Speaking during the 11th annual African Property Investment (API) Summit, held virtually from September 30 to October 1, 2020, Standard Bank’s Head of Real Estate Finance, Africa Regions, Niyi Adeleye (pictured), commented that while the Covid-19 pandemic has impacted the sector, those with the necessary capital have continued to seize opportunities.
“Real estate investors that had dry powder (capital) and saw unique opportunities, appeared to have continued to pursue these investments, albeit at a slower pace. On the other hand, investors that depended on external sources of capital appear to have mostly pushed their investment plans out, which is not surprising,” said Adeleye.
Having moved online for 2020, the API Summit Virtual, took place under the theme of Resilience, Opportunity and Innovation (ROI) and provided a platform for more than 800 delegates from 32 African and international countries to network, gain new insights and build for the post Covid-19 future.
As one of more than 100 speakers at this year’s online conference and representing one of Africa’s most proactive and largest lenders to the commercial property sector, Adeleye’s views on the investment implications for the sector post Covid-19, was of key interest to this year’s delegates, said API Events’ Kfir Rusin, the host of the API Summit.
“2020 has been a challenging year for all, and the real estate sector has been hit particularly hard. We are now beginning to see investors and developers explore how they can identify opportunities, as well as building resilience and innovation into their current and future projects,” said Rusin.
He adds that the pandemic has particularly exposed the weaknesses in the retail, hospitality and office sectors, while conversely it has highlighted the defensiveness of logistics and warehousing, corporate residential, as well as the need for data centres, healthcare and affordable housing investments across the continent.
While Adeleye remains cautious on what will be most attractive and provide ROI for investors post Covid-19, it has been observed that the rate of recovery has been faster than anticipated, especially in non-resource dependent economies, he said.
“The pace of recovery appears to have been faster than anticipated in retail, especially for established centres, as customers appear to prefer the use of formal retail environments to less formal ones due to perceptions of better health and safety and this reinforces the growing adoption of many of these assets in key jurisdictions and nodes.” While, also commenting that hospitality assets that “mostly targeted local demand has proven to be slightly more stable than those dependent on external demand,” said Adeleye.
From an emerging sub-sector perspective, Adeleye has noted that the demonstrated resilience, has been seemingly backed by strong occupier demand, he said.
“Currently, segments and emerging segments that are driven by corporate demand, such as offices, logistics and data centres, appear to have demonstrated some resilience. Emerging sectors like healthcare and affordable housing are driven by very wide demand \ supply imbalances and will likely remain resilient going forward.”
However, Adeleye does stress that for African real estate to remain resilient and provide long-term ROI, “All segments must ensure that the rate of supply growth is matched by addressable demand so as to avoid gluts and weaknesses in the property cycles.”
A perspective which Rusin shares, and says it is one of the key themes that has emerged from the more than 35 API Events produced webinars and virtual conferences, which have been watched by tens of thousands of attendees during 2020.
“As we move forward into 2021/22, we believe that this year has also highlighted pre-existing trends such as a slowdown in future retail and office developments; a boost to co-working spaces; renewed interest in affordable housing, diversification into data centres, healthcare and logistics; greater adoption of property technology; more sales and leasebacks, less reliance on international capital, and a race to economic diversification,” said Rusin. Adding that these trends will also help to inform future investment decisions and priorities.
Taking place online, the API Summit Virtual will enable real estate leaders actively developing projects and pursuing investments will be able to engage with decision makers from the safety and comfort of their homes and offices. Attendees can now attend free when registering on the limited access passes.