South Africa: More than $800mn invested in Africa’s New Real Estate Era

Commercial Director for Real Estate Industry, Kfir Rusin says Africa’s real estate sector is driving the continent’s economic recovery forward with more than $800mn disclosed deals taking place in 2021 by Africa Property Investment (API) Summit stakeholders.

According to Kfir Rusin, Africa’s real estate investors and developers are forging ahead and building for a new era and they’ve witnessed significant investments into emerging sectors of student and affordable housing, logistics, data centers and others.

Rusin’s comments come ahead of this year’s free to attend virtual edition of the summit, which will attract more than 500 real estate deal makers from 30 African and international countries from 06-10 September 2021.  

Having funded over 40% of the deals listed, Standard Bank has capitalized on its balance sheet, and broad African expertise to finance several eye-catching deals in 2021 across sectors and jurisdictions over the past 12 months.

The most high-profile of these deals have been the $300m debt refinance deal of Lango Real Estate (formerly Growthpoint Investec Africa) which is currently the largest sub-Saharan Africa (SSA) real estate debt deal and the first cross-collaterized funding structure across multiple jurisdictions in SSA. Additional deals by Standard Bank include a $5.5mn to refinance Africa Logistics Properties (ALP) in Kenya; a $9mn deal in the DRC, as well as the $10mn funding of the Metroplex Mall in Uganda.

According to Niyi Adeleye, Standard Bank’s Head of Real Estate Finance, Africa Regions, these deals are representative of the bank’s sustained commitment to their clients and efforts to building long-lasting relationships in the real estate sector and across the continent.

“In the new era, Standard Bank’s view is that our approach has to be holistic in considering both the market evolution and our client’s aspirations backed by credible considerations for key real estate fundamentals in our markets as they evolve,” says Adeleye.  

Adding that Standard Bank will also continue to back client activities for our key clients and evolving sector participants as well as firmly encourage and support ESG themes and activities which are quite critical to our objectives as a market participant. 

As Adeleye elaborates, “In this regard, we continue to collaborate, fund deals and follow the sustainable market trends in both the traditional commercial sectors and some of the emerging sectors like student housing, digital themed real estate assets and middle-income residential.”

For the Group CEO of Africa’s largest pan-African real estate operator, Broll Property Group’s Malcolm Horne explains that the rapid changes in the broader real estate market have been accelerated by Covid 19 and are a net positive for the future of the continent.

“We’ve seen how these market pressures have pushed long term patient capital to the forefront and now we are going to see the development of a sustainable and a more investable real estate sector in this new era across the continent.”

As Africa’s leading real estate commercial real estate operator with more than 500 staff outside of South Africa, Broll has positioned its businesses to be at the forefront of this new era says Horne.

“We don’t work in a bubble, and as we enter this new period, we have focused on investing in the enablers that will drive the new era forward and make it a reality.

For Horne, these enablers include the digitalization of the business; attracting and deploying the right human capital; to understanding the fundamental importance and role of how Environmental Social Governance (ESG) will shape the business of real estate in the future.

Echoing Horne and Adeleye’s sentiments on Africa’s New Era and the significant opportunities in new sectors is Gateway Real Estate Africa’s (GREA) CEO Greg Pearson, whose company has become the most active and prominent developer across the continent, as he comments.

“Africa has for long been regarded as the last frontier for growth. From a real estate perspective, we have seen some interesting structural and cyclical shifts away from so-called traditional real estate asset classes, driven primarily by ongoing investments into telecommunications as well as the impact of Covid-19 on healthcare and supply chain logistics. This is where we see the real opportunity,” says Pearson.

Building off its impressive track record in a short period since establishment in 2018, Gateway Real Estate Africa has a $500mn pipeline for developments in Nigeria, Kenya, Ghana and Mauritius confirms Pearson.

And while data centers, healthcare developments and logistic parks are the outliers in terms of driving Africa’s real estate growth in the short to medium-term, Africa’s New Era is also importantly about collaboration and inclusiveness, says Pearson.

“For me, Africa new era means greater collaboration between investors, funders, corporate tenants, developers, regulators, and professional services firms with a long-term, sustainable view on the continent.

“GREA’s approach is to build indigenous businesses and we place a strong emphasis on hiring suitably qualified diaspora and in-country professionals to collaborate with international teams. This not only ensures significant skills transfer and local employment creation but ensures that each development is firmly entrenched in the community in which it is located.”

As Rusin concludes, “This year’s API Summit will explore Africa’s New Era, but also create a platform for investors and developers to connect and fast track the recovery of the sector at scale.”