nReal Estate Investors and Developers eye Post Pandemic Opportunities in East Africa

By Mourice Seretta

With East Africa predicted to lead the post pandemic recovery on the continent, the 8^th annual East Africa Property Investment (EAPI) virtual edition attracted hundreds of forward thinking, and bullish investors and developers from more than 20 countries, said its host, Africa Property Investments (API) Events’ Kfir Rusin.

“Over the past 18 months, 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.”

Adding that while the macro-economic picture is improving, the strategic play is to be ready to seize opportunities unlocked by the Covid recovery; AfCTA trade agreements; e-commerce and the increasing need for modern data centres and healthcare assets.

NEDBANK’S STRONG PIPELINE

Taking a pragmatic approach; Nedbank’s Head of Property Finance Africa, Gerhard Zeelie, believes that the past 18-months have highlighted that predicting the future is futile and 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.”

And while he remains reserved on Nedbank’s future plans in the region, Zeelie confirms that the bank is committed to East Africa with a number of deals on the table.

“We are still very active in the East Africa region and our pipeline of transactions looks strong. As in 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 this trend. 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.”

TILISI DEVELOPMENTS STRONG PERFORMANCE

Sharing Zeelie’s views on logistics and light industrial, Tilisi Developments’ Ranee Nanji, Co-Chief Executive Officer, reveals that while demand dipped initially, interest quickly rebounded especially in logistics space, while their strong residential offerings have also proved popular.

“When it comes to other uses such as land for industrial or logistics, when the pandemic hit, there was a slow down or stop to some of the negotiations we were having. However, 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.”

“As a master planned and controlled development on the outskirts of Nairobi, we have seen a definite increase in interest during and ‘post’ Covid 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.”

GATEWAY REAL ESTATE AFRICA WELL POSITIONED FOR THE FUTURE

With a reported $500M pipeline across Africa, Shevira Bissessor, Chief Operating Officer, Gateway Real Estate Africa (GREA), is confident on the future despite the structural shifts in the sector, especially as international investors look for opportunities post pandemic.

“As demonstrated during the 2008/2009 Global Financial Crisis, capital flows to emerging markets typically accelerate following 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,” said Bissessor

“Covid-19 has no doubt resulted in some structural shifts in the sector. 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.”

“The logistics sector was also affected by the pandemic, with contingencies and multiple distribution centres playing an important role in diversifying risk. This has created numerous opportunities, especially in East Africa as the gateway to the rest of Africa,” added Bissessor.

As the sector moves forward and developers position themselves to cater to demand and attract investments, Bissessor highlights that GREA is ideally suited to the post pandemic environment. “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.”

Adding that GREA is excited by the development of new emerging assets classes. As Bissessor says, “Whilst retail is facing cyclical and structural headwinds, demand for good quality data centres and healthcare, for example, is outstripping demand.”