper options elsewhere.

The real estate sector has been hit by an increase voids resulting in lower rental incomes.

Occupancy levels in the central business district in particular has remained low as firms have downsized operations or closed while others now operate from residential areas.

Other property firms, Pearl Properties recently indicated its turnover for the four months to April 2017 fell 10 percent to $2,46 million on high voids especially in the central business district coupled with downward rental reviews.

However, some firms have vacated CBD offices for office parks to avoid traffic congestion and parking space limitations.