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AVCA report shows investor appetite for real estate in Africa

Africa Global Funds
Oct. 10, 2016, midnight
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Of the total $1.1bn private equity fund closures in 2016 H1, 46% were dedicated exclusively to real estate opportunities in Africa, according to the inaugural 2016 H1 AVCA report.

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Of the total $1.1bn private equity fund closures in 2016 H1, 46% were dedicated exclusively to real estate opportunities in Africa, according to the inaugural 2016 H1 AVCA report.

Ponmile Osibo, Manager Research and Training at the African Private Equity and Venture Capital Association (AVCA), said: “We’ve seen real estate emerge as a key sector attracting investor interest, adding another channel for PE investment in Africa.”

Africa’s real estate sector continues to hold tremendous investment potential, driven by strong economic growth and rapidly urbanizing populations, according to Papa Madiaw Ndiaye, Founder and CEO at AFIG Funds, and AVCA Vice Chair.

“In markets such as Ghana, analysts estimate the shortfall of commercial office space at nearly one million square meters, and the annual housing deficit at one million units. This formed the rationale for our 2015 investment in the real estate sector in Ghana, to deliver quality office space to both local and multinational companies, and to house an emerging middle class initially focusing on Ghana, and ultimately serving the sub region,” he added.

The first bi-annual African Private Equity (PE) Data Tracker report from AVCA, produced in response to growing member demand, reinforces that deal activity in Africa remains strong despite continued global and regional macro-economic volatility. 

FMCG, financial services and industrial sectors also continued to attract investment across the region, although sector breakdowns were not published.

The total value of PE deals in Africa during the first half of 2016 reached $0.9bn, comprised of 83 reported transactions, which remains steady when compared with recent years.

According to the findings, smaller deal sizes in Africa have continued on from 2015 as 75% of PE deals reported in the first half of 2016 in the region were under $250m in size.

This reflects the concentration of deal activity in sectors such as finance and technology that typically attract smaller transactions.

 “Our figures illustrate a resilient PE industry despite continued economic volatility and similar fundraising levels when compared to 2014 ($2.0bn). Overall, we see positive signs that investors continue to close deals boosting local economies by injecting capital and driving job creation on the continent,” said Osibo.

 

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