WITH growing economies and populations, Africa offers rich opportunities for property development, although the diversity of countries mean a "one size fits all" approach needs to be avoided, industry experts say.
Speaking at a research breakfast hosted by the South African Property Owners Association (Sapoa) and the Investment Property Databank (IPD) on Friday, Malcolm Horne, CEO of Broll property group, said there were opportunities "beyond the comfort zone of South Africa", and astute investors would reap the rewards.
Mr Horne said the African property landscape would be transformed over the next decade.
Pieter Steyn, head of commercial property finance at Absa, said local property investors and developers now enjoyed opportunities both in South Africa and in foreign markets such as the UK, Germany and Australia.
However, "with the exponential growth of the African economy and the opening of its business markets, diversification into African opportunities should be seriously considered as a key element of a short- to medium-term investment strategy", Mr Steyn said.
Two weeks ago, Desmond de Beer, CEO of Resilient Property Income Fund, said the fund would stop developing shopping centres in South Africa because of "massive regulation" in the country. He said local developments were taking up to six years because of red tape.
The property group would instead move its operations to Nigeria, Mr de Beer said.
Marc Wainer, CEO of Redefine Properties, South Africa's second-largest listed property company, said doing business in South Africa had become "impossible" and there was no will to get things done.
However, Mr Steyn of Absa said diminishing opportunities in South Africa were not necessarily the result of a lack of will, but rather because of obstacles and inefficiencies imposed by municipalities. There were still opportunities in the country, he said.
KEY AFRICAN MARKETS
Caswell Rampheri, CEO of Buna property development group, identified three key markets on the continent: west, east and southern Africa.
West Africa - especially Ghana and Nigeria - was a high-risk, high-return area but there was a lack of regional cohesion, he said. Ghana, "a country to watch", had one of the fastest-growing economies in the world last year, according to the International Monetary Fund, with clear rules and regulations, he said.
East Africa was a high-risk, moderate-return area, he said, although it had improving regional cohesion, so investors could use Kenya as a base to expand elsewhere.
The southern African market offered moderate risk and returns, and Mr Rampheri said Mozambique was "a gem waiting to be unlocked", where retailers were "crying for space".
Mr Rampheri recommended Zambia for property investments, with its decelerating inflation, a growing population, established markets, political stability and infrastructure in place making it "investor friendly".
The country offered attractive investment incentives, with zero corporation tax rates for a period of five years after the first year of profit, and opportunities were "in abundance". Its property market offered "superior returns" on a risk-adjusted basis, Mr Rampheri said.
He said while there were still challenges on the continent - including the "opaqueness of data and information", a shortage of institutional capital and high costs of development - many aspects were improving.
Mr Steyn said there was a "realisation that opportunities are tougher to come by in South Africa", with more obstacles being imposed by municipalities on commercial property investors, along with inefficiencies and corruption, while consumer debt meant less spending power.
Because of this, many South African developers saw the rest of Africa as worth exploring, he said.
Seven African countries were among the top 10 fastest-growing economies in the world, and 13 already had a higher per capita gross domestic product than China. The continent was experiencing a population boom, and would have 2-billion customers in 2050, from 1-billion in 2010, Mr Steyn said.
This, combined with rapid urbanisation and opening trade, meant "the demand will create itself", he said.
However, the challenges could not be ignored, with many countries ranking badly on indices for corruption and ease of doing business, and political instability still a concern.
Also, the South African government "needs to put more effort into improving its trade links with the rest of Africa to make it easier for companies to take advantage of these opportunities", Mr Steyn said.
He agreed Ghana was an attractive market, with ease of doing business and no language barrier. Zambia, although small, was attractive too and investors needed to "get there quick", he said. Kenya was also worth considering, although high levels of corruption were concerning.
Opportunities were also available in Mozambique, Namibia, Nigeria, the Seychelles, Tanzania and Uganda.
"The key to any investment in any African country is to understand that every country is different, with a mix of different political, cultural, lingual and regulatory factors, which means it is essential to do your homework beforehand," Mr Steyn said.
Neil Gopal, CEO of Sapoa, said: "The South African commercial property sector is in a unique position to lead successful real estate development and investment in Africa. This is underpinned by the strength of our property sector and our globally respected development expertise."