Real estate: trends that will inform the future investment decisions

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Speaking ahead of the 11th annual African Property Investment (API) Summit Virtual, Standard Bank’s Head of Real Estate Finance, Africa Regions, Niyi Adeleye, commented that while the Covid-19 pandemic has impacted the sector, those with the necessary capital have continued to seize opportunities.
Under the theme of Resilience, Opportunity & Innovation (ROI) seek to provide a platform for delegates from 32 African and international countries to gain new insights and build for the post Covid-19 future.

“2020 has been a challenging year for all, and the real estate sector has been hit particularly hard. We are now beginning to see investors and developers explore how they can identify opportunities, as well as building resilience and innovation into their current and future projects,” said API Events’ Kfir Rusin, the host of the Summit.

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He adds that the pandemic has particularly exposed the weaknesses in the retail, hospitality and office sectors, while conversely it has highlighted the defensiveness of logistics and warehousing, corporate residential, as well as the need for data centres, healthcare and affordable housing investments across the continent.

While Adeleye remains cautious on what will be most attractive and provide ROI for investors post Covid-19, it has been observed that the rate of recovery has been faster than anticipated, especially in non-resource dependent economies.

“The pace of recovery appears to have been faster than anticipated in retail, especially for established centres, as customers appear to prefer the use of formal retail environments to less formal ones due to perceptions of better health and safety and this reinforces the growing adoption of many of these assets in key jurisdictions and nodes.”
While, also commenting that hospitality assets that “mostly targeted local demand has proven to be slightly more stable than those dependent on external demand,” said Adeleye.

From an emerging sub-sector perspective, Adeleye has noted that the demonstrated resilience, has been seemingly backed by strong occupier demand, he said.
“Currently, segments and emerging segments that are driven by corporate demand, such as offices, logistics and data centres, appear to have demonstrated some resilience. Emerging sectors like healthcare and affordable housing are driven by very wide demand \ supply imbalances and will likely remain resilient going forward.”

also read:Digital disruption comes to the property market in Uganda

However, Adeleye does stress that for African real estate to remain resilient and provide long-term ROI, “All segments must ensure that the rate of supply growth is matched by addressable demand so as to avoid gluts and weaknesses in the property cycles.”

also read:Real Estate: the 21st Century Surveyor and the Surveying profession, What Next?

“As we move forward into 2021/22, we believe that this year has also highlighted pre-existing trends such as a slowdown in future retail and office developments; a boost to co-working spaces; renewed interest in affordable housing, diversification into data centres, healthcare and logistics; greater adoption of property technology; more sales and leasebacks, less reliance on international capital, and a race to economic diversification,” said Rusin.
Adding that these trends will also help to inform future investment decisions and priorities.

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