The past decade has seen South African property developers and investors forge their way up the African continent and then pull back. As they withdraw, a new wave of property progress is building – a more sustainable one – without them.
The Africa Property Investment (API) Summit has tracked developments on the African property landscape for the last decade. As the continent’s real estate market has evolved, the API Summit has seen business models change significantly, adapting to the challenges and opportunities in Africa.
Most recently, the API Summit has witnessed development on the continent slow, leading to a better balance of demand and supply. And, with market fundamentals remaining in place, Standard Bank’s Head of Estate Finance, African Regions Niyi Adeleye, who is among the impressive line-up of speakers at the next API Summit in South Africa this October, says that growth is inevitable.
“The precise timing is hard to predict but the next wave of African property development and investment will be less short-term and opportunistic. There’ll be a more sustainable approach that creates products that really serve their markets and make sense in their context,” he says. “As some investors pull out, property aggregators can acquire portfolios at competitive prices. Investment levels are currently in a holding pattern, but there’s more longer-term capital entering the market.”
This marks a massive change from the first wave of South African developers and funds, which mostly replicated South African models: from designs to financing and the income model via ‘known’ tenants. “The aim was to make money in stable currencies by exporting our version of business as usual,” explains API Summit speaker and Paragon Architects Director, Henning Rasmuss.
“This worked in a few countries, for a while. But it became clear that this is just one way of doing business. Quickly, fully blended development models have emerged. Smaller projects have been broadly more successful, and ambitions and expectations have been scaled down,” says Rasmuss.
Independent real estate advisor Kevin Teeroovengadum, who will also take the podium at the API Summit, agrees that the copy-and-paste model has had limited success. “It is imperative to take time to understand the depth of markets and how local nuances impact on what needs to be built.”
Today, the API Summit sees the African property game changing and new players coming to market, catering to mass needs and solving critical shortages in housing, logistics, healthcare and student accommodation. New projects are rising in the retail and industrial sectors, as well as data centres, business hotels and private education facilities, many of which will be at the API Summit.
“We are seeing more funds and developers forming joint ventures and using the experience of local developers to deliver better and more sustainable projects,” says Kfir Rusin, MD for API Events, host of the API Summit, the major industry event on African real estate for South Africa and globally.