The 10th edition of the African Property Investment Summit was held in Johannesburg earlier this month. It brought together over 500 of Africa’s top dealmakers and service providers, who have driven and supported transactions on the continent over the past decade. The theme of the event, ‘Africa Re-Inspired’, sought to document the progress of the real estate market since inception, track wins and losses and chart a new way forward.
Here are some interesting notes from a few of the discussions.
The first panel session of the event was called 10 Years On: The Evolution Of African Real Estate Investment & Development-Where To Next? Panellists included:
- Niyi Adeleye, Head Real Estate Finance-Africa Regions, Standard Bank Group;
- Thomas Reilly, Managing Director, Growthpoint Investec African Properties (GIAP), Investec Asset Management;
- Kevin Teeroovengadum, Real Estate Advisor, Mauritius;
- Adam Nisbet, Head of Investment, GRIT, Mauritius.
Speaking on GRIT’s strategy, Adam Nisbet explained that they prefer to take a tenant driven approach that involves them identifying and focusing on occupiers. Rather than buying undervalued assets, GRIT prefers to pay value for the asset, focus on the counterparty and let these assets mature. One of their recent investments include Capital Place in Ghana with tenants such as Hollard, Siemens and Aurecon. GRIT has been very active this year with several acquisitions following their listing on the London Stock Exchange. Adam explained that the process opened their business to many new capital markets.
Thomas Reilly from Growthpoint Investec African Properties (pictured speaking above), responded by explaining that they prefer to take a different approach. Their strategy involves putting a greater focus on cities that are growing, as they need to make sure all assets are leasable outside their existing tenants. He went on to explain that in lieu of owning one asset in a market, they aim to own a portfolio of assets, so they can influence markets they operate in and also gain some synergy in the management of those assets. GIAP recently acquired Achimota Mall in Accra and have stated that they focus only on office and retail but may consider logistics. They will not invest in residential or hospitality as they see themselves as specialists.
My panel session, which was called The Future Of Space And The Shared Economy, Defining New Ways Of Occupying For Africa, discussed the places where we work and the ways in which the workplace is changing. Panellists included:
- Greg Schwebig, CEO, Haussmann Group, Kenya;
- Nnenna Alintah, Head: CRES & Research, Cushman & Wakefield | Broll, Nigeria;
- Yossi Dayan, Head of Growth, South Africa, WeWork.
During the session, Yossi from WeWork mentioned that the group intends to make a few announcements on their Africa strategy in the weeks to come. Their flagship location, which is a c. 13,000sqm space in Rosebank pictured below is now at capacity after opening officially earlier this year.
Most of this demand is from corporates, who currently take up the largest percentage of space. A new centre in Sandton will be open in a few weeks, while the next in Cape Town is currently in implementation.
Speaking on occupiers and their preferences, Nnenna explained how requirements from global corporates within Africa are becoming standardised as African real estate markets mature.
On day 2 of the event, Dominique Moerenhout, CEO, European Public Real Estate Association (EPRA), Belgium gave a presentation on African Real Estate within the European and Global Context. Some of his interesting points are noted below.
- The graphic below illustrates the listed real estate market across the world and how it is distributed between REITs and Non-REITs. The size of the market in Developed North America is €1.135tr and over 90% of this is in REITS. In contrast, within other parts of the world, most of the listed real estate market is held in non-REIT entities.
- Though it is now more established than ever, Dominique notes that getting European REIT Regimes to the state they are in now, was a very long-term initiative that involved consistent engagement with the government. As a result of the perceived negative effect on government taxable income, a strong political approach is required to successfully scale a sound REIT regime through.
- Though some governments take the stance that the objective is not to pay tax, there are studies that show that the introduction of a sound REIT Regime boosts tax income for the government.
- US Pension funds allocate between 12-14% of their AUM to listed real estate while that range changes to 1%-5.5% in Europe.
- The portfolio composition of listed real estate entities in Europe has become more diversified from 2010 – 2018 with residential, industrial and self-storage progressing the most.
- An interesting side note on the ongoing global ‘retail revolution’ due to the disruption caused by e-commerce and the shared economy are the different ways it is affecting the occupancy and performance of shopping centres in the US and the UK. Within the US, 40% of all retail is in the department store format, however, this figure is as low as 8% in Europe. The disruption caused by e-commerce predominantly affects the department store formats.
Panellists on the Capital Market, REITs and Listed Property in Africa session included:
- Thapelo Tsheole, CEO, Botswana Stock Exchange;
- Deborah Nicol-Omeruah, Chief Commercial Officer, UACN Property Development Company Plc (UPDC), Nigeria;
- Craig Lyons, representing Novare Africa;
- Nozipho Makhoba, Acting Chief Executive Officer: STANLIB Fahari I-REIT.
During this session, Deborah explained that UPDC owns a diversified portfolio of assets and their newest asset in the student housing sector is their best performing. She also pointed out that there is still a gap in market competence for Asset Managers that are able to sweat assets and bring out latent or underlying performance.
Speaking on behalf of Novare, Craig said that though they are very occupied in the markets that they are active in such as Nigeria and Zambia; Uganda, Ghana and the Ivory Coast are very interesting markets for them.
To round this up, African markets are facing a new kind of reboot. Many international institutional real estate investors who were excited about deploying capital into the continent a few years ago have either backed down or changed strategies. Though few, new investors have emerged and the existing ones are sitting up. All of whom, more importantly, are paying close attention to execution and strategy. Schedule a demo here to see how the real estate data on the Estate Intel platform can help you make smarter investing or advising decisions!
See you at WAPI 2019!