CATEGORIES: Africa, Private Equity, REITs & Funds

‘Investment Grade Africa’ or ‘Growth Africa’: Where does Nigeria’s Real Estate Market Fit in?

Earlier this week, Bronwyn Corbett, CEO of the GRIT Real Estate Income Group, spoke to the BBC about where and why they invest in Africa, their focus on 2nd tier cities and the process of educating foreign institutional investors.

GRIT’s investment thesis focuses on what they refer to as Growth Africa and Investment Grade Africa. It sets a fairly good example for how real estate investors looking to deploy capital into Sub Saharan Africa should seek to understand the multi-faceted nature of each extremely different city.

According to Corbett, Investment Grade Africa refers to countries such as Morocco, Mauritius and Botswana, where there are sophisticated capital markets, strong political stability and ease of doing business.

Growth Africa includes countries such as Ghana, Mozambique, Kenya and the rest of the East African region. She explains that these regions can mitigate a lot of Africa’s un-understood risks and are also seeing a large influx of international tenants who are in need of good quality real estate and infrastructure.

To mitigate risk for any of their investments, GRIT follows a strict checklist that includes secure land tenure, flexibility in the deployment and repatriation of capital and ability to secure funding among others. 

'Investment Grade Africa' or 'Growth Africa': Where does Nigeria's Real Estate Market Fit in? Source: GRIT UK Roadshow Presentation 2018.
‘Investment Grade Africa’ or ‘Growth Africa’: Where does Nigeria’s Real Estate Market Fit in? Source: GRIT UK Roadshow Presentation 2018.

Even though the sample countries Corbett provided in the video were not exhaustive, it will come as no surprise that Nigeria was notably unmentioned among the Growth Africa countries, as each item on the checklist has become exceptionally hard to close, especially in recent periods. According to their UK Roadshow Presentation published last year (just before raising $132m on the London Stock Exchange), Senegal was an approved investment jurisdiction while Seychelles was still in the pipeline.

Despite the abundance of retail, office and hospitality assets that have come onto the market in the past 18 months in Nigeria, many of which have been shopped to institutional investors such as GRIT; finding prospective buyers has proven to be a slow and difficult process, with only a handful of still imminent success stories. Besides the economy, this is largely due to a combination of factors especially the inhibitive regulatory policies and market saturation across many of the property sectors.

Outside of GRIT, the Investec – Growthpoint and the Eris – Momentum alliances are among the investors currently exploring the continent in search of attractive assets.

Watch the video below to learn more.

See more about GRIT and other African real estate funds by browsing our collection of Company Snapshots and Fund Factsheets on app.estateintel.com.

Share your thoughts!