Friday, January 22, 2021

Exciting future for Botswana’s property outfits

As more property developments continues to emerge particularly at the Central Business District (CBD) of the capital Gaborone and in other urban and peri-urban centres like Francistown and Palapye local property outfits are now considering development of mixed use outlets.

These comes after the latest developments in the property sector, more especially in the office space rentals saw a decline in terms of monthly returns. As a result, while some developers look into mixed- use properties, others for now have resorted to the provision of residency as there is still demand compared to retail and office space market.

Pundits maintain that there is room for mixed-use development, but it should be well coordinated as Botswana is an emerging market. The retail industry is trying to improve their offerings to attract clients while the office market is saturated to an extent where tenants are dictating rental prices and locations.

Nonetheless, the property counters still offer good yields and still remain attractive from an income point of view.

Some of the well known local companies have been able to create long-term wealth for shareholders while growing and diversifying their asset base.

Operating in a space where is currently viewed as a mature market by property investors and developers, and presents an increasingly compelling investment case for those searching for stable long-term returns, most have started looking outside Botswana borders for more business.

Motswedi Securities Research Analyst, Garry Juma says it is not surprising that the domestic economy is seeing more property companies expanding outside Botswana. 

A BSE quoted outfit – Turnstar are already in Tanzania and Dubai, whilst its competitor, also listed at the local bourse, PrimeTime have followed suite in SA. RDCP, also a local property outfit which owns the popular Masa square in the CBD is following the same trend and has announced plans to expand outside the country.

For RDCP Juma said, “It shows that its expansion strategy outside Botswana is gaining traction and we are likely to see an uptick in this line going forward as contribution from SA, Mozambique and Namibian operations. The future is exciting for RDCP and its investors.”

RDCP

Looking at RDC Properties which released its half year results for the year ended 30th June 2018 this week, the company’s revenue jumped up by 51 percent over the comparative period, resulting in a 26 percent increase in profit for the period. This is an exciting reveal for not only the company itself but its investors as well.

RDC which in 2017 had the intentions of exiting the Madagascar market due to unprofitable gains from Isalo Rock Lodge, has since reversed the idea.

Chairman said at the group’s Annual General Meeting in May 2018 that, the sale of the lodge did not materialize, however the lodge was to break even and did not require the Group to inject any further money.

This week’ good results are underpinned by the stable Botswana portfolio and the solid performance of the Capitalgro portfolio in South Africa. Capitalgro acquired The Edge building on 20 March 2018, a 100 percent let building for a total acquisition cost of R307 million, financed through a bank mortgage loan and a Capitalgro rights issue. “Our participation to the rights issue R120 million resulted in its shareholding in Capitalgro increasing from 34.85 percent to 62.99 percent. We are presently evaluating a number of opportunities presented to the Capitalgro team and we are confident of the prime portfolio that we are building in the Cape Town area,” said Executive chairman Giudo Giachetti.

ICC Flats (Gaborone Ext 9) and leasing activities are progressing well. The group which also owns ICC Flats in Gaborone’s Extension 9 and said to be progressing well in leasing; is also currently evaluating another project in Tlokweng which would be a mix of sales and rental of units, amongst other local development opportunities to look up to.

In Mozambique, the group reported that Xai Xai shopping centre building works have been completed and the anchor tenant is expected to commence their fit-out as soon as possible. The advanced earthworks have commenced at the Zimpeto project; this is expected to be a 24 months project. We also continue to explore other opportunities in Mozambique.

In Namibia, the group expects to imminently start building works for the convenience centres in Tsumeb and Grootfontein on ministerial approval of the land transfer and finalization of the deeds of sale.

The company also invested USD3million in construction of a block of 61 flats and a restaurant. The project started in September 2017 and is said to be progressing fast, and already USD 37million has been realized through the sale of 40 flats and the restaurant against the cost of construction USD 42.25million.

Giachetti this week indicated that, the City Lights project in the United States of America is progressing well and the plan is to convert proceeds on the development sales into a yielding portfolio. An interim dividend of 0.124 thebe per ordinary share and interest of 6.206 thebe per debenture has been declared.

Primetime

Since listing at the BSE on the 20th of December 2007, PrimeTime has grown from an initial portfolio of 13 properties valued at P175million to 25 properties valued at P1.12billion, with total assets of over P1.3 billion. This is from the successful implementation of the company’s geographical diversification strategy and strategic acquisitions.

Led by Sandy Kelly, Primetime is one of the most sought after property stock on the local market, In Botswana, the property developer owns some of the quality and most sought after properties such as Prime Plaza, Letshego Place, Sebele Centre among others; whilst in Zambia it has acquired Centro Kabulonga in Lusaka.

PrimeTime has identified Zambia as an additional investment opportunity because it has a robust, diversified economy with a strong democracy and democratic principles that work, according to Kelly. PrimeTime’s acquisition of its largest asset by value, Centro Kabulonga in Lusaka, represents its entry into the Zambian retail market.

Turnstar

The Group consists of Turnstar Holdings Limited (Botswana), Island View (Proprietary) Limited (Botswana), Mlimani Holdings Limited (Tanzania), Turnstar Investments Limited (UAE) and Palazzo Venezia Holdings Limited (UAE).

Turnstar reported some delays in the completion of the construction of its new section of Botswana’s Game City, Mlimani development in Tanzania which also showed that, the current downturn in the economy has affected the Mlimani Commercial Office and Conference Centre revenues. The group also during the 2017 year successfully acquired an office block in Dubai.

The delayed income from the newly completed areas has affected the Group’s operating Profit down to P143.0million for full year results ended January 31st 2018 from P158.1million realized in full year January 2017. The group’s revenue went down to P251.9million from P254.6million in the previous full year reporting period. Directors have approved a final distribution of 9 thebe per linked unit.

Some other small property company’s although not listed, believe their future lies outside the country’s borders. CEO of Vantage Holdings, Sethebe Manake recently said, “we want to be a Pan-African business,” she says, and for her to achieve these aspirations, she realised tech was the best solution which her business model is fast driving to.

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