International investors line up for Africa’s retail property space

“When it comes to sectors of investment, we look at retail as well as commercial office space, and that’s on the physical real estate market. There’s also the listed market in Africa, which is another market for investors to invest in. In South Africa we’ve seen that grow to about 30 billion dollars,” Atterbury Property Developments managing director James Ehlers said on Tuesday.

“In the rest of Africa, it’s still a very small market so we aren’t seeing the amount of liquidity that you’ve seen in South Africa.”

Africa has been dubbed as the last growing investment frontier and with a growing consumer class, particular attention is coming from foreign retail companies.  

“The market is underserviced in sub-Saharan Africa, and the South African retailers are looking to expand their businesses into Africa. There are a number of international retailers that are also looking to expand their businesses. The development is really responding to a historically underserviced market,” Ehlers explained.

In South Africa, listed properties have outperformed other asset classes in the country last year, becoming one of the most attractive asset classes.

“If you look at where these guys are playing, they’re playing in the field where often you’ve had entrepreneurial developers running ahead of them, and great products are now being actually put into these listed funds with great leases sitting behind them,” said Broll Property Group CEO Malcolm Horne.

Other regions that are fast becoming retail property hotspots include Nigeria, Ghana, Angola and Mozambique. Kenya, which has traditionally been a well-serviced retail property space, is also a prime market country.

“South African retailers have definitely driven the growth from a retail perspective in Africa. They have been some foreign retailers with interests, we’ve seen the likes of Walmart purchasing Massmart, and there’s also been Carrefour in France, looking to get into the African market,” said Brett Abrahamse, director at Terrace Africa.

“The future is definitely going to be driven more by foreign retailers. However the South African retailers at the moment do hold the pack.”