Investment into West African real estate is primarily being driven by pension funds, according to Thomas Reilly, head of African real estate at Investec.
Speaking on a panel at the Second West Africa Real Estate Investor Forum, Reilly addressed the issues surrounding the lack of capital in African real estate, despite the pension fund investment.
Reilly said: “Big pension funds are driving investment [into Africa], the middle east as well. It’s been a strategic change, investors have realised that the cycle is at a low point, so it becomes about funding partners … proving that the strategy is very important.”
In the last 12 months, Africa-focused private real estate fundraising totalled $450 million, with two funds closing, which shows a decrease on $850 million raised in 2016 and the exception figure of $3.83 billion, which was raised in 2015.
However, looking forward to 2018, Reilly expects that fundraising “will be up there”.
Another panellist, David Laskbrook, head of Africa real estate at Momentum, said: “US investors are interested, but when investors see the challenges in Africa over the past 18 to 24 months, they tend to back off.”
Reilly added: “Depth of capital in various markets hasn’t been there … by and large it has been a difficult sell. [Investors] are not prepared to come in and write a $30 million cheque, it’s not worth their time.”
Source: Real Estate Investment Times