African Sun expands property portfolio

The Elephant Hills Hotel in Victoria Falls is one of African Sun’s major property assets (File Picture)

Hospitality group African Sun Limited is moving to expand its real estate portfolio by investing in a residential development cluster, as it seeks to diversify risk and consolidate its position within the real estate segment.

Under the real estate portfolio, the group owns eight hotels, seven of which are leased to the hotel operating segments, two timeshare lodges, residential properties in Harare, and vast undeveloped land across Zimbabwe, held either for sale or capital appreciation.

Group chairman Mr Constantine Chikosi indicated the group is developing 55 residential stands in Marlborough’s Sunset Views.

For long, the property industry has been a perfect hedge against economic volatility. In Zimbabwe, the residential segment has remained strong with firm demand from both Zimbabweans in the diaspora and those resident in the country.

“On the property front, we are developing an additional 55 stands in Marlborough Sunset Views, aiming to tap into the flourishing residential properties market,” said Mr Chikosi.

Experts have projected the segment will remain strong albeit the challenging economic environment, creating scope for businesses to tap into the segment.

Real estate expert with Knight Frank Siza Masuku has previously highlighted that: “There is also an intensification by institutional investors and other high-net-worth individuals towards the development of cluster houses, showing the resilience of the real sector during this period.”

“With the national housing backlog standing at more than 1,5 million, investment in affordable low-cost housing remains key, and we have noted that a subsector of up-market residential cluster developments is also growing and is a good investment,” explained Mr Masuku.

For African Sun, the developments also come at a time when the group seeks to offset the adverse impacts of its discontinued operations following the closure of the Kingdom Hotel in the resort town of Victoria Falls.

The closure of the hotel has had an adverse impact on its financial performance, with the group recording an after-tax loss of US$1,8 million for the half year to June 30, 2023.

During the half-year period, costs escalated at a faster pace than revenue, exacerbated by losses from discontinued operations, which incurred a loss of US$0,75 million.

The group mutually terminated the lease agreement for The Kingdom at Victoria Falls Hotel with Makasa Sun (Private) Limited effective 31 December 2022, following approval by the board on 20 June 2022 to exit from the lease and discontinue operations by 31 December 2022. As a result, the casino operations were also discontinued.

“Following the closure of The Kingdom at Victoria Falls Hotel, the group terminated Casino operations.

“The Harare Sun Casino license was linked to the Makasa Casino which operated at the Kingdom Hotel. Due to the closure of the Kingdom Hotel, both casinos were subsequently closed,” said Mr Chikosi.

During the review period, the group also disposed of investment properties relating to two units of the Elizabeth Winsor Garden and a stand-in Marlborough which was disposed of during the current period. The Elizabeth Winsor Garden units were previously rented out to tenants.

Herald

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