_Africa 2019 Year Review
In December 2019, the Ivorian president alongside his French counterpart announced the overhaul of the CFA franc currency and adoption of the eco currency in 2020. The common currency established in 1945, and in use in eight West African and six Central African countries will also see a rescinding of the requirement to have half of the foreign currency reserves stored in France. Further, Ethiopia’s adoption of market friendly policies through privatisation of state owned enterprises is effectively set to reduce trade barriers that have long existed in the country. Such milestones continued to make the 2019 headlines in a sweeping tide of economic and political reforms serving as an anchor to continued investor confidence in Africa.
In real estate, the signing on by 54 African countries and current ratification by 28 countries to the African Continental Free Trade Agreement led to a renewed focus on the industrial property sector through increased demand for sophisticated warehousing that saw developers such as Agility Group expand their portfolio into different African Countries. The completion of the Great Mosque of Algiers Towers as the tallest building in Africa and the World’s tallest minaret was a key milestone towards the continued sophistication of the sector.
The real estate investment landscape followed a trend of cautious optimism as the market continued to stabilize with investors seeking more long term investment options. Recorded transactions included the acquisition of RMB Westport Real Estate Development Fund Limited by Growth Point Investec African Properties (GIAP) providing GIAP with a cumulative asset base of approximately $500M. Stanlib Fahari I-REIT in Kenya also sold their management rights to ICEA Lion Asset Management Limited even as the REITS sector across the continent continues to advance beyond its nascent stages. The green bond issued by Acorn Holdings at $41.5M towards construction of purpose built rental housing in Nairobi attracted investments emphasizing renewed investor interests towards emerging real estate sectors and sustainability.
The occupier market reflected the changing dynamics of space demand towards flexibility, innovation and efficiency. WeWork’s successful debut into Africa through their fully occupied 13,000 square meters space in Rose Bank and subsequent expansion into Cape Town was a testament to the now established co-working trend in the continent. The retail and residential market however remained subdued with affordable housing demand persisting at a total deficit of 56 million units.
2020 is likely to be a game changer towards investor’s hunt for yield in the continent even as the real estate market dynamics continue shifting towards formalisation and sophistication of the sector.
For a country level detailed analysis watch out for our Africa Report 2020.