Markets react to economic conditions
The slowdown in growth on the African continent has surely taken its toll on almost all economic sectors but the African property market is yet fighting to hold its own.
And to give perspective to the subject, the cream of the property market will shortly be gathering in South Africa for this year’s edition of the annual African Property Investment Summit.
The two-day conference will be held from 18-19 August 2016 at the Sandton Convention Centre in Johannesburg and will feature speakers from Broll, CBRE, Mara Delta, Knight Frank, Old Mutual, STANLIB, Standard Bank, Novare, RMB Westport, JLL, CDC Group, ALN, ITL, Growthpoint, UPDC, Britam, Fusion Capital, and Heriot Properties amongst others.
Commendably also, the event will feature various discussions on innovative strategies and collaboration, as well as showcasing new real estate opportunities and projects across Africa.
And in the view of the organisers, the prospects are looking up overall.
Indeed, despite Africa’s slowdown; property developers and private equity funds continue to pour investment into the continent, but with more focused strategies. “Over $1,2 billion has been raised and allocated to real estate investment in Africa over the past year and we expect this trend to continue” said Kfir Rusin, General Manager of the upcoming Africa Property Investment Summit.
Commenting on the global capital flows making their mark on African real estate, Peter Welborn, chairman of Knight Franks’ Africa business says that “The underlying investment theme across sub-Saharan Africa, over the next decade will undoubtedly be driven by substantial allocations of equity, into JV’s with successful local partners. Both the west African retail sector as well as the southern and east Africa logistics sectors will be high on the hit list of international capital.”
The last year has seen Actis, RMB Westport, Novare, Phatisa and Growthpoint successfully raising capital from global funds such as GIC Singapore, Grosvenor (USA), The IFC, CDC Group (UK) among other international funds.
The Africa Property Investment (API) Summit is the leading African focused real estate forum, which brings together influential property players from around the continent. The API Summit offers developers and investors access to new development strategies, a chance to showcase projects and meet with new sources of capital across Sub-Saharan Africa. The summit is the perfect opportunity to leverage off the expertise and knowledge of key industry players.
“This year’s summit will feature various discussions on innovative strategies and collaboration, as well as showcasing new real estate opportunities and projects across Africa. Whilst uncertainty remains, we believe that African property is still poised for growth, albeit at a lower but more sustainable level,” says Rusin.
The effects of the currency and liquidity crises have been sharply felt across the continent but most notably in the larger oil driven commodity exporting countries. This has resulted in a shift towards economic diversification and countries in the East African region providing more economic stability than others. Although there has been a slowdown across Africa, one of the continents’ largest funds remain optimistic. Bronwyn Corbett, CEO of Mara Delta says, “The company remains bullish under the African growth story. We have built extensive IP into our target countries and see tremendous growth in these markets that we are levering to build an Africa powerhouse real estate fund. Focus is on the strength of the counter party and mitigation of risks to build a quality portfolio and deliver substantial returns to shareholders.”
“We can already confirm over 500 delegates from over 30 different countries. We have noticed substantial growth in delegate numbers, with a 30% increase in attendance and a large international contingent compared to previous years. We see real estate and related industries as an important contributor to GDP in Africa and therefore we expect this trend to continue in future years,” concluded Rusin.
Key sessions at the API Summit will include: The Role of global capital in Africa , Africa’s Retail reality check, Logistics & Industrial sector making its mark as well as focused discussions on countries such as Rwanda, Ivory Coast and Tanzania.
And in a related development, Novare Africa Property Fund II, the fund with a mandate to invest in retail and commercial real estate in sub-Saharan Africa outside of South Africa, has announced that the fund, which will be listed on the Mauritius Stock Exchange at the end of July 2016, has raised $350 million (R5.25 billion) for investment in a portfolio of new developments in, amongst others, Nigeria, Zambia and Mozambique. It is managed by Novare Fund Manager in Mauritius, while Novare Equity Partners provides a sub-advisory role, being tasked with sourcing of potential new development opportunities.
Derrick Roper, chief executive of Novare Equity Partners said that while uncertainty and volatility had clouded the investment outlook for the continent, Novare’s Africa Property Fund will benefit in the longer term from positive demographics, urbanisation and growing personal incomes.
“The retail sector remains among the most under-penetrated, with significant potential for investors. Facilities for retailers to operate from, as well as to support their logistical operations, remain scarce,” said Roper.
The approach of Novare is to work in partnership with leading South African and international retailers expanding in sub-Saharan Africa. Novare is a seasoned operator in African markets north of South Africa, having operated in the region since 2007.
Novare had launched its first fund, the $81 million (R1.215 billion) Novare Africa Property Fund I, in July 2010. The fund’s first investment was the successful Novare Apo mall in Abuja, Nigeria, which opened in June 2012 with Shoprite as the anchor tenant – alongside prominent brands like PEP, Mr Price, MTN, LG, Adidas and Samsung.
The Novare Africa Property Fund II had its first close at the end of June 2014 and has since attracted additional commitments to achieve a target of $350 million (R5.25 billion). The Fund has already invested in various projects, with a strong pipeline awaiting capital deployment as well.
The 22 000m2 Novare Lekki mall in Lagos, which opens on 25 August 2016, at a total project cost of $83 million (R1.245 billion) is one of its star investments. This will be the largest mall in Nigeria’s most populous city and home to a range of blue chip Nigerian, South African and international tenants.
Equally, construction has commenced at Novare Gateway mall in Abuja, where it will be the first building of stature most visitors experience when arriving in Nigeria’s capital city on the expressway from the airport.
And with bulk earthworks completed at the Novare Central facility site, also in Abuja, construction is due to start on this mixed use centre consisting of retail space and A-grade offices.
In Southern Africa, bulk earthworks have also been completed at Novare Matola mall in Maputo, Mozambique, and construction has commenced. The mall is scheduled to open in the fourth quarter of 2017. At Novare Great North in Lusaka, Zambia, land has been acquired for the shopping centre due to open in the first quarter of 2018.
Roper said: “The continent’s challenges have tended to over-shadow its longer term potential, and we believe that this stage of the economic cycle presents significant opportunities for superior future investment returns.”