The Managing Director and Chief Executive Officer, Propertygate Development and Investment PLC, Mr Adetokunbo Ajayi has proposed some measures to enable developers in African continent to raise funds internally as against over-dependent on foreign investors.
Besides, Ajayi who addressed experts at the meeting of the African Chapter’s first Global Real Estate Institute (GRI) Club in London recently on ” Trends Shifting in Real Estate Capital Flows in Sub- Sahara Africa advocated the use of Real Estates Investment Trusts (REITS) as a potent window for enhanced financing of real estates investment.
Ajayi explained that rather than depend solely on foreign investors for funds, real estates operators in the African continent should explore funding opportunities in an array of financial outlets such as pensions funds. Insurance companies and the capital capital market by leveraging REITs.
” Instead of of players in the continent devoting significant energies chasing after foreign investors who demand a great deal of persuasion, in the light of structural and other challenges on the continent and competition from other regions of the globe, operators should begin to seriously look inward for funding.
” There is a big need for capital from local institutions in Africa in order to avoid the current reliance on foreign investment. Capital investment from local institutions like pension funds, insurance companies, and capital market, through channels such as REITS should be boosted. It was hoped that big changes will take place in the market in the next 10-15 years., Ajayi said
The discussion at the London meeting centered on how Africa compares to other emerging markets of the world. Members considered the impact of regulatory and policy changes, and obstacles preventing flows of foreign capital into Africa.
They unanimously agreed that investment into African real estate from international investors has slowed down. Specifically, they noted that investment flow from South Africa had reduced, as attention had turned to Eastern Europe.
Apart from the current economic challenges of the continent which has turned off investors, the meeting observed lack of liquidity in the African market and absence of secondary market.
A member however pointed out that the continent had begun to witness some improvements as countries like Ghana and Zambia are beginning to pick up while liquidity in the exit market is believed to be deepening.
Assessing the Africa’s market. the forum lamented dearth of occupiers in Africa to fill shopping malls which according to them is a disincentive to retail real estate development on the continent
With the dearth of organized retail on the continent, some members argued that developers should rethink the current model of building sophisticated retail centre as they need to do more of strip malls, which may be better suited for a number of African countries, considering their current level of development.
By Marc Philips