Africa is the last frontier, so it has very attractive growth prospects, yet many infrastructure and property investors are not capitalising on what it offers because they are sceptical of the political landscape, says Kofi Smith, Managing Member at Consult Three Architects.
Smith explains that the housing sector in Africa is very attractive due to economic growth and high influx of multinational companies. There is a huge demand for affordable housing and middle income housing, and governments are spending millions of dollars on mixed use housing/retail developments. Rural retail developments have been a big area of focus in South Africa for example, as the country tries to rebuild previously disadvantaged communities. However, Smith says African government agencies are not spending a lot of funds on building basic infrastructure, thereby delaying development processes. Only a small portion of the market, the private sector, has been doing very well investing in real estate. Forming local partnerships Investors need to understand the terrain they want to enter, says Smith. They must form local partnerships to understand each market better, avoid delays in various approvals and take advantage of the established networks they have in place. They must also understand the political landscape of the country and align themselves to new policies.Where to invest
According to Smith, Ghana is currently booming and is politically stable. He points out the large difference in the cost to develop versus the cost of sale, if you compare Ghana and South Africa. “In South Africa the profit margin of the typical middle-income housing development is around the region of 20% – 30% – that would be considered successful. In Ghana, the profit margin can be between 100% – 200%,” he says. “Ghana does not have much of a credit system in place, but investors who go in liquid can make a lot of money. The market is very right for office and high-end housing developments. Retail is also doing well, but getting land in the right location costs a fortune. Demand is so high that it almost does not make the developments feasible.” Infrastructure & Property Development MEA Summit 2014 Consult Three Architects is a sponsor company that will be present at the Infrastructure & Property Development MEA Summit 2014, in Dubai, UAE. The Summit includes presentations on performing a delicate balancing act by adopting a superior level of quality, sustainability and convenience within allocated budgets, and validating development plans to showcase the booming market and deliver profit-generating products.
