East Africa will most likely lead the post pandemic recovery – Experts
By Victor Adar
Over the past 18 months, real estate developers and investors have faced many challenges. But the 8th Annual East Africa Property Investment (EAPI) summit held on July 7, paints a bullish picture.
Themed “Reposition & Reimagine”, the event sought to pass the message that investing in real estate is primed to build the foundations for a more sustainable and inclusive future.
“We have seen development being driven by new demand and changing market dynamics across the sector. This has led to investment in logistics and light industrial to support e-commerce growth; data centres and healthcare, affordable housing, as well as residential community development, which prioritize space,” said Kfir Rusin, the summit’s organizer and commercial director at Terrace Africa.
Nedbank’s head of property finance in Africa, Gerhard Zeelie, knows too well the importance of remaining agile in a fast-moving market.
“All players in the property market need to be able to change quickly when the environment changes. This means that scenario and option analysis is very important. We are still in uncertain times and it is too early to conclude on how the real estate market will look in the future,” said Zeelie, whose bank is among lenders currently wooing customers to invest in real estate.
Zeelie says Nedbank is committed to investing East Africa and is upbeat about the bank’s transactional capacity despite the prevailing tough business environment.
“As with the rest of the world, we are cautious of offices and hotel developments. Light industrial is a growing trend across Africa and we are following it. We also still see retail space as favorable although we acknowledge that Nairobi, in the short term, is probably adequately supplied in respect of retail space,” Zeelie said.
Sharing Zeelie’s views on logistics and light industrial, Tilisi Developments observes that while demand dipped initially, interest quickly rebounded especially in the logistics space. Their residential offerings have also proved popular.
“As people adapted and learned how to navigate the pandemic and understood the long-term nature of it, we began to see the old interest renewed as well as increased interest. We have opened more land for industrial and logistics as a result of this interest,” says Tilisi’s CEO Ranee Nanji.
Nanji also notes that there was a definite increase in interest from buyers during and post-Covid-19 times. From a resident’s perspective, “the need for space, fresh air and open spaces has led to a significant shift in decision making for a home. Our sales have surged since Covid-19.”
Positioned for the future
Gateway Real Estate Africa (GREA) is another high growth player that is well positioned for the future. The firm’s chief executive, Shevira Bissessor, is confident on the future despite the structural shifts in the sector. Citing the 2008/2009 global financial crisis, Bissessor says that capital flows to emerging markets typically accelerate after global recessions.
“With developing markets recovering on the back of increased vaccine roll-outs, Africa will be a likely beneficiary from the increased hunt for yield. The pandemic has resulted in much fewer speculative developments and a preference for multinationals to rather lease than hold assets on their own balance sheets. At the same time, online shopping has been accelerated with a surge in demand for data centres and warehousing,” says Bissessor.
Bissessor also notes that although the logistics sector was affected by the pandemic, contingencies and multiple distribution centres played an important role in diversifying risk, which has created numerous opportunities. And, as the real estate sector position itself to cater to demand and attract investments, Bissessor believes emerging asses classes will drive future growth.
“We believe that the majority of developments across the continent will be tenant driven in future. This will result in smaller, more bespoke turnkey projects for which GREA is ideally suited. Whilst retail is facing cyclical and structural headwinds, demand for good quality data centres and healthcare, for example, is outstripping demand,” said Bissessor.