SA property funds wary about investing elsewhere on the continent

Posted On Tuesday, 05 September 2006 02:00 Published by eProp Commercial Property News
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The problem is that most South African companies are cautious about investing in other parts of Africa.


The Actis Africa Real Estate Fund, which aims to focus on investments in office and retail space in sub-Saharan Africa, should facilitate the creation of adequate infrastructure and make the region more attractive for other property investment.

South African property companies have not yet invested in a major way in the rest of Africa and the question now is whether an investment like the Actis Africa Real Estate Fund will encourage them to take the plunge.

The problem is that most South African companies are cautious about investing in other parts of Africa. There are often no title deed systems, neither is there clarity on tax issues.

Des de Beer, MD of listed property loan stock company Resilient Property Income Fund, says that Diversified Property Fund - a sister company of Resilient that specialises in retail property - had looked at property investment opportunities in sub-Saharan Africa.

"We didn't pursue it because we couldn't get clarity on tax treatment of income. Also, in many African countries the title to property is not secure. We decided the risk outweighed the returns," says De Beer. He says they will keep "watching the African situation".

"There are opportunities there but in future if we do take positions it will be in SADC (Southern African Development Community) countries only."

De Beer says the SADC region has a much more stable environment than other parts of Africa.

Brian Azizollahoff, CEO of listed property loan stock company Redefine Income Fund, says the "rest of Africa is a bit of an unknown to us".

"We don't have the experience of the rest of Africa and we would generally stick to the more conventional offshore investments," says Azizollahoff. "We have expressed previously that we would look at the UK and possibly the US and continental Europe."

Redefine owns 18% of UK-based property fund CIREF, which listed on London's Alternative Investment Market in May. Corovest International, the British property arm of SA-based Coronation Investments and Trading, listed the property fund.

But Azizollahoff says the majority of Redefine's property portfolio would remain within SAs borders. "The rest of Africa has risk. They are not as stable as Europe and the US. If we were going to go offshore, which we have done, we would first look to the more stable markets."

But Azizollahoff says South African property companies and developers may well follow suit and enter the African market.

"But to date there have been no notable developments by South African developers in the rest of Africa. This may change in the future. Especially with South Africa's exchange control policies, which have been relaxed for investment into the rest of Africa, there may be some developers who would take advantage of that."

Last modified on Tuesday, 15 April 2014 10:07

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