Unpacking a Continent: Understanding Opportunities in African Property Markets

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This was an excellent networking event – in addition to which our guests were treated to a very insightful panel discussion on the potential that exists across the continent of Africa.  The distinguished and highly knowledgeable speakers were complemented by our host, Sean Godoy of Divercity Property Solutions, who gave the introductions and set the pace for the evening in focussing on some key areas.

What was most striking was the convergence of views – the key points that emerged were:

  • the affordable housing sector in all countries needs to be financed, scoped and developed – financing, through national and international pension funds and other sources are needed to meet the significant needs of the nations.
  • a focus on cities – particularly those with recognised universities and facilities – is needed to develop sustainable housing projects.  We heard from Philip Hillman on student accommodation and the growth of this particular ‘alternative’ asset class, for which the appetite is growing – Morocco and Ghana were mentioned as having great potential.  Johannesburg, Pretoria and Cape Town have developed high quality student accommodation and rising middle classes.
  • the need for investors to ‘be there’ for the longer term – it could take 15 years to realise an investment and obtain returns above the hurdle rate of 8%.
  • scale is key – commercial projects such as shopping malls need to fit the size and needs of communities and the purchasing power of local people – research is critical to enable realistic valuations and to obtain a degree of certainty for ROI.  Cote d’Ivoire and Senegal are new hotspots for developers.
  • urban landscapes are changing rapidly – then catchment areas change as new business comes into major cities, generating demand for services.
  • developers are raising funds from myriad sources – however, affordability and keeping costs low are vital in terms of the investment mix; developers need to be educated in terms of how markets are evolving. There are issues in some countries where there is a lack of demand and over supply of existing housing, as property is out of the reach of populations – Kenya/Nairobi was cited.
  • communications networks and infrastructure are critical to support development.

In essence, the key areas for investment were summarised as – affordable housing – pretty much across the continent – the rental market is potentially massive in terms of need for more housing development and logistics – Africa is rich in natural resources – is a key export and import market and commercial opportunities are there to be explored.  The point was made, though, that many countries lack the necessary legal frameworks that investors require. The richness of the debate cannot be captured here.

Thank you to our speakers, Professor Francois Viruly, Philip Hillman, Thomas Reilly, Kevin Teeroovengadum and our presenter, Sean Godoy and all at JLL who made the evening a great success.