The market is less well-established in emerging markets, but countries such as Mexico and Brazil have REITs. The REIT market worldwide totals more than $1 trillion, according to consultancy EY, in more than 30 countries.
Kenyan legislation to allow REITs is expected to go through this year. Private equity funds look to attract institutional investors and traditionally do offer higher returns, due to the risks of investing in unlisted companies which may be less transparent.īut Ghana and Nigeria already have real estate investment trusts (REITs) - similar to mutual funds - which can be listed on stock markets and make it easier for retail investors to access the sector. There are currently eight Africa-focused unlisted real estate funds targeting $1.25 billion in capital, according to data provider Preqin.Īround 69 percent of capital raised for African real estate funds between 20 was focused on sub-Saharan Africa excluding South Africa, up from 40 percent from 2006 to 2009. But potential rents are also high - at a monthly $25-30 per square metre for high-end office blocks in cities like Rwanda’s capital Kigali or Ghana’s capital Accra, compared with below $20 in Johannesburg. WHY REAL ESTATE?īuilding costs in many African countries are high, real estate specialists say, partly because many materials have to be imported. Morley is also targeting annual returns of 20 percent or more, around 5 to 10 percentage points more than returns seen in similar mainstream emerging or developed funds. “The desire of the increasingly middle class to meet, socialise, shop and spend their leisure time in facilities or retail developments that are on a par with what you find around the world is not going to abate, it is going to continue,” said David Morley, head of real estate at private equity firm Actis.Īctis has raised and invested nearly $500 million in two real estate funds, with markets including Nigeria, Zambia and Mozambique. Urbanisation and population growth will boost the number of people in cities globally by 2.5 billion over the next three decades, with much of that growth in Africa and Asia, a recent United Nations study said. “The investors we are looking at targeting are institutions who can be locked up for the whole eight years.”Īs Africa’s fast-growing population gains spending power and moves into the cities, demand for real estate will grow, fund managers say.
“The number one reason (to invest) is return - 18-20 percent on an annual basis, if you are in for the full eight years,” said David Lashbrook, head of Africa investment strategies at Momentum. The fund has a life of up to eight years, so it won’t be a fast way to make a buck - but Momentum expects it to be lucrative. Momentum Global Investment Management is launching a $250 million sub-Saharan real estate fund later this year, focusing initially on shopping malls and office buildings in countries such as Mozambique and Rwanda. Investors have already taken a liking to sub-Saharan African dollar debt, encouraging a record $10 billion in sovereign and corporate issuance last year and $5 billion so far this year, according to Thomson Reuters data.īut when even bonds from Kenya and Senegal offer yields of only five or six percent, enthusiastic risk-takers may choose to invest on the ground in Africa. LONDON, Aug 28 (Reuters) - High stakes for high return, if you can stick it out for the long term - investors are buying into a boom in sub-Saharan African real estate.įorecasts for 20 percent net annual returns from investing in shopping malls, office blocks or industrial complexes in countries from Zambia to Kenya is drawing in new investors, despite more immediate concerns in some countries about Ebola, terrorism or political stability.