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Africa: Asset Managers Look to Continent
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Business Day (Johannesburg)
15 May 2008
Posted to the web 15 May 2008
Nick Wilson
Johannesburg
SOUTH African institutional asset managers are increasingly refocusing their attention to real estate acquisitions in the rest of Africa, says property services group JHI.
Wayne Wright, JHI's director of business development for Africa and international regions, said yesterday these were institutions that had before just been investing in Africa's equity markets.
Wright said they were now "refocusing" their investment strategy into acquiring "trophy" properties in certain other African countries, including Nigeria, Ghana, Zambia and Angola.
He said the sellers of the properties were opting for "sale and lease back" agreements where they sold their properties but took 10-year leases to stay as tenants.
He said the sellers wanted to sell for "cash injection purposes" and get a spread of investments in a diversified range of properties.
Wright said JHI was negotiating with three South African institutional asset managers wanting to buy real estate in these markets and hold them.
He said the properties would be held with a "view to listing these properties further down the line. There has certainly been an increase in these deals over the past three months."
On SA's commercial property market, Wright said prices were coming down. He also said there were probably 25% more properties for sale on the market now than at the same time last year.
This is due to the fact that sellers are feeling the squeeze because of the higher interest rate environment. "Where they were selling at yields of 8%, they are now selling at 10,5%-11%," he said.
He said there was a mix of properties being sold, including offices, retail and industrial properties.
Although the property market was experiencing difficult conditions, JHI said it was well positioned for further growth.
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JHI CEO Marna van der Walt said that the company was "determined" to deliver 15%-20% year-on-year growth this year. It has property assets under management valued at about R31bn.
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