Exceptional real estate returns in Southern Africa are just the first step for investors, as risk mitigation and understanding their own risk budget are just as critical.
However, even with risk mitigation becoming increasingly tricky across multiple jurisdictions, sub-Saharan Africa offers enticing opportunities.
“Indeed, the most stand out feature of South Africa commercial real estate investment is the return on investment,” said Bruce McGlogan, Head of Private Equity and Real Estate Fund Services at the Maitland Group. McGlogan will be tackling the issue at the 11th Annual IPD Property Investment Conference in Cape Town later this month, with the over-arching theme this year being Property on the Red Carpet.
“Overall, my message is an upbeat one,” said McGlogan. “Real estate and particularly private equity real estate investment continues to grow in sub-Saharan Africa. While it may be true there are risks associated with emerging market investments, core returns in sub-Saharan Africa are comparable to opportunistic returns in developed countries. And risk is, of course, a key imperative in global real estate investments.”
In the Southern African context, McGlogan points to governance, transparency and a lack of sophistication in portfolio management, along with macroeconomic considerations, inflation and exchange rate fluctuations as general risks. “Increased regulation and legislation are key risks for the region’s real estate investments,” he added.
Simon Fairchild, Executive Director & Head of North America, IPD, who will also be speaking at the conference, points in particular to the variety of ways that investors can now access property including direct, indirect, listed or privately held. Fairchild said, “Over the past 20 years, we have seen real estate becoming increasingly integrated with the mainstream investment process but understanding risk is critical. All investors have a ‘risk budget’ when they invest and for what they get back in return. Investors also need to realise that some risks simply cannot be managed or predicted.”
Other speakers bringing their insight and perspectives to the conference include economist and academic Brian Kantor; Axel Schimmelphennig, Senior Resident Representative, International Monetary Fund; Andrew Rogers, Deputy CEO, Hospitality Property Fund; and Rob Wesselo, Director from International Housing Solutions.
Sponsored by Stanlib, the 11th Annual IPD Property Investment Conference will take place on 18 and 19 July 2013, at The Westin Grand Hotel in Cape Town, South Africa.