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A report from The South African Property Owners Association’s 2016 Convention

16 August 2016 Comments (0) Africa, Business, Featured

SAPOA Awards

The South African Property Owners Association celebrated its 50th anniversary at its annual convention this year, with a renewed focus on development.

The South African Property Owners Association (SAPOA) is in its 50th year of existence, and its annual convention celebrated this landmark moment. However, while celebration of half a century’s existence was notable, so was a focus on the challenges that investors face in newly emerging markets. South Africa has changed almost immeasurably in the past 50 years, and trying to create an environment that encourages positive investments, both domestically and abroad, was key to most speakers.

Expanding African Investment

A focal point of the SOPOA convention was how to encourage foreign investors to embrace opportunities within Africa, as the body aims to create growth that will reward South Africa’s own developers and investors. The convention was held at the Sandton Convention Centre in Johannesburg, where leading figures in property development, from journalists to construction groups, met to exchange ideas on furthering the expansion of property ventures in Africa.

While much of any planned expansion will be within South Africa, many experts are hoping to encourage their own developers, and those from outside Africa, to see exciting opportunities across the continent. Experts agreed that investors needed to recognize that African property investment was a long-term game, and to treat the markets with the same respect that they would in America or Europe.

Bronwyn Corbett, the head of the pan-African property group Mara Delta, explained that patience was key as she said, “Many South African investors don’t actually know what happens on the ground in Africa and may expect things to happen more quickly.”

Mara Delta holds a property portfolio worth $430 million that spans 6 African nations, from as far north as Morocco to as southerly as Mozambique. Companies like Mara Delta offer South African investors opportunities to invest in these outside markets, and in turn help bolster the growth of property value within the nations where their holdings lie. The evidence suggests that a rising number of investors are seeing prospects in Africa. Ian Anderson, the chief investment officer at Grindrod Asset Management, told SAPOA listeners that a mounting number of companies were asking about openings within African property.

Likewise, South Africa’s largest real estate investment trust, Growthpoint Properties, is already working alongside Investec to find new assets outside of South Africa, and yet still within the continent.

The challenges faced

While a positive approach was extolled, any objective discussion of the continent’s opportunities had to address the difficulties that could be faced. By openly discussing some of the problems and concerns around property investment within Africa, organizers hope to find solutions, and assuage investor concerns.

One of the main problems discussed was that many investors felt concern over the varied currencies of Africa. Africa uses more than 40 difference currencies, and the process of exchanging these can be time consuming. In addition, many African banks suffer from a slower speed of service that can give investors cold feet.

Corbett and others also discussed concerns over limited debt facilities within some African markets, but she insisted that companies like Mara Delta existed to relieve investors of the need to understand every market’s nuances.

Moreover, despite the issues that came up, the tone from Corbett was one of optimism, as she stated, “Each African country is different. Each is a challenge, and it wouldn’t be worth doing this if it wasn’t a challenge.”

The Convention and its awards

SAPOA celebrated its 50th anniversary with a grand convention, which offered attendees the opportunity to enjoy golf courses and a banquet, alongside the more serious nature of the talks and presentations. As with all of SAPOA’s conventions there was also an awards ceremony to recognize outstanding performers within property.

Some of the most notable awards included the Mall of the South for best retail development, Google Head Office Building for the Overall Green Award, Mitchell’s Plain Hospital for the Overall Transformation Award, and Frank’s Place for the best residential development.

The most prestigious award for the 2016 SAPOA Property Development Awards in Innovative Excellence went to Lion Match Company.

As many financial markets face uncertain times, the experts at SAPOA felt confident that property will provide stable investments for many people, and Africa can offer an exciting and prosperous opportunity for those willing to invest.

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South African Firms Look to Invest in Greater Africa

23 July 2016 Comments (1) Africa, Business, Featured

House of coins

South African real-estate investors are looking for high returns in the African market, despite the myriad challenges of investing within the continent.

South Africa is, in some ways, akin to the neighborhood misfit: its historical and contemporary socio-economic environment, such as world class universities and medical schools, a fabulously lucrative niche safari sector and a diverse population set it apart from its regional and continental neighbors. As the non-African international community begins to increase its interest in Africa’s property market, so too are South African property developers. During a recent South African Property Owners Association (SAPOA) Convention, speakers suggested that property markets around the continent are ripe for investment.

Research, Research, Research

At the Johannesburg Sandton Convention Centre, speakers suggested that investors need to treat African property markets with respect: not only do investors need to know their individual markets, but they need to treat the African market as a long game, just like the American, Asian and European markets are treated. Bronwyn Corbett, head of Mara Delta investment group, the only pan-African listed fund, urged investors to see the trees within the forest: “each African country is different. Each is a challenge, and it wouldn’t be worth doing this if it wasn’t a challenge.”

Speakers meeting at the Johannesburg Sandton Convention Centre

Speakers meeting at the Johannesburg Sandton Convention Centre

That kind of optimism may be the key to successful investment choices. Property investment is full of obstacles regardless of the location but, speakers noted, Africa has some obstacles that may prove larger than in other markets further afield.

Getting a Bang for your Buck

Among the top cited concerns, some are universal and some are uniquely African. Volatile political climates, rapidly fluctuating currencies and changing rules and regulations surrounding the real estate markets were just a few of the concerns discussed by Corbett. “I appreciate that investors want us to make good deals. We are starting to find things but we have to learn as we go along. Many South African investors don’t actually know what happens on the ground in Africa and may expect things to happen more quickly,” Corbett said.
What happens “on the ground” in Africa is, Corbett insinuates, very different from what happens in the realm of South African investors. Deal brokering and relationships are very different for the elite of South Africa. These individuals entrust their capital to firms like Mara Delta to avoid the nitty-gritty of the day-to-day wheeling and dealing required to obtain high quality assets in Africa and elsewhere. Corbett cautions that it is the firm’s responsibility to have an understanding of the potential obstacles in African markets outside of South Africa. Their customers cannot be expected to have an understanding of property markets and thus, investment funds must do their homework into each potential investment market.

Mara Delta, a substantially black-owned and primarily black-managed investment firm with properties on the Johannesburg stock exchange since 2012, has an impressively broad portfolio that includes private and industrial properties in Morocco, Mozambique, Zambia, Mauritius, Kenya and Nigeria. With this geographically diverse set of investments, Mara Delta is a reliable advisor for potential investors. Corbett touched upon perhaps the primary concern for future international investors: the currency market. There are more than 40 different currencies used in Africa, and extracting funds from these countries can take time, both due to the exchange process and due to the sluggish bureaucratic process of African banks. In addition to currency-related challenges are the limited debt and credit lines available through African banks.

Worth the Price?

Some fund managers voiced their concern that African properties are significantly more expensive when compared to more developed properties in Asia, Canada and Central and Eastern Europe. “Our research indicates that prices per square meter have been significantly higher (in Africa) than similar investments in developed markets,” said Alternative Real Estate Capital Management’s Garreth Elston.

Real estate investments are, Corbett urged, worth the trouble. She cited the South African market as a symbol of endurance even in challenging times as long as quality assets are purchased, for the right price. Given the uncertainty of the global economy in light of Britain’s imminent exit from the European Union, real estate may once again become the safest bet.

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