Real Estate Investor Magazine South Africa May 2014 | Page 48

AFRICA

BY JONATHAN SMITH

SA paving the way
The gateway to property
development in Africa

I

sat next to an Australian businessman on an
international f light recently: this entrepreneur
does business (from Australia) in six African
countries, excluding South Africa.
His business revolves mainly around the luxury- or
high end- sector and is, apparently, growing at about
fifteen percent per annum.
One of my immediate thoughts was that South
Africans should be doing this sort of trade in Africa:
if there is an African market to be exploited, then we
should be investing in such an opportunity.
And, this includes our becoming involved in the
property-sector within African countries.
There are two primary reasons (along with several
secondary or supporting motivations) why South
Africans should be involved in property business
activity within Africa:
• It can be difficult to develop new property in South
Africa as a result of the constraints placed upon
property-developers by our sometimes lethargic
municipalities and wavering electricity supplies; and
• Africa is, without doubt, the next development
frontier.
Some other motivations for becoming involved in
property-development in Africa include:
• most African countries are only too content to benefit
from our expertise as both property- developers and
managers: they respect our systems, our information
technology as well as our approach towards property
asset management
• African countries encourage property-development
through simplified town-planning processes and access
to infrastructure
What has been noticeable in recent years is that
African countries are beginning to produce a wide
range of goods for their local (domestic) markets and

46

May 2014 SA Real Estate Investor

SUBSCRIBE

for the African market: this trend is supported by new
democratic governments within some African states
and increased trade with Brazil, Russia, India and
China (BRIC) which currently stands at around US$
320 bn – equivalent to 20% of Africa’s total trade.
The African countries which most contribute towards this
trade have re-invested their gains in overseas trade activity
so as to increase their production and export ability.
Bearing in mind that most property investment is a
long-term strategy, the next 10-to-15 years will see a
demand for industrial-led property development which,
in turn, shall lead to housing demand, retail demand and
office (property’s tertiary sub-sector) demand.
Standard Bank’s chief economist, Goolam Ballim,
has calculated that for every 1% increase in China’s
fixed investment, sub-Saharan Africa’s exports improve
by a correlated 0.6%. Of course, it is unwise for Africa
to rely primarily on China of BRICS to stimulate its
own growth and this is why African states are keen to
develop intra-Africa trade opportunities.
But, trade – whether destined for overseas, other
African or local markets – requires infrastructure, fixed
property development and skill.
We were recently approached by an Ethopian
enterprise to assist with the implementation of propertywww.reimag.co.za