Real estate tipped in Africa investment rush

INVESTORS looking to participate in the sub-Saharan Africa growth story should consider property, according to Derrick Roper, CEO of Novare Equity Partners.

He says several factors support the case for property investment across the region as economic growth is expected to remain strong, backed by positive demographics and a middle class that is expanding fast, which is fuelling consumer spending.

“Aligned with this is rapid urbanisation and investment in underdeveloped infrastructures in fast-growing African cities,” Mr Roper says.

SA, Ghana and Nigeria are examples of countries that have dedicated substantial resources to infrastructure upliftment.

Mr Roper says urbanisation, facilitated by improving infrastructure, makes it easier for developers to optimise utilisation by concentrating property investments in areas where great numbers of people live.

“This young, affluent and urban middle class is looking for modern amenities, from office space to retail complexes and housing. At present, the supply of these facilities is limited, with the lack of modern shopping space in many cities in sub-Saharan Africa a good example.”

A number of South African property companies are eyeing the rest of the continent for growth as the local property market is getting saturated.

Mr Roper says the scope for property development is enhanced by the involvement of retailers such as South Africa’s Shoprite and Massmart, the latter recently acquired by Walmart, with their insatiable demand for access to African markets.

However, investing in longterm projects in the region is not always easy. Finding the correct properties and dealing with relatively slow-moving authorities can be stumbling blocks.

Although construction costs and professional fees are relatively high, superior real rental yields of over 10% for retail, residential and industrial properties are achievable.

In terms of accessing the subSaharan Africa market, “except for SA, liquid, listed property investments are rare”, he says.