SA companies to invest in Africa

WITH rapid urbanisation and consumers becoming increasingly sophisticated, Africa is starting to attract commercial property investment from South African companies.

An increasing number of local property companies have announced their intention to start pouring billions of rand into the continent to take advantage of improved business environments, which are opening up trade and allowing goods, services, labour and capital to flow more freely among market participants.

South African companies are trying to get in first before global companies wanting to diversify from their home markets grab the available opportunities in the continent.

SA’s retail giant, Shoprite, which has a massive presence on the continent, paved the way for local companies to do business in Africa years ago and continues to expand.

Absa commercial property finance head Pieter Steyn says Africa is experiencing a population boom and its population is expected to reach 2billion by 2050, with more than 66% in the active working age.

Mr Steyn says Absa is planning to leverage the footprint of its parent company, Barclays, on the continent and play a significant role in commercial property investment.

“Africa’s poverty has fallen from a high of 40% in 1980 to almost 30% in 2008 due to significant economic growth. Seven African countries are in the top 10 fastest-growing economies in the world,” he says.

Mr Steyn says research shows that 13 African countries have a higher gross domestic product (GDP) per capita than China.

“Added to this is the fact that 22 African countries have a higher GDP per capita than India. There are already 650-million mobile phone subscribers in the continent.”

South African property company Atterbury has concluded its second major African property transaction.

With Sanlam it has acquired an 85% stake in Ghana’s first A-grade shopping centre, the 20000m² Accra Mall, which is valued at about $65m.

The transaction follows the development of Atterbury’s 39000m² Bagatelle Mall of Mauritius, which opened in September last year.

“Right now, there is a window of opportunity to expand into this growing market,” Atterbury property development MD James Ehlers says. “Our purchase of the lead stake in the Accra Mall meets our investment criteria and furthers Atterbury’s goals of providing excellent total returns to investors. It also helps achieve a healthy measure of international geographic diversification in our portfolio.”

Sanlam plans to invest $500m in commercial property in sub-Saharan Africa, while Liberty Properties, a unit of insurer Liberty Holdings, is working on two mixed-use property projects in Ghana that are worth more than $100m.

JSE-listed property group Resilient, one of SA’s largest owners of shopping malls, has entered into a joint venture with Shoprite to build 10 shopping centres in Nigeria in a deal worth more than R1bn.

The deal also involves Standard Bank and Group Five.

Sanlam Properties CEO Thomas Reilly says there is a misconception that it is difficult to do business in Africa.

“The truth is that it is easier to do business in certain countries than others in the continent. Africa’s population is experiencing an increase in income, resulting in an increase in household spending,” Mr Reilly says.

Liberty Properties CEO Samuel Ogbu says Liberty aims to be considered the leading property brand on the continent, with a key role to play in building its infrastructure.

Mr Ogbu says the company has two mixed-use projects that it expects to start in Ghana in the third quarter of this year.

JSE-listed Rebosis Property Fund, a substantially black-held property company, is following suit, exploring opportunities on the continent.