Anticipating platinum and tourism boom, Old Mutual buys property in Ngezi, Vic Falls

Old Mutual Zimbabwe currency
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Old Mutual Zimbabwe has bought up land at Ngezi in anticipation of a mining boom in on the platinum belt, and is adding properties in Victoria Falls to build a new hotel.

The country’s largest insurer has bought 27 hectares at Ngezi and two other properties in Victoria Falls. This is sign by the company that it sees growth in these two areas, but it is also a worrying signal by the country’s largest insurer that it sees inflation rising.

Old Mutual will build an industrial park plus a hospital near Turf Village in Ngezi to serve the growing community. The area is expecting growth due to planned expansion by Zimplats, a new platinum mine being developed by Karo Resources and other mining investments.

“At Ngezi, our investment is to support in the growth of the mining community that we see rising there,” CEO Jonas Mushosho says.

Karo Resources expects to start development of its mine in 2020, while Zimplats’ Mupani mine is to reach full production by 2025. Two separate mining ventures are also planned on the Great Dyke platinum belt.

The Mhondoro-Ngezi council earlier this year announced that it had offered the land to Old Mutual at US$4.25 for the 15ha industrial park and US$2.50 per square metre for the 12ha hospital.

The park will comprise seven separate industrial shells, Old Mutual has previously said. Facilities will include a foundry to supply chrome-cast grinding balls used by platinum miners and for the manufacture of rock bolts used for underground support.  

At Victoria Falls, Old Mutual plans to build a hotel and a conference centre, Mushosho said.

Property hedge

Old Mutual is already one of the country’s largest property owners; its portfolio comprises over 500 000 square metres of property. Among these are Westgate, Highglen, Chitungwiza Centre and Nkulumane Shopping Centre.

But with slow commercial growth in the big cities – cement maker Lafarge says its best business is outside Harare – Old Mutual is diversifying away from Harare and Bulawayo. The company is now looking to boom towns like Ngezi and Victoria Falls for better returns.

For Old Mutual, where insurance policies were decimated during the hyperinflation era, lessons were learnt, Mushosho told analysts at a briefing for half-year results.

As inflation rises, the insurance business is likely to take a knock. Old Mutual’s asset management arm saw net outflows of $98.4 million in the half year. This was driven by investors withdrawing investments to buy foreign currency.  

“For the second half of 2019, our focus is on developing products that provide value for money to customers in the current environment. We are looking to minimise the risk of loss of value for our customers and shareholders,” Mushosho said.

During the first half of 2019, Old Mutual saw a rise in demand for USD-linked products from its customers, showing the market’s negative outlook on inflation.