ASIA NEWS: Tapping into Africa’s potential

An increasing number of investment managers are starting to recognize the commercial investment opportunities to be found in Africa’s emerging real estate markets, notwithstanding the geopolitical and economic turbulence underway.

At the PERE Growth Forum: Middle East and Africa, the publication’s first conference focused on the region, delegates spoke of the leap of faith that many US, European and domestic African institutions are taking to invest in hotels and retail centers. A big draw is the high yields that can be generated– around 11 percent to 13 percent for a development project – according to Michael O’Malley, director of RMB Westport, an Africa-focused real estate investment management firm.

Panelists speaking at the two-day conference held in Dubai in early December cited Morocco and Lagos as the most attractive destinations to park capital.

“We are seeing a huge interest from retailers in the continent and they are using Morocco as a conduit to make their entry,” said Bronwyn Corbett, chief executive officer of Delta Africa, a pan-Africa listed real estate fund investing in markets outside South Africa. Delta Africa became the first regional vehicle to invest in North Africa when it acquired a shopping center in July last year.

There are also opportunities to invest in retail in Lagos, where as much as 699,654 square feet of investment grade retail space is currently available, according to Xavier Atieh, managing director of advisory firm Lazard.

The biggest concern for prospective investors, however, remained the poor performance of most African currencies against the US dollar and plunging
oil prices.