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Absence of adequate number of occupiers to fill spaces in large shopping malls is a disincentive to investment and development of retail market in Africa, experts at a global real estate forum have said.
Though Africa, especially Nigeria, in the past decade, witnessed what looked like a revolution in the retail segment of the real estate sector, it is still challenged by liquidity issues, hence the need for developers/investors to rethink the current model of building sophisticated malls.
“They may need to do more of strip malls, which may be better suited for a number of African countries, considering their current level of development”, said the experts who gathered for a meeting in London under the auspices of Global Real Estate Institute (GRI) Club, African chapter.
The meeting with the theme, ‘Trends Shifting Real Estate Capital Flows in Sub-Saharan Africa’ noted that that was funding challenges for investment in real estate and proposed options for practitioners in to operate optimally.
Kunle Osilaja of Ecobank Nigeria Plc pointed out that Africa compares to other emerging global markets, pointing out that the impact of regulatory and policy changes and obstacles were preventing the flow of foreign capital into Africa.
Ajayi Adetokunbo, MD/CEO, Propertygate Development and Investment Plc, advised that real estate operators in Africa should not to devote significant energies chasing after foreign investors who demanded a great deal of persuasion.
“Operators should begin to seriously look inward for funding in view of the structural and other challenges on the continent coupled with competition from other regions of the world”, he advised.
Investment in African real estate market from international investors has slowed down in the past couple of years. An investment inflow from South Africa, particularly, has reduced as attention has turned to Eastern Europe.
The experts were of the view that, apart from the current economic challenges in the continent which has turned off investors, “there is lack of liquidity in the market and it may be hard for a secondary market to commence soon”.
Continuing, they said, “there is need for capital from local institutions in order to avoid the current reliance on foreign investment; capital investment from local institutions like pension funds, insurance companies, and capital market, through channels such as Real Estates Investment Trusts (REITS) should be boosted to enhance the market”.
CHUKA UROKO
