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#AfricaMonth: Seeff explores the continent's real estate trends and growth opportunities
What are some of the key trends you've observed in the South African real estate market over the past few years, and how do you see these trends shaping the industry's future?
- Semigration for a better lifestyle and better local services has been a huge trend, ignited by the pandemic lockdowns where people suddenly realised they need more from their daily lives than merely commuting to work.
- Rediscovery of the country and seaside, with many smaller towns seeing a resurgence in demand for property.
- Growth in hybrid working which means people are looking for work-from-home space so that they only need to commute part of their workweek.
- Rising urbanisation with a significant influx into the cities by people looking for economic opportunities. This has created enormous pressure for affordable housing, and because the government has not acted and fallen well behind in terms of developing affordable housing, it is putting tremendous pressure on the cities. This is likely to continue, and there are loads of opportunities for private developers to come in and fill the gap, but they will need government funding.
- Lack of maintenance and infrastructure development is another huge draw-back for the property sector.
South Africa often serves as a bellwether for real estate trends in the region. In what ways do you see South African real estate trends influencing or diverging from trends in other African countries?
SA has by far the most advanced and active property market with much higher volumes compared to the SADC property markets. It is also a trend setter in terms of mixed-use developments, and estates, to cater for the growing demand in the cities.
Namibia is similar to SA; the same interest rate and property prices are very similar. Botswana as well, but the SADC property markets are still mostly smaller than that of SA, but they are developing.
The Zimbabwe residential property is largely driven by expats for example. They battle with a high interest rate and challenges to obtain home-loan finance which means buyers need cash on hand, and due to the weak economy, it is mostly expats who are able to afford property with locals mostly renting.
Comparatively, South Africa offers a market in which it is much easier to purchase property, even for first-time buyers, for example. The banks are still lending up to 100% (some still up to 105% including costs), prices have remained very flat, and there is additional government assistance in the form of FLISP (Finance Linked Individual Subsidy Programme) for those earning between R3,501 and R15,000 per month.
According to Seeff’s branches in SADC, there is strong demand for commercial property as development continues and the economies expand, and shifts are happening.
What opportunities do you see for real estate investment and development in Africa, particularly in regions outside of South Africa?Affordable housing is a huge gap not just in SA, but also in the SADC countries, with opportunity for developers, although there are challenges in terms of being able to deliver low-cost housing, but this is happening in many areas.
There is also growing demand for mixed-use developments and estates where people can enjoy a lifestyle in relative security with amenities on hand such as a swimming pool, play area for children, open space for cycling or hiking and so on.
How important is sustainability and environmental consciousness becoming in the African real estate sector, and what are some innovative approaches you've seen in this regard? This is growing and likely to increase in the coming years, but as we for example see in SA, it is often out of necessity such as the switch to solar due to the Eskom energy crisis.
Many estates and new developments are now incorporating sustainability which is good for future growth and development.
Affordable housing is a critical issue across Africa. What strategies do you believe are most effective in addressing the shortage of affordable housing, and how can the private sector contribute to these efforts? More suitable for developers to answer, but we do see strong demand for mixed-use developments.
We are likely to see more densification in the cities to make use of existing infrastructure (water, electricity, sewage etc.). Cape Town is a good example where ordinary residential properties can be built and rezoned to sectional title.
In your view, what role does government policy play in shaping the real estate sector in Africa, and what policy changes or reforms would you like to see to support further growth and development?
The government plays a significant role in terms of legislation and taxes, including for example property taxes such as transfer duty and Capital Gains Tax, both of which can be a hindrance to the market, and the promotion of protection of private property which is vital to driving prosperous economies.
It also plays a key role in shaping economic policies and developing and maintaining vital infrastructure needed for economic growth which in turn would boost and unlock property growth potential.
Are there any emerging markets or sectors within the African real estate landscape that you believe hold particular promise for investors or developers?
South Africa offers excellent opportunities for affordable housing and densification, but there are also many opportunities in neighbouring countries.
SADC countries are expected to grow and develop in the coming years, and that will naturally offer plenty of opportunities for developers.
Africa's urban population is expected to double by 2050. How do you see this demographic shift impacting real estate demand and development patterns across the continent?
It is widely expected that significant urbanisation will take place; we are already seeing people flocking to the cities in search of economic opportunities. The high demand for housing is likely to necessitate densification with more compact living, more mixed-use apartment complexes, better public transport because traffic will become even more challenging than what it currently is.
Collaboration between the public and private sectors is often crucial for successful real estate projects in Africa. Can you share any examples of successful partnerships or initiatives that have made a positive impact in the communities they serve?
Cape Town CBD was run-down by the early 2000s, the success story that you see today, is the direct result of futurist thinking and public-private partnerships where the private sector came in and developed the city. It also saw the rise of the CCID (Cape Town Central City Improvement District), again a privately funded initiative which provides top-up services such as cleaning, safety and security. This initiative has subsequently spread to many other areas such as Sea Point.
As we celebrate Africa Month, what message do you have for aspiring real estate professionals or entrepreneurs looking to contribute to the continent's development through the property sector?
The property sector, both residential and commercial, is an important economic contributor, and also has a notable economic multiplier effect in terms of igniting a value chain of economic benefits and jobs created. It is a sector which should be embraced and seen as a growth vehicle, but requires a conducive environment in terms of legislation for the private sector to do what they do best, and that is to develop and grow.
South Africa can be a continental leader in that regard, setting the tone for neighbouring SADC countries to also follow. That said, for this to take place, the right economic climate must be a priority here, and elsewhere.
