Macro and ESG Trends REsetting the Real Estate Agenda – Africa Real Estate Investment Summit (API)

The way we live, work and play has been fundamentally redefined, comments Kfir Rusin, host of Africa’s leading gathering of real estate investors and developers, the API Summit (www.APISummit) (Johannesburg, 21 and 22 september). This has transformed the way occupants use space; how we do business and how real estate investors allocate capital. As we build back stronger, stakeholders across the real estate value chain must adhere to a new set of principles focused on real returns, sustainability, resilience and affordability.

Speaking ahead of the API Summit, Niyi Adeleye, Head of Real Estate Finance for Africa Regions at Standard Bank, says key micro and macro trends including improving infrastructure supply; ESG; pending IMF agreements, currency instability and liquidity have an effect on the broader investment case and how investors choose to allocate capital in the future.

“Owners should remain aware of the impact of the micro and macro environment on the demand patterns for their assets. The pragmatic response is usually the careful use of debt in a project’s capital structure to manage volatility. similarly, project sponsors should pursue portfolio strategies that balance their sector exposures to manage the impact of micro and macro factors on specific assets, countries (which may be more vulnerable) and However, following the rebasing of rents in certain sectors before the pandemic, the observation is that key sectors and a number of assets had found a rental balance and the observation was a rise in trading power on a number of stabilizing assets in the markets.”

Moving from funding allocation to a sector performance perspective, Adeleye points out that in Africa (ex-RSA), the industrial segment is overall the most resilient and best performing, followed by Class A and Class D commercial office space. a satisfactory rebound in the hotel sector.

Conversely, for him, retail developments remain a concern across the continent as the sector continues to grapple with the prevailing global macroeconomic environment. As Adeleye puts it, “Retail is likely to feel the brunt of current macroeconomic pressures and inflationary trends as currency volatility continues to erode purchasing power while increasing the cost of imports given the relative strength of the dollar”.

And while the traditional real estate sector has delivered mixed results, Adeleye shares optimism about the growing value and importance placed on the industrial, residential, life sciences and data center segments, but cautions market players to fully understand the demand in each segment and jurisdiction.

“The demand patterns, types of user bases, and critical nature of spaces required for the demand profile of these real estate segments suggest that the sectors will show more stable performance over the medium term. Thus, the likelihood of outperformance is likely, however, proper consideration is also needed to ensure that the supply and demand dynamics of these segments are carefully monitored to avoid massive oversupply.

It is this correct balancing and mitigation of risks associated with real estate investment and development in Africa that ESG is coming to the fore and increasingly critical to correct decision-making and retain the value of assets and wallets, says Adeleye.

“ESG considerations have become a critical part of risk assessment because the absence of these characteristics, whether at an asset or portfolio level, erodes confidence in the sustainability of demand for assets given the importance of the theme.Similarly, adapting to changing market dynamics and urbanization trends is a reality that market players must continually consider to remain relevant to the their markets and demand patterns.

In conclusion, Rusin concludes that the diversity of speakers, companies and countries represented at this year’s API Summit is evident from a rapidly changing and growing African real estate sector.

“The API Summit continues to attract pan-African and international leaders who are actively seeking agreements across the continent. This year’s event also includes a stand-alone Africa Hospitality Forum, the Africa Proptech Forum Event, an awards dinner and a cocktail reception for over 400 attendees from 30 countries. The fact that we are able to continue to grow and grow the event in 2022 after the Covid-19 pandemic is a testament to the value we bring to our investment community and the support of our main sponsor Standard Bank and many others.

Distributed by APO Group on behalf of API Summit.

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About API Summit 2022:
The API Summit is Africa’s premier real estate event that connects regional and global players across the real estate value chain. This year’s summit will feature over 120 speakers, over 350 in-person attendees and over 400 virtual attendees over 2 days. From large African banks to pioneer listed funds; institutional investors, developers, operators and more, the API Summit sets the agenda for African real estate.

This press release was issued by APO. Content is not vetted by the African Business editorial team and none of the content has been checked or validated by our editorial teams, proofreaders or fact checkers. The issuer is solely responsible for the content of this announcement.