Africa — A challenging environment for Real Estate Investment

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Addressing Sapoa conference, Mark Stevens, Fortress Income Fund CEO said it was still highly risky to invest institutional capital in the likes of Nigeria, because property laws and regulatory frameworks were not strong enough yet. Addressing Sapoa conference, Mark Stevens, Fortress Income Fund CEO said it was still highly risky to invest institutional capital in the likes of Nigeria, because property laws and regulatory frameworks were not strong enough yet.

Property Investors are still concerned that a lack of strong legal structures and reliable rules are making the decision to invest in other African countries difficult as opposed to investing in Europe — SA Commercial Prop News has learned.

CEO of Fortress Income Fund, the very successful diversified property group, Mark Stevens said it was still highly risky to invest institutional capital in the likes of Nigeria, because property laws and regulatory frameworks were not strong enough yet.

Stevens was a part of a panel at the South African Property Owners Association's (Sapoa) conference, held in Cape Town last week.

Fortress has invested in industrial property in South Africa - in fact it owns the most of listed industrial property in the country. It invests in Western Europe through its stake in Hammerson plc and in central and eastern Europe through New Europe Property Investments (Nepi) and Rockcastle Global Real Estate which own assets in countries including Romania, Poland and the Czech Republic.

Nepi and Rockcastle are set to merge into the largest property fund on the JSE with a market capitalisation of over R85bn.

Fortress is part of the Resilient REIT group of companies. Resilient REIT had plans to build ten shopping centres in Nigeria, but these have been put on hold.

"We have been unable to spend the money which we raised in Nigeria. The economic policies related to currency control are not conducive to investing for us," said Resilient REIT MD Des de Beer a few months ago.
"Nigeria is on ice in our portfolio for the time being. We are looking to move our efforts elsewhere," he said.

Rendeavour CEO and founder and developing market investment expert, Stephen Jennings, said many African countries were actually offering very high growth relative to a decreasing degree of political and conflict risk as compared with the likes of Western Europe and the US.

He said many South African investors may have taken their money out of the continent because of push factors without considering strong genuine opportunities in Africa.

Stevens said he still believed political risk had caused trouble in SA's economy. It had created volatility.

"We are in a recession and recent ratings downgrades have prompted investors to buy assets offshore. SA's government needs to stay out of running much of the economy," he said.

Read more on:

South African Property Owners Association (SAPOA)  |  Fortress Income Fund  |  SAPOA Convention and Property Exhibition  |  Nigeria Property Market  |  Mark Stevens
Nedbank Corporate and Investment Banking

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