African real estate market presents opportunities – summit

2nd October 2019

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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The African real estate market is growing and maturing, albeit with different trajectories and challenges in the various regions, African Property Investment (API) events MD Kfir Rusin said on Wednesday.

He was speaking on day one of the API Summit, in Johannesburg.

He noted that while the sector's growth over the last decade had not been linear or smooth, there had been a rise and completion in developments, a steady increase in transaction activity and an increase in expansion into new real estate centres, as well as an increase in stakeholder engagements. He posited that these factors indicated that the African real estate industry was vibrant and growing across all jurisdictions, while increasing in volume and scale.

Most importantly, he noted that stakeholders were taking a longer-term view on investments, with the days of "short, easy and fast money" gone.

Using published data, the company estimated that about $14.5-bilion had been invested and deployed in African real estate in the last decade.

The biggest question facing stakeholders and investors now was where in the cycle the market was now, and whether it was the right time to invest, Rusin noted.   

According to API, there are three distinct development cycles, looking from the past decade and into the future.  

First, there was the early money phase, which ended in 2016 during the commodity crash and was characterised by the formation of key real estate funds, South African developments and investors such as global development finance institutions.

This phase saw the core focus being the development of A-grade offices, large-scale retail malls and high-end residential units, Rusin explained.  

The second, current phase is the maturity phase, and is characterised by elements such as market corrections, the sale of assets developed during the first phase, and the exit of certain pioneering companies.

The next phase will be the institutional and public investment phase, which the company believes will be driven by further market consolidation, which will, in turn, create greater input and create the climate for large-scale institutional and public investment into the sector.

Looking at the continent’s prospects and outlook going into the next decade, real estate adviser Kevin Teeroovengadum indicated that it would be defined by rentals going down.

Grit Mauritius Investment head Adam Nisbet said a major factor over the next decade would be sustainability, across all aspects, especially tenant sustainability with total return on investment being pursued.

Growthpoint Investec African Properties UK MD Thomas Riley said the next decade would be characterised by consolidation, in terms of underling markets and potential players in the market.

He also touched on sustainability, with this linked to endurance, noting that it will take time for the market to grow and to start attracting international capital.

Riley posited that there would be growth over the next decade, with the continent growing, and of importance would be selecting and understanding the correct markets and countries to invest in.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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