Nedbank on Africa's real estate outlook post-COVID-19

The COVID-19 pandemic has brought unprecedented challenges to the global real estate market, and Africa is no exception. In a recent interview with CNBC Africa, Gerhard Zeelie, Head of Property Finance, Africa at Nedbank, provided valuable insights into the current state of the real estate sector on the continent. Zeelie highlighted that even prior to the pandemic, the outlook for the real estate market in Africa was already facing challenges, with vacancies in office buildings and tenants feeling the pinch, especially in economies heavily reliant on commodities. The impact of COVID-19 has exacerbated these existing challenges, with tenants and landlords renegotiating leases and seeking relief. Nedbank has stepped in to support landlords by providing flexibility in covenants and restructuring payments during cash flow shortages resulting from these negotiations. Looking towards the future, Zeelie emphasized the uncertainty surrounding the long-term effects of the pandemic on real estate, citing potential shifts in consumer behavior and the tourism industry as factors that could significantly impact the market in the coming years. Besides the immediate impacts of the pandemic, challenges such as the cost of land, construction, and financial constraints for end-users continue to hinder the real estate sector's growth. Zeelie called for bravery and resilience to address these challenges post-COVID-19. While there is demand for housing and office space in Africa, attracting investors in the current climate remains challenging. Developers are cautious about embarking on new projects, awaiting clarity on the pandemic's aftermath and how people's behavior will evolve. In terms of sector adjustments to suit the new realities of COVID-19, Zeelie noted varied responses across different segments. Retail developers are reassessing tenant mixes to cater to changing consumer preferences post-pandemic, while industrial and warehousing spaces have seen relatively less impact, with potential increased demand due to a rise in e-commerce. When it comes to government intervention, Zeelie emphasized the importance of cracking down on corruption and simplifying bureaucracy to stimulate growth in the real estate sector. Overall, while the challenges posed by COVID-19 are significant, there are opportunities for innovation and adaptation in Africa's real estate market, paving the way for a resilient and thriving industry in the post-pandemic era.