Real Estate Investor Magazine South Africa June 2013

STANLIB ADVERTORIAL African Real Estate Opportunities Abound T he S TA N L I B D i r e c t P r op e r t y Investments team stands at the forefront of Africa’s real estate revolution. It plans to raise an additional $100m to fund the construction of an African property portfolio, with seed capital provided by Liberty. CIO of STANLIB Direct Property Investments, Amelia Beattie, believes the Fund could be the catalyst for further infrastructure development across the continent. It also comes at a time when demand for quality retail and office space in Africa is surging. The Fund will spearhead 6-8 predominantly retail developments in the economic nodes of Kenya and Nigeria - both countries offer the spending power and critical mass sought by retailers. The team has eight years to implement the Fund – four to commit to opportunities and another four for completion. The asset manager will then extend its property investment into Ghana and Uganda. “The biggest opportunity in Africa is the growing emerging middle class which remains chronically under-serviced,” says Beattie. “They’re very aspirational and want to live and work in quality environments. That’s why we see huge potential in quality retail and office space in Africa – there is less supply than demand. Currently, Lagos has just two quality shopping centres servicing an estimated 20 million people.” rise to $38 billion by 2020. Rapid urbanization has increased the potential consumer base for many retailers. Supermarkets and hypermarkets are set to see 21% and 16% outlet volume CAGR respectively during the next 5 years. Nigeria is Africa’s most populous nation with 162.4 million people. This number is expected to expand to 400 million by 2050. The swift growth means that Nigeria’s population is exceptionally youthful with a mean age of 18. The population increase creates opportunities, one being the emergence of a robust consumer base. Rising incomes in Nigeria suggest a maturation of its middle class. Additionally, investors should be attracted to investing in Nigeria on the back of ambitious economic projections; Morgan Stanley expects the Nigerian economy to become the largest one in the African continent by 2025, surpassing the South African economy due to higher oil prices and the expansion of consumer spending in Africa’s most populous country. Beattie says the team have established successful partnerships with local landowners to develop real estate. “You have to be absolutely sure that you’re partnering with the legitimate landowner on a long-term basis in order to mitigate against ownership risk, which is probably the biggest concern of any prospective property investor in Africa. It’s also crucial that you partner only with Kenya and Nigeria are compelling investment a landowner who is willing to partner with you for destinations for property developers. The Kenyan the long-term, as well as a reputable construction population is 37 million and 18% of households firm with an established track record of delivery.” are classified as middle class indicating more disposable income is being spent on non-essential STANLIB research shows that an estimated items. This is the largest percentage of middle class 400m people in Africa are expected to migrate households in sub-Sahara Africa outside South from rural areas to cities by 2050, a factor that Africa. Consumer spend in Kenya is expected to will put enormous strain on existing urban www.reimag.co.za infrastructure. Yet this emerging middle class is also why South African companies ranging from Shoprite and Massmart to Famous Brands are boosting their footprints across Africa. “The retailers are all telling us they can go into Africa provided they can find enough quality properties to give them the critical mass they need to make entering a new market viable,” says Beattie. “Most of the retailers say they need about five sites per country in order for it to be worth their while. If you consider the logistical effort it takes for retailers like Shoprite and Massmart to get their products into Africa it’s easy to see why they’d rather be supplying several stores rather than just one.” With Africa’s growing population and surge in middle class consumers, the retail sector is ???)????????????????????????Q???MQ91%)?????????A?????????????????????????)?????????????????????????????????????L)???????????L???????????????????????)???????????????????????)??????????????????????())???????M?I????????%?????((??((0

Real Estate Investor Magazine South Africa June 2013 | Page 49