By Fadekemi Ajakaiye
Leading real estate and infrastructure experts under the aegis of
Global Real Estate Institute (GRI) club have identified funding challenges to investment in real estate and proposed options for practitioners in African continent to operate optimally at a recent meeting in London.
At the meeting with the theme “Trends Shifting Real Estate Capital Flows in Sub-Saharan Africa was the African Chapter’sÂ first London’s GRI forum, an official of Ecobank Nigeria Plc, Mr Kunle Osilaja led the discussion onÂ how Africa compares to other emerging global markets, the impact of regulatory and policy changesg and obstacles preventing flows of foreign capital into Africa.
Corroborating him, the Managing Director and Chief Executive Officer, Propertygate Development and Investment Plc., Mr. Ajayi Adetokunbo advised the real estate operators in the African continent not to devote significant energies chasing after foreign investors who demand a great deal of persuasion.
According to him, operators should begin to seriously look inward for funding in view of the structural and other challenges on the continent coupled with competition from other regions in the globe.
Participants at the meeting agreed that investment into African real estate from international investors had slowed down. They noted in particular, that 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 also observed that there was lack of liquidity in the African market, and it might be hard for a secondary market to commence soon.
A member however pointed out that the continent was beginning to witness some improvement, as countries like Ghana and Zambia are beginning to pick up while another noted that liquidity in the exit market was deepening.
Consensus was reached that there is a big need for capital from local institutions in Africa in order to avoid the current reliance on foreign investment.
They agreed that capital investment from local institutions like pension funds, insurance companies, and capital market, through channels such as Real Estates Investment Trusts (REITS) should be boosted to enhance improvement in the market.
The meeting also assessed the retail real estate market noting that no occupiers in Africa to fill shopping malls, which is a disincentive to retail real estate development on the continent.
Participants resolved that with the dearth of organised retail on the continent, developers should rethink the current model of building sophisticated malls.
They agreed on the need to do more of strip malls, which may be better suited for a number of African countries, considering their current level of development.
Members were welcomed by Mr. Neall De Beer, GRI Club Director Africa to the London meeting.