Kenya presents the best opportunity for real estate investments over the next 12 months, according to majority of participants in a continental property forum in Nairobi slated for mid-next month.

The country is seen as a hub in East Africa, and the emerging oil and gas industry presents a fortune for early movers, according to the experts interviewed by Africa GRI 2014's organisers.

"There is a lot of interest in East Africa and especially Kenya as the country emerges as the business, telecommunication and travel hub in sub-Saharan Africa," said Njoroge Ng'ang'a, chief executive of NSE-listed Home Afrika Ltd.

"With the recent discovery of oil and production set to start as early as 2016, there are a lot of companies that are setting up base in the country due to the future potential. Kenya also has a solid human resource base and middle class," he said.

Ng'ang'a said Home Afrika's Kikwetu development in Machakos county will provide affordable housing at a large scale "in a satellite city". It will sit on 1,000 acres and construction is expected to begin this year.

Ng'anga said he is seeing a shift from high end residential housing to affordable and middle income housing.

"Due to the growing middle class, there is a huge supply gap in this segment hence we should see a lot of activity in this space going forward. Due to this also, there will also be demand for the supporting services that go in tandem with provision of mass housing such as malls, hospitals, schools," he said.

Britt Gwinner, programme manager for housing finance in sub-Saharan Africa region at the International Finance Corporation said Kenya, Uganda and Rwanda "are the best immediate bets".

"Recent hydrocarbon discoveries and planned infrastructure investments spur demand for commercial and residential investments. Reforms to the legal and regulatory enabling environment and moderating macroeconomic volatility reduce cost and risk. Each has relatively strong GDP growth prospects," Gwinner said.

He said the Garden City development on Thika Road, in which IFC has invested, brings in a new concept to Nairobi. It comprises office space, residential units and "a well-targeted shopping mall".

Frank Dupuis, chief executive of Germany's Dupuis Asset Management said: "For residential investments, Kenya and Ghana provide the best opportunities to us

on a risk-adjusted basis."

Gwinner said retail commercial presents best opportunity for returns because the segment is "under-built" in most African cities.

"I see an opportunity for international builders and developers to partner with local developers to deliver efficiency and economies of scale, particularly in East Africa," he said.

Kevin Teeroovengadum, CEO of South Africa-based African Land Investments said retail remains a favourite as the number of A-Grade malls still does not match with

potential demand.

"Having said that, industrial/logistics parks would be the next sub-sector where opportunities remain completely untapped," Teeroovengadum said.

Dupuis said there remains a "strong fundamental supply and demand imbalance" in residential investments for middle class and emerging upper-middle class segments.

David Harper, head of property services at Hotel Partners Africa, on the other hand sees the hotels and serviced apartments sector performing well going forward.

"Specifically I am extremely excited by the mid-market and budget segments, where a huge opportunity is presenting itself for hotel developers to cater to the growing middle class," Harper said.

Randy Cooper, head of corporate real estate (Africa) at Standard Chartered Bank, said office and retail are key areas to watch.

"Also, residential for the massively growing 'middle class' pan-Africa, especially in Nigeria, Kenya and South Africa," he said.

On where he sees sub-Saharan Africa's real estate market a year from now, managing director of Rendeavour Ghana Anthony Okyere said the region is performing at a rate above the usual global expectations.

"In a word: buoyant. I understand a recent Knight Frank index showed Nairobi as having the strongest rate in annual growth of prime property rents across the globe, standing at something like 26 per cent. For anywhere, that is high, but for the location to be in SSA is fantastic news. ...I am certain this will continue," Okyere said.

StanChart's Cooper believes real estate in the region will be "more expensive" over the next 12 months.

Source : allafrica.com
 

Posted on : 30 Nov,-0001