Investors in position to increase acquisition
In Africa, investments are also increasing as investors search for better yields, points out Elaine Wilson, Divisional Director: Research at Broll Property Group. "Investments in South Africa are mostly driven by the strong local listed property sector while in other countries, real estate investments are driven by international companies looking to invest in the oil and gas industries as well as natural resources."
Kenya continues to see an influx of investors especially those looking for real estate assets to apply to their new REITs, says Jonathan Yach, Broll Kenya CEO and Head of East Africa Operations.
He also anticipates an increase in property developments in various counties as government continues to drive the devolution process. County land values and opportunity is within reach for investors looking to make a difference in the market.
Nairobi County remains the key business hub for major organisations due to the higher levels of development and infrastructure in place. Despite macroeconomic challenges and currency depreciation, Nigeria continues to show that long-term economic and demographic fundamentals are a strong attraction for institutional investors.
The Survey noted that although London retains its position as the top city for investment, there is also a marked increase in appetite among investors from Europe, Middle East and Africa (EMEA) and North America for value-add and opportunistic investments.
"The appetite for global real estate investment is increasing as more investors intend to deploy capital outside of their own region this year. Competition for assets is intensifying and many investors plan to move out the risk curve in search of higher yields, a trend that will result in a stronger focus on value-add and opportunistic investments," says Chris Ludeman, Global President, CBRE Capital Markets.
According to Wilson, investors generally enter the African market through formal retail, the large-scale growth of the consumer market in Africa lead to the increase of retail facilities and subsequent demand for warehousing space and distribution centres.
In Kenya, office properties are sought-after with many international companies either looking to set up offices in Nairobi or are expanding their current office offerings and the retail sector is experiencing exponential growth. Meanwhile the industrial sector is seeing a much higher demand for modern warehousing which currently outstrips supply.
The same is happening in Nigeria where office and retail properties remain the most preferred asset classes for investments. The office sector has seen strong demand in the past few years, with a number of developers and investors taking advantage of the lack of prime properties hence the addition of A-grade office properties onto the market, explains Bolaji Edu, Broll Nigeria CEO.
A few fundamental requirements to successfully attract and retain investors in any part of Africa is political stability, sound economic policies and investor friendly legislation. Even though problems like Mozambique's political unrest, South Africa's Employment Equity restrictions or the suspension of infrastructure projects in Angola could make investors rethink their investment strategies, the group still anticipates an overall increase of investments in Sub-Saharan Africa.
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