SHELTER Zimbabwe is set to complete servicing the last batch of its low-density residential stands in Ruwa.
BY TATIRA ZWINOIRA
Shelter Zimbabwe are servicing residential stands at Rockview Park and 530 low-density stands are currently being serviced at a cost of $6,3 million.
Speaking to NewsDay on Tuesday, Shelter Zimbabwe general manager Francis Mugandani said of late they were only able to secure financing through small bank overdrafts from their bankers and borrowing against other properties they own.
“Of late, with our bankers, we have now ended up getting small cushions in the form of overdrafts just to cushion our overhead costs, on the back of inflows that come through deposits from clients,” Mugandani said, adding that monthly instalments were another source of funds.
Mugandani said at inception, the company used in-house security (other properties) to borrow from banks.
“We own other properties elsewhere and went to borrow a certain amount of money to kick-start the project as bridging finance, so we go into a bank to borrow a certain amount or money against a property. Every avenue we tried employing in the process of borrowing was not possible, so in the process we ended up looking for other options,” he said.
Rockview Park consists of 1 500 low-density stands.
It has 4 500 stands in the high to medium-density range and development is currently underway on 720 stands at a cost of $4 million.
The project cost the developers a total of $47 million and has seen nearly 50% of the stands taken up since its start in 2008. It is expected to generate $60 million.
In order to get other sources of finance and secure injection capital from banks, Shelter Zimbabwe set up a scheme where clients would pay deposits and instalments into a fund which the company would use to complete servicing of stands under different phases.
Mugandani said the inflows coming into the fund would be used to service the project only getting profits upon completion of a phase. It takes an average of 24 months to complete servicing and 42 months to collect instalments.
He said the leftover money in the fund would then be used as injection capital into the next phase to lessen the amount of money needed to borrow from a bank.
“We broke our project into smaller units. So, if we do 400 units, we focus our 24 months on those, service and deliver them to the clients for occupation. As a private developer, we are very cautious in terms of how we apply resources,” Mugandani said.
The project started when Shelter Zimbabwe signed a joint venture agreement with the Epworth Local Board in 2008. The deal would require Shelter Zimbabwe to provide works in developing the land for occupation which has led to significant financial gains for the authority.
The country is facing housing shortages with estimates showing that there is a housing backlog of over 1 million. A number of companies and banks have stepped in to provide housing.