Real Estate Investor Magazine South Africa October/ November 2019 | Page 39

O
ver the last year changes in Africa’s regulatory en-
vironments, coupled with constant swings in com-
modity prices as well as heightened political and
economic tensions, have resulted in ongoing volatility in
the continent’s real estate markets. Despite this, fundamen-
tal demand-supply imbalances continue to present a largely
attractive long-term investment outlook and thereby drive
demand for real estate investment opportunities. As a con-
sequence, there has been significant interest from both do-
mestic and international investors as well as some - albeit
marginal – growth noted in the market during this period.
This growth points to an evolution in the continent’s real
estate sector as well as to the urgent need for investors in this
space to adapt their approach in line with this evolution and
to seek out more economically sustainable ways to participate
effectively in these markets.
Given the volatility which Africa’s economies are generally
subject to, more patient, long-term strategies for delivering
value also need to be adopted and thorough market research,
conducted as well as ‘Fit for Purpose’ solutions, applied.
A ‘one-size-fits-all’ approach does not work in Africa and
it is crucial that sufficient time and resources are put into
understanding the vast and varied markets that call the
continent home.
The more traditional private equity funding model has
begun to fall out of favour and in order to effectively navigate
the current environment, investors are now increasingly
taking portfolio views and evolving from short-term to more
permanent real estate investment structures.
When the size of an economy does not allow for the scale
that investors are looking for, this limits the depth and size of
the investments that they are able to make in that economy.
We are however, now seeing a shift towards more diversified
markets and the evolution of previously untapped asset
classes, as well as the emergence of a new breed of investor
class.
Historically, the markets have been dominated by developers
or development entities creating assets but ‘property
aggregators’ are now buying properties out at reasonable levels
of discount and creating investment theses for them to achieve
their return objectives. This demonstrates a level of depth within
the markets and, once again, speaks to the evolution thereof,
which is creating a demand for new asset classes and triggering
the start of a new cycle of development and acquisition, with
increased sustainability built into the structure.
Real estate investment offers long term, stable return
profiles and continues to represent an exciting opportunity for
the deployment of local savings for broader investment and
economic growth. And while African real estate investment has
traditionally focused on top end, global quality opportunities
aimed at attracting hard currency funding; these markets are
today rapidly developing the infrastructure that connects their
economies to the world and making middle and lower end real
estate opportunities more attractive to investors.
Standard Bank offers in-country presence and insight,
a multi-jurisdictional view and capability across 20 African
markets. As our clients evolve with the markets in which they
operate, so too do we, both in supporting their aspirations,
and in helping them meet the demands of this constantly
changing environment.
About Standard Bank Group
Standard Bank Group is the largest African bank by assets with a
unique footprint across 20 African countries. Headquartered in
Johannesburg, South Africa, we are listed on the Johannesburg
Stock Exchange, with share code SBK, and the Namibian Stock
Exchange, share code SNB.
Standard Bank has a 156-year history in South Africa and
started building a franchise outside southern Africa in the early
1990s.
Our strategic position, which enables us to connect Africa
to other select emerging markets as well as pools of capital in
developed markets, and our balanced portfolio of businesses,
provide significant opportunities for growth.
A ‘one-size-fits-all’ approach does not
work in Africa and it is crucial that
sufficient time and resources are put
into understanding the vast and varied
markets that call the continent home.
The group has more than 53 000 employees, approximately
1 200 branches and over 9 000 ATMs on the African continent,
which enable it to deliver a complete range of services across
personal and business banking, corporate and investment
banking and wealth management.
Headline earnings for 2018 were R27.9 billion (about USD2.1
billion) and total assets were R2.1 trillion (about USD148
billion). Standard Bank’s market capitalisation at 31 December
2018 was R289 billion (USD20 billion).
The group’s largest shareholder is the Industrial and
Commercial Bank of China (ICBC), the world’s largest bank,
with a 20,1% shareholding. In addition, Standard Bank Group
and ICBC share a strategic partnership that facilitates trade and
deal flow between Africa, China and select emerging markets.
For further information, go to standardbank.com
NIYI ADELEYE, Head of Real Estate Finance for
Africa Regions, Standard Bank Group
SA Real Estate Investor Magazine OCTOBER/NOVEMBER 2019
37