Wealth Tax Shadows WestProp's Soaring Revenue in Z...

Wealth Tax Shadows WestProp's Soaring Revenue in Zim

Zim Now Reporter

Zimbabwe’s leading listed property developer, WestProp Holdings Limited, has reported an impressive 80% revenue surge to US$29.05 million in 2024, up from US$16.09 million the previous year, buoyed by strong residential property sales.

However, the gains come as the company faces looming headwinds from newly introduced wealth taxes on high-value properties.

The significant growth was driven primarily by sales at WestProp’s flagship developments: Pomona City, Pokugara, and Millennium Heights residential estates. Yet, the company expressed concern over new fiscal policies, particularly the proposed wealth tax on high-value residential properties, which could impact the sector’s outlook.

In its abridged audited consolidated financial statements for the year ending 31 December 2024, WestProp acknowledged the increasingly volatile Zimbabwean economic climate, citing fluctuating inflation and evolving exchange controls.

The Chairman’s report zeroed in on government efforts to boost tax revenues, especially through property taxation. Initially, the 2024 national budget proposed a 1% wealth tax on residential properties valued at US$100,000 or more, later revised to US$250,000 after industry feedback.

“On the fiscal side, policies aimed at increasing tax revenues, particularly property taxes, have introduced significant challenges,” said Michael Louis, Chairman of WestProp’s board. “These tax measures may also influence real estate investment trends and property values, creating a dynamic landscape for investors.”

Despite these concerns, the company emphasized its ability to adapt strategically, noting it has strengthened its presence in the middle-class market while leveraging gains from investment properties. WestProp’s gross profit rose sharply by 90% to US$11.15 million, signaling improved operational efficiencies. It also posted a US$1.13 million share of profit from associates, up from US$0.85 million in 2023.

However, the Group’s net profit dipped to US$18.26 million from US$39.43 million in 2023. This decline was largely due to a lower fair value gain on investment properties—US$18.84 million in 2024 compared to US$49.51 million the previous year—and higher operating expenses tied to its expansion strategy. Profit before tax held firm at US$23.60 million, while basic earnings per share dropped to 61.86 cents, down from 131.42 cents in 2023.

Despite this dip, headline earnings doubled to 8 cents from 4 cents in 2023, indicating stronger core profitability. The Group’s total assets rose to US$213.51 million, propelled by the expansion of investment properties. Equity increased to US$151.73 million, reflecting robust retained earnings.

In recognition of shareholder value, WestProp declared dividends totaling US$2.40 million for 2024. Looking ahead, the Group expressed a "cautiously optimistic outlook", pointing to ongoing developments at The Hills Lifestyle Estate, Pomona City, and Millennium Heights.

Strategic growth initiatives include the commissioning of a glass and aluminium fabrication plant, a brick-moulding factory, and the much-anticipated "Mall of Zimbabwe", the country’s first regional mall, with groundbreaking expected by year-end.

WestProp also reaffirmed its commitment to sustainability, citing efforts in green building, wetlands rehabilitation, and afforestation. It invested US$275,573 in community upliftment, including a beekeeping project aimed at environmental conservation and community empowerment.