adminDUBAI – Peter Welborn, the chairman of property consultancy Knight Frank’s African operations, insists that “there has never been a better time to invest” in the continent. Speaking at a recent event held alongside Dubai Multi Commodities Centre (DMCC), Welborn said the huge population growth underway in Sub-Saharan Africa will mean that by the end of the current century, the continent will contain 40 per cent of the world’s population.
GDP in Sub-Saharan Africa is likely to rise by more than 4 per cent in 2016, following a recent dip related to its oil-exporting countries. IMF forecasts for 2017 to 2020 suggest a GDP growth in Sub-Saharan Africa of 5.3 per cent a year.
Knight Frank identified seven major African countries that it said presented opportunities for investment in retail, commercial property, logistics and the hotels market.
These were Ethiopia to the north, the Ivory Coast and Nigeria to the west, Kenya and Tanzania to the east, and South Africa and Zambia in the south.
Lagos is Africa’s biggest city, with a population of 12.6 million and a United Nations forecast that it will reach 18.9m by 2025, partly because of birth rates, but also increasing urbanisation.
The UN says the amount of people living in cities in Africa is predicted to grow to 62 per cent by 2050 from 42 per cent last year.
Welborn said that there were currently only three major shopping centres in Lagos, equating to about 121,000 square metres of space (although another 240,000 sq metres is in the pipeline).
“If you’re not in retailing in Africa, you’re missing an opportunity,” he said. “If you look at what’s happening in Nairobi, in Zambia; If you ask yourself, out of a population of 12.6m in Lagos, why are there only three shopping centres? In South Africa, you’d have 300.”
Kabil Jobanputra, a director and the head of real estate for Middle East and Africa at Standard Chartered Bank, said: “There’s a huge influx of global equity coming into Sub-Saharan Africa.
“Globally, there’s a flow of funds that has been dedicated to Sub-Saharan Africa, and real estate specifically.
“That equity as of 2015 was around $2 billion, and is expected to be $4bn to $5bn over the next two to three years.”
Eugenio Battella, a partner at the Germany-headquartered law firm Rödl & Partner, which has bases in three African countries, plus associate offices in 13 more, argued that investment in Africa requires great care, especially if it involves land or property.
He said that foreigners are not typically entitled to buy land or property outright, but can acquire them on long leaseholds.
“The general system in Africa is that the land belongs to the state. You’re entitled to use the land according to certain concessions for a certain period of time.”
He also states that registration of title deeds and thorough due diligence is necessary before completing deals, and that in some countries transparency or even formal paperwork trails may not be easily accessed.
Similarly, he advises that acquirers need to check their tax and environmental obligations prior to acquisition, as new owners can find themselves responsible for costly clean-ups even where pollution may have been in existence for years.
According to Knight Frank, Dar es Salaam, which has a population of 4.8m, currently only has 107,000 sq metres of mall space, with a further 235,000 sq metres in the pipeline.
Nairobi has a smaller population of 3.8m, but a larger middle class with higher disposable income.
It has 391,000 sq metres of malls built and 470,000 sq metres in the pipeline. Source—The Nation
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