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Zim property 'ripe for exploitation’

Jun 03 2012 17:45 Elma Kloppers

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Johannesburg – Zimbabwe’s property market is largely given a wide berth by South African property groups, but some players in the industry reckon the time is ripe to start exploiting opportunities there.

The opportunities lie in the fact that for decades precious few new commercial properties have been brought to the market – and no new retail properties.

The country will soon have a new property fund with assets worth $46m.

The property portfolio of the new Ascendant Property Fund will comprise the assets of three listed companies in Zimbabwe and be managed by South African property services group JHI.

“The assets will therefore be moved from a listed environment to an unlisted environment,” says Kura Chihota, chief executive of Ascendent.

He says the idea is raise finance for purchasing the properties from banks in Zimbabwe. Although closed, the fund will be open to investors who wish to bring properties or finance to the table, he says.

The assets include offices and retail and industrial properties comprising 95 000m² in Harare, Bulawayo and Gweru.

Chihota says the objective is to expand the value of the assets to $100m within the next two years.

The anticipated income yield is 12%.

He says the expectation is that within the next 24 months a new political dispensation with a clear direction will be in place.

Samuel Ogbu, chief executive of Liberty Properties, is positive about Zimbabwe but says it is a market for long-term investors and not for those wanting to make a quick buck.

Liberty Properties has already spread its wings in Africa and opened the doors to its new 28 000m² shopping centre in Lusaka’s Levy Business Park.

This centre was developed as a joint venture with Zambia’s National Pension Scheme Authority.

Various other South African property players have in recent times moved out into Africa, including Sanlam, which is busy establishing a Pan-African property fund to be listed in Mauritius because that is an easy jurisdiction from which it can operate in Africa.

Sanlam plans to operate in seven countries and is targeting an expected annual return of between 15% and 16% in dollars.

Private equity investor Actis sees a rosy future in Africa, despite the challenges.

It has invested around $2bn in the continent and it developed, inter alia, the first shopping centre in Lagos in Nigeria and recently sold the Accra Mall in Ghana to property developer Atterbury and Sanlam.

Actis receives capital from overseas investors in the US and Europe.

Renaissance Capital Africa chief executive Clifford Sacks has great faith in the Africa story.

The continent has a rapidly urbanising population which is beginning to consume on a big scale, he said at the 44th annual property conference held by the South African Property Owners Association in Durban last week.

Renaissance is involved in the enormous Tatu City mixed-use development in Nairobi in Kenya. But, says Sacks, corruption remains Africa’s most vexing challenge.

Actis director Kevin Teeroovengadum says the company recently experienced an incident with a tenant with government contacts who failed to pay his rent. The company followed the legal route and after a lengthy process managed to evict him from the property.

The most exciting countries in Africa for property companies are Nigeria and Kenya, while Angola (owing to a lack to title deeds) and the Democratic Republic of Congo are provisionally being given a wide berth.

But not everyone is excited about Africa. Growthpoint executive director Estienne de Klerk says the group is investing in countries with established property laws, property ownership and property rights, and Africa is not currently on its radar.

The new 28 000m² shopping centre in Lusaka’s Levy Business Park was developed by Liberty Properties and Zambia’s National Pension Scheme Authority.

Africa in a  nutshell:

  • Its population will increase to 2bn by 2050, compared with 1bn in 2010.
  • Seven African countries number among the top 10 fastest growing economies in the world.
  • There are 650 million cellphone subscribers in Africa.
  • A total 50% of Africa’s people will live in cities by 2030.
  • By 2040 Africa will have an working population of 1.1 billion.
  • Its gross domestic product is expected to be $2 600bn by 2020.
  • Nigeria will grow to be the biggest economy in Africa between September this year and 2014.

Source: Absa, Renaissance Capital

 - Sake24

For more business news in Afrikaans, go to Sake24.com.

 
zimbabwe  |  property
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