AFRICA
Zambia Focuses on Growth
Knowing Where to Invest
MWIYA MUSOKOTWANE
Mwiya Musokotwane is the co-founder of Thebe Investment Management
A s investors in the developing world , there are many opportunities if you know where to look . Zambia ’ s population is set to triple by 2050 , according to the UN . This would make it one of the fastest growing populations , offering savvy investors a fast-growing market .
At the moment , there is much interest in the Sub-Saharan real estate market , largely driven by South African REITs and Africa-focused PE funds . This interest is largely concentrated on servicing large South African retailers , and is consequently primarily deployed in developing or acquiring shopping malls .
This does , of course , provide investors with an attractive US Dollar yield , but there is a lot of money being left on the table . Investors should be looking beyond the traditional five to ten year holding period when considering Sub-Saharan property . They need to be willing to tolerate the exchange rate risk in order to benefit from longer-term economic and demographic trends .
The expected population boom , rapid urbanisation , and moderate to high economic growth offer investors a tremendous opportunity . In our esti- mation , by far the greatest opportunity is one that provides and services the assets and services needed in growing cities . These would include hotels , schools , single and multifamily housing , logistics centres , bus stations , railway stations , and the more traditional assets like office and retail buildings .
This thinking is also framed by the observation that , as economies experience long term growth , they see a formalisation of their private sectors . This reduces the prevalence of informal commerce . Finally , the growth of populations and cities is generally happening at a rate that puts governments and municipalities on the back-foot . There is typically an inability by governments to fully and properly service their citizens and critical social services . This service deficit is increasingly being met by the private sector , and we see this even more in the Sub-Saharan markets . Examples include Curro and Advtech , building large education service platforms to bridge the gap in public schooling . In our assessments , this will eventually become the norm , creating opportunities for real estate investors to build the infrastructure to support such endeavours .
54 MARCH 2018 SA Real Estate Investor Magazine