In Africa today, local capital markets, domestic institutions and favourable demographics are converging. This is seeing many countries take control of their own investment and growth agendas.
The economy is expected to rebound in 2018 following a difficult 2017. Some of this rebound will trickle down to the Real Estate market but developers and property owners should not expect things to normalise immediately. In this instance, where should Real Estate Investors focus their attention in 2018? The year 2017 saw a significant reduction in consumer spending and both local and international investment. This slowdown was largely due to two factors: the prolonged presidential election, and a legislation driven slowdown in lending.
By Aditi Khimasia (pictured), Senior Associate, and Dominic Rebelo, Partner, Anjarwalla & Khanna
It seems 2017 flew by at a blinding speed. At the end of last year, we were wondering what a Trump presidency would look like. Now, the first year of Trump’s term in office is nearly behind us. Unexpected election outcomes left us reeling in 2016, and 2017 has certainly proven no less turbulent.
Blockchain refers to a distributed or decentralised public ledger or database of records of executed and shared digital events among participating parties. When persons transact in a blockchain system, a public record of all transactions is automatically generated and are visible to all participants which increase trust and reliability since participants can access the transactions from different nodes if one-point node fails. These transactions are verified by computers using sophisticated algorithms to confirm transfer of value and create a historical record of all activity which are impossible to change thus it contains an accurate and verifiable record of each and every transaction ever made which reduces opportunity for fraud.
Infrastructure as an asset class can provide a distinct addition to African pension and investment portfolios and is increasingly being considered.
Africa’s has the potential to become the next private equity hotspot. Merely looking at the energy infrastructure sector, “600 million Africans are not connected to the electricity and public investment will not be sufficient,” says Graham Sheward, Managing Director of SGG Mauritius.
When it comes to investing, the quote above from Albert Einstein is extremely apt; especially today, when many investors are concerned about where future returns will come from.
The recent ruling by the Supreme Court of Kenya to nullify the results of the presidential election caught Kenyans and the rest of the world off-guard. After a tension-filled election period most Kenyans were trying to settle into their normal routines amid calls by the international community that the election results of the August polls should be accepted.
In an industry-changing move, the amended Pension Fund Act regulations which came into effect on September 1, 2017, bring about welcomed reforms. But, implementation could pose challenges for trustee boards that are already grappling with limited governance bandwidth.
Africa has the fastest-growing economies in the world as well as the youngest population expected to double by 2055. This growth presents an opportunity to transform this youth boom into a catalyst for industrialising Africa or it can undermine the progress that has been made. The real question is "what do we do with the youth and how to develop their capacity to unlock their potential to be positive agents of change and contribute towards job-creation?
In recent years there has been a shift in the power base of private equity (PE) investment in Africa from the oil rich West to the new emerging economies of Kenya, Uganda and Tanzania in the East, write James West (pictured) and Perry Yam, Partners at Mayer Brown.
In the early days of 2017, Kenyan stocks were trading near their lowest valuations in years. At that time, 27 of the 66 companies listed on the Nairobi Securities Exchange (NSE) had grown their earnings at an average rate of more than 10% during the preceding five years, and 16 of them had grown in excess of 15%. But despite this broad-based growth, the market as a whole traded at a price-to-earnings ratio of just 12.7 and sported an average dividend yield of 6.3%. Nearly half of all listed firms (29 to be exact) traded at a discount to their net asset values.
The brilliant thing about working in Africa is the continent’s ability to change - and adapt - almost instantly. While at first glance this is often interpreted as a challenge or a risk, the importance of adopting a glass-half-full approach has never been more essential than in Africa’s current real estate environment.