Real estate gains interest in Africa

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There is a growing interest in real estate investment in Africa.

“It’s fairly new and it’s a bit limited at the moment, and that’s really to do with supply. What you’re seeing is that a lot of the institutional investors, particularly in South Africa, are rolling out vehicles for investment that are allowing investors the access points,” Caveo Fund Solutions’ chief investment officer Gyongi King told CNBC Africa.

“The challenge is liquidity – it’s always a challenge on the continent and particularly on these vehicles because a lot of what we’re talking about is very early stage investment onto the continent. It’s a very exciting opportunity and it gives the investor the geared opportunity and the geared investment into the growing middle class.”

There is optimism towards Africa by investors. This has mainly been as a result of high investment returns, fast growing economies, commitment to infrastructural development, and regional and international partnerships with mutual benefits.

“We’ve seen a lot of the emerging markets coming off recently from the all-time-highs and a lot of the exuberance of the late 2000’s. The converse of this is that we’re seeing a lot more interest in Africa. The high growth rates, the yields, the solvency of the governments are all attractive propositions,” King explained.

“For investors, it’s quite an interesting time to be looking at the continent where a lot of the other investment sectors, such as developed and emerging markets, don’t look that attractive anymore.”

King however, cautioned that one has to be very careful about who one is investing with and where one is investing their assets.

“I think there’s a lot of opportunity out there and you just need to be very selective in your investment spectrums. There’s a lot of high performing, high GDP growth countries which are not accessible to an ordinary investor – they don’t have equity markets and they don’t necessarily have the transmission mechanisms to make the return potential for the investors,” she said.

“Others have a very high return potential. I think you need to be very careful about the investment spectrum and what you’re looking at. It’s really about getting the expertise on the ground, that know where the opportunities lie and where the returns are going to come from.”