African property finds fans in growth-hungry investors

Real estate elsewhere in Africa is back in vogue with investors who battle to find growth in SA.

Bronwyn Corbett, CEO of the largest Africa-focused property company, Grit Real Estate, says more investors are sending teams to other African countries to seek deals.

“The SA environment is problematic at the moment.

“Growth prospects are poor and landlords and fund managers are trying to find somewhere to put their money that is attractive,” she said.

Corbett, who listed Grit Real Estate as the first pan-African fund on the JSE in 2014, spoke at the Africa Property Investment Summit and Expo in Sandton on Thursday and Friday last week.

“The SA property market itself is highly saturated for investors and fund managers, so there is interest in Africa again.

“An example is Growthpoint Investec African Properties, a joint venture between Growthpoint Properties and Investec, which recently raised more than $200m for investments in Africa,” she said.

Grit now owns a $700m property portfolio spread across seven African countries including Botswana, Ghana, Kenya, Mauritius, Morocco, Mozambique and Zambia.

It is the only Africa-focused property company on the JSE. In 2018 it also listed on the London Stock Exchange.

Corbett said Grit would own $1bn in assets by the end of 2018 and would soon conclude deals in Senegal, Ghana and Morocco.

Her comments came soon after listed property funds Attacq and Hyprop Investments and unlisted group Atterbury Property announced they would dispose of a portfolio of six shopping centres worth $637.1m (R9.5bn) in a number of African countries.

Hyprop said it could find better opportunities in Eastern Europe and Attacq said it was seeking more liquidity.

“We feel there is a more exciting pipeline in south Eastern Europe and our offshore focus is here,” Hyprop CEO Pieter Prinsloo said at a results presentation in August.

Attacq’s COO said recently that Africa had not been a focus area for the group, which had plans to build residential assets in SA’s Waterfall precinct.

Corbett said their decision to disinvest needed to be taken in context. “We have made mistakes in Africa too. I believe that their [Hyprop and Attacq’s] strategy of buying only large shopping centres in large cities was a bad strategy. In Africa you need to be open to owning a variety of assets. Various factors make an asset succeed or fail. Having a good location and good tenant isn’t enough on its own.

“Super regional shopping centres have been the worst-performing asset type in Africa in 2018 so far,” Corbett said.

Grit had also committed to long-term leases, often 10-year ones, as Corbett said these were a “mitigant against risk”.

Anchor Stockbrokers research head Craig Smith said he had become “more bullish about African real estate”, but the continent still lacked investable product and there were many barriers to entry.

“There is a limited pool of institutional-grade product. There is also a lack of liquidity. This will change over time but it only makes sense for certain investors to look for opportunities there,” he said.