New frontiers in property hunt
• Potential markets in Nordic nations and north Europe
South Africans are trying to buy commercial property worldwide as they look to build defensive diversified real estate portfolios, with various companies expected to invest in new markets in 2018, including in Nordic countries and Canada.
South Africans are trying to buy commercial property worldwide as they look to build defensive diversified real estate portfolios, with various companies expected to invest in new markets in 2018.
It seems investors may even look to put their money in central and northern Europe.
Garreth Elston of Golden Section Capital says potential new markets for South African investors are Nordic countries such as Sweden, Norway and Finland as well as France, the Netherlands and Ireland. Another option could be Canada.
Because of a weak South African economy and poor business confidence over the past three to four years, many local investors have shifted money offshore, with the bulk of it going into eastern Europe.
Recently, they have looked to southern Europe, specifically Spain and Portugal.
Some property funds are expected to look at new markets in 2018, given the lack of opportunities at home, the volatile rand and political uncertainty.
The opportunities are likely to be dominated by Europe as most of the continent appears less risky than Africa.
Investors are able to transact in many countries on the continent and are able to take their profits out to SA.
Green Street Advisers, a UK group, says the office markets of Stockholm and Helsinki are attractive relative to other European office nodes. Stockholm’s market is booming while Helsinki’s is attractive even if its recovery has been tepid.
Some South African funds are already well positioned in Europe. As far as western Europe is concerned, property companies are continuing to seek investments in Germany and the UK.
Eastern Europe has steadily gained in popularity.
The head of listed property funds at Stanlib, Keillen Ndlovu, says eastern Europe makes up more than 20% of the South African listed property sector’s asset base.
The US should not be ruled out as a property investment destination given how diverse and large its commercial property sector is.
According to Catalyst Fund Managers, the market capitalisation of US real estate investment trusts (Reits) was about R11-trillion at the end of October. This excludes some developers and other property companies which are not necessarily Reits. Reits are different from other property counters in that they pay out the majority of their profits as dividends.
Emira Property Fund has taken the plunge into this mega market, recently becoming the first South African listed property fund to invest in the US. Emira co-invested with Rainier Companies, a company based in Dallas, Texas.