Sub-Saharan African opportunities

Many are looking beyond SA’s borders to explore investment opportunities in subSaharan Africa. But expanding an offshore portfolio can be daunting because every market requires insider knowhow. With that in mind, we rounded up expert comment on the most promising property investment sectors in the region. Which countries are poised for growth?

The Doing Business index ranks countries based on the World Bank Group’s research of their regulatory environments being conducive to business. Economies with a higher ranking (1 to 20) have more user-friendly regulations for businesses, indicating a stronger protection of property rights. More than 190 economies were scrutinised on criteria including electrification, ease of business creation, tax burdens and protection of property rights.

The top 10 sub-Saharan African economies, as

ranked in the Doing Business 2019 report were Mauritius (20), Rwanda

(29), Kenya (61), SA (82), Botswana (86), Zambia (87), Seychelles (96), Lesotho (106), Namibia (107) and Malawi (111). Growthpoint Investec African Properties (GIAP) is a pan-African real estate investment joint venture between Growthpoint Properties and Investec Asset Management. MD Thomas Reilly says subSaharan Africa’s property prices have been under pressure since 2015, when local rental levels fell, in some cases by 30% or more. “Fast-forward a few years and a different picture is emerging. The overheated tenant markets with excessive rentals visible prior to the oil crash are no longer,” he says.

“Real estate markets have re-based themselves to arguably more sustainable levels and to open to a broader market. From a pricing perspective, this bodes well for new entrants. While prices have yet to show a rebound, the entry point for a new long-term investor, particularly in markets such as Ghana and Nigeria, could be viewed as compelling. Couple this with demographics, which show little signs of abating, including some of the world’s highest levels of urbanisation and middleclass growth, aside from absolute population growth.”

OPPORTUNITIES

According to Reilly, key opportunities prevail in retail, office and logistics/ industrial sectors, where quality assets remain in short supply and strong international tenants can be secured for a local or regional presence.

Standard Bank’s head of real estate finance for Africa regions Niyi Adeleye says sub-Saharan growth is inevitable. As some investors are pulling out, others are entering. “In the current market, property aggregators are able to acquire assets and portfolios at very competitive prices. While investment levels on aggregate are currently in a holding pattern, there is now more longer-term capital entering the market,” Adeleye says. He expects new projects in retail and industrial sectors, data centres, private education and student housing.

Kfir Rusin is hosting the Africa Property Investment (API) Summit this October. API’s research shows that sub-Saharan Africa’s real estate sector has evolved. “The trading environment in African real estate over the past 24 months has been tough, but in 2019 we’ve seen increased investment activity in new sectors that cater to proven demand,” Rusin says. “We estimate that our stakeholders alone have done deals of more than $500m in 2019. That $500m has been invested in logistics and warehousing, affordable housing, convenience retail, hospitality, serviced land and mixed-use developments.”

AFFORDABLE HOUSING

Which countries are drawing investors? “Affordable housing is probably the biggest discussion point in Africa,”