• ZECO’s retail property portfolio occupancy improved to 55.88% from 46.67%, a 921 basis-point gain, marking a meaningful leasing recovery in a competitive tenant market
• Revenue fell to ZWG2.178 million from ZWG2.265 million, showing that higher occupancy has not yet translated into stronger income generation
• Administration expenses rose 40.96% and property expenses increased 15.66%, creating a margin compression risk as Palm Estate remains dependent on securing an anchor tenant

Harare- ZECO’s retail property portfolio occupancy rate has rose to 55.88% in the first quarter ended 31 March 2026, up from 46.67% in the corresponding period last year, a 921 basis point improvement. This represents a meaningful operational achievement in a highly competitive market where commercial landlords are vying for a limited pool of tenants.

Despite the occupancy uplift, revenue fell to ZWG 2,178 million from ZWG 2,265 million in the prior year period. Operationally, ZECO is advancing; financially, it is moving backwards.

The revenue decline amid rising occupancy stems primarily from the macroeconomic headwinds ZECO itself highlighted: tight monetary policy and a stable currency. At the same time, cost pressures intensified.

Administration expenses grew 40.96 percent, accelerating from the prior year’s 27.16% growth rate, while property expenses rose 15.66%, up from 13.29%. Both cost lines are expanding faster in a contracting revenue environment, creating a clear margin compression dynamic.

Although the trading update does not disclose absolute cost figures or a bottom line profit number, limiting the precision of the analysis, the directional signal is unmistakable. If sustained into Q2, this combination of rising costs and falling revenue is likely to produce materially weaker full year profitability than the occupancy improvement alone would suggest.

At Palm Estate, the group noted that business stability is expected to improve once an anchor tenant takes up additional space. This language shows a structural vulnerability: the commercial viability of at least one key node in the portfolio remains dependent on a single tenant event that has yet to materialise. Anchor tenants do far more than contribute rent; they generate foot traffic, validate the centre’s positioning, and create the critical mass that supports occupancy and rental rates for surrounding smaller tenants. The absence of an anchor at Palm Estate is therefore suppressing not only the vacant space itself but the performance of the entire node.

ZECO’s overall portfolio occupancy of 55.88% remains well below the 70 to 75% threshold that commercial property analysts typically regard as the minimum for sustainable, diversified retail operations. Stronger performance at other nodes may be masking the ongoing drag from Palm Estate.

On a more positive note, ZECO’s window and doorframes manufacturing operation continues to provide a strategically sound vertical integration benefit. The business is positioned to capture upside from the elevated construction activity driven by the strong 2024/25 agricultural season and the resulting increase in corporate and household infrastructure spending, a tailwind also referenced by CAFCA, WestProp, and other infrastructure linked companies in their Q1 updates. While the trading update does not quantify the manufacturing division’s contribution to group revenue, the commercial logic of this integration is clear.

A peer comparison further highlights the outlier nature of ZECO’s results. In the same reporting season, WestProp delivered 80.2% revenue growth, Eagle REIT posted more than a tenfold increase in profit (with its Mazowe Walk Mall reaching 93% occupancy in its maiden operational quarter), Dairibord reported 26% volume growth, and CAFCA achieved 24% revenue growth. ZECO’s revenue decline stands in sharp contrast to a broader corporate landscape that has broadly validated the IMF’s 5 percent GDP growth projection for Zimbabwe in 2026.

The group’s underperformance relative to peers is not explained by macro conditions, which were common to all, but by ZECO specific factors: a still constrained portfolio occupancy level, accelerating cost growth, and the unresolved anchor tenant dependency at Palm Estate. These elements are imposing a revenue ceiling at a time when the wider commercial property market remains constructive.

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