Focus on Partnerships key to unlock value in Africa’s Property Market
Property Investors and developers looking to expand into Africa, need to take heed that focusing on finding the right local partner on the ground, are among the quickest ways to unlock value and underpin growth in the continent.
Achieving sustainable success in Sub-Saharan Africa as a property investor, irrespective of market conditions, requires that you have the confidence to pursue and maximise your opportunities - and only the right partner with proven expertise and a clear desire to help facilitate your success can enable you to do that.
The sentiments were echoed at the two day Africa Property Investment Summit which took place at the Sandton Convention Centre on 13th to 14th October.
As the world’s second-fastest growing region, the continent’s booming economies have caught the eye of multinationals and property developers in search of higher yields.
According to Stanlib Direct Property Investments chief investment officer Amelia Beattie said real estate investment trusts looking to do business in Africa had to manage risks applicable to each country.
“It helps to develop ties early on with partners there when you are finding your feet. Of course, working with large South African companies which have established themselves on the continent can be a benefit,” she said.
Delta International became the first outright africa property fund to list on the JSE. CEO Louis Schnetler said he expected more funds to move into Africa where existing funds had strong track records.
“There are risks in Africa but there are risks in any market. We may be the first listed fund focused on the continent to pay distributions to investors, but we know others will spring up soon,” he said.
Last month, Property services and development company Eris Property Group and Momentum Global Investment Managers launched a R2.6 billion (US $250-million) African Real Estate Fund focused on Sub-Saharan Africa.
The investment vehicle, will focus initially on shopping malls and office buildings in key African locations including Zambia, Namibia, Botswana, Mozambique, Ghana and Rwanda.
JSE-listed Resilient Property Income Fund recently started Resilient Africa to develop properties in Nigeria.
Resilient has a 50.98% interest in Resilient Africa, with Standard Bank and Shoprite as partners.
The joint venture has more than R2bn in equity and is building the 12,819m² Delta Mall in Warri, in Delta State, Nigeria. Its other main project is a 12,291m² mall in Owerri, in Imo State.
Alternative Real Estate Management fund manager Maurice Shapiro said it needed to be borne in mind that projects in Africa took years to develop. “There is not that much which has already been developed in Africa, so many funds from SA will see this as an opportunity. But the lead times are long.
“It can take two years before you even start construction and then years after that to build, say, a large mall. What we are seeing is some funds coming to the fore now who have been in Africa for five years already,” he said.
“We are not at a stage yet where large investors believe they have to invest directly into Africa. When they look for offshore exposure, their eyes are on investments in various countries in various continents, not just Africa.”
Economic growth in Africa expected to reach 5.2%
According to the World Bank’s new Africa’s Pulse, a twice-yearly analysis of the issues shaping Africa’s economic prospects, economic growth in Sub-Saharan Africa continues to rise from 4.7 percent in 2013 to a forecasted 5.2 percent in 2014.
This performance is boosted by rising investment in natural resources and infrastructure, and strong household spending.
Africa’s Pulse notes that while GDP growth in the region is expected to remain stronger than in many other developing countries worldwide, a number of important risks remain, which include locally volatile food prices, Political uncertainty, weaker demand for metals and other key commodities.