Solving basic need for affordable housing, enabling tertiary education through sufficient student accommodation, fostering communities in co-living and retirement accommodation will all be central tenets of economic and social development on the continent.
This was the submission of Lead Valuer, East Africa, JLL – Kenya, Shadrack Mella, at the just concluded Africa Property Investment (API) summit held in Johannesburg, South Africa. He said Africa governments have realised their inability to solve these issues alone, while fully acknowledging their importance and their allied role in creating the right environment for the private sector to partner in solving them.
“However, more needs to be done; innovation is critical to delivering housing at scale. Policy needs to foster innovation, support capital and encourage sustainability.
“ Africa’s demographic dividend presents an exceptional opportunity for real estate investors, who can take a long-term view of the sector and align their strategy and understanding of local fundamentals. In particular, the living sectors are well placed to leverage this opportunity, but almost every real estate sector stands to benefit from these fundamentals in Africa,” he said.
Speaking on Africa residential sector, Mella said built environment must adapt and grow to accommodate this seismic growth. According to him, the built environment needs to become an agent of change in providing more than investment yield. “In Africa, it needs to be at the forefront of solving the societal and environmental challenges that the ensuing population growth will bring,” he said.
On the theme: ‘Africa Re-Set,’ the host of API Summit, Kfir Rusin, said “the way in which we live, work and play has been fundamentally re-set.
“This has transformed how occupiers utilise space; how we do business and how real estate investors are allocating capital. As we build back stronger, stakeholders across the real estate value chain have to deliver on a new set of principles driven by real returns, sustainability, resilience and affordability.”
During the two-day event, captains of industry examined how sustainable returns, Environmental, social, and governance (ESG) principles, new market dynamics and urbanisation are driving future strategy and defining occupier demand, buyer pool, liquidity and overall access to capital.
From Nigeria, best practices on facility management and real estate brokerage were highlighted, while the issue of declining power supply and hitting a net zero carbon emissions status were key discussion points.
During the commercial real estate segment, A grade commercial project – Trinity Towers was highlighted. Trinity towers, the first tri tower building in West Africa, received accolades when presented by the brokers Estatelinks and Knight frank Nigeria.
The brokers advised the teeming audience to take a position by leasing a space in this edifice, which is now being completed. The second day featured a prop tech forum and a hospitality forum with multiple networking areas to build stronger business relationships all over Africa.
Head of Real Estate Finance Africa regions, Standard Bank, Niyi Adeleye, shares the optimism on the growing value and importance placed on industrial, residential, life sciences and data centres segments, but cautions market players to fully understand demand in each segment and jurisdiction.
“The demand patterns, the types of user base and the mission critical nature of the required spaces to the demand profile these real estate segments suggest that the sectors will show more steady performance in the medium term,” he said.
“Thus, the probability of out performance is likely, however, appropriate consideration is also necessary to ensure that the demand-supply dynamics of these segments are carefully monitored to ensure that massive supply overhangs are avoided.”
It is this correct balancing and mitigation of risk associated with real estate investment and development in Africa that ESG is coming to the fore and increasingly critical to correct decision making and retaining value in assets and portfolios, says Adeleye.
“ESG considerations have become a critical component of risk assessment as the absence of these features either at an asset or portfolio levels erodes confidence around future proofing of asset demand given the importance of the theme. Similarly adapting to evolving market dynamics and urbanization trends is a reality that market participants have to continuously consider to remain relevant to their markets and demand patterns.”
