The Managing Director, Propertygate Development and Investment Plc., Mr. Adetokunbo Ajayi has advocated the use of Real Estates Investment Trusts (REITS) as a potent window for enhanced financing of real estate investment.
This he stated while addressing experts at the meeting of the African Chapter’s first Global Real Estate Institute (GRI) Club in London recently.
At the event tagged, “Trends Shifting in Real Estate Capital Flows in Sub- Sahara Africa,” Ajayi said REITS would enable developers in African continent to raise funds internally as against over-dependent on foreign investors.
The focus of the London forum was how Africa compares to other emerging markets of the world while members considered the impact of regulations, policy changes, and obstacles preventing flows of foreign capital into Africa.
Ajayi stated that African continent should explore funding opportunities in an array of financial outlets such as Pensions funds, Insurance companies and the Capital market by leveraging on REITs.
He said that rather than devoting significant energies chasing after foreign investors who demand a great deal of persuasion, in the light of structure, challenges and competition from other regions of the globe, operators should begin to seriously look inward for funding.
The London forum observed that there is lack of liquidity in the African market and absence of secondary market, adding that with this economic challenge, investors are turned off.
As attention had turned to Eastern Europe, with reduced investment flow from South Africa, the Meeting unanimously agreed that investment into the African real estate market from international investors has slowed down.
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 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 in the continent
With the dearth of organised 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.