PROPERTY NEWS

WITH the global economic meltdown yet to show appreciable signs of abating, the property markets in Nigeria and other African nations are being tipped to be the emerging safe havens for international investors in real estate.

Recent projections by property analysts have revealed that property markets in Nigeria and some other African countries have proved book-makers wrong, showing signs of reliability and offering huge opportunities for investors. They have also hinted that in Nigeria, for instance, the major attractions for would-be investors are the rental returns and track records of appreciation for property in its choice cities, notably Abuja, Lagos and Port Harcourt.

The new assessment by the real estate analysts also states that Africa is brimming with "undiscovered real estate gems" and has begun to intercept opportunistic capital earmarked for China, Brazil and India, a partner in one of Europe's oldest African.

Chairman of the Estate Surveyors and Valuers Registration Council of Nigeria (ESVARVON), Mr. Joe Idudu, told The Guardian last week that most African currencies have depreciated so massively that properties in these countries are now of low value.

Idudu, a former managing partner at Knight Frank and former President of the Nigerian Institution of Estate surveyors and Valuers (NIESV), noted that rental values in Africa countries are the highest in the world, thus presenting high returns for investors who brave the market.

His views were collaborated by Mr. Bode Adediji, NIESV First Vice President, who added that the attractions for investors are "superior rate of returns in relative and absolute terms caused by the ever widening gap between demand and supply."

Adediji, Principal Partner in the firm Bode Adediji and Company, anticipates increased influx of foreign investors into the Nigerian property market following the global meltdown that has made housing unattractive in developed countries. "Real estate investment is safe in Nigeria and Africa, barring any unforeseen political upheaval," he said.

Indeed, to Peter Welborn, a partner in the private equity real estate fund manager Rutley Capital Partners, the African continent presents real estate investment opportunities that are just as good, if not better, than those seen in Asia or Latin America.

To ensure safety of their interests, the analysts said, one exit strategy that investors are considering for their real estate investments in Africa is to have portfolios of assets listed on a local stock exchange, with the shares sold to growing local pension funds in countries such as Malawi and Botswana.

Rising oil prices, a telecommunications revolution and greater economic stability shored up by the emergence of an aspiring middle class, are transforming investor attitudes toward the continent, Welborn said.

Going by the assessments, the relationship between rental income yield and price remains intact in Africa, unlike in Europe, where highly-leveraged investors paid record-breaking prices for smaller and smaller sums of yearly rental income, setting the foundations for a buyer-seller impasse on values that has kept Europe's market dormant for nearly two years.

By contrast, well-advised buyers can regularly achieve double-digit rental income yields for prime assets in the capital cities of some of Africa's most developed countries, Welborn said.

"In Nigeria, for example, you have increasing political stability ... an environment based on English law for land ownership, and also oil and gas which produces the hard currency that enables financing of infrastructure," Welborn told the Reuters Global Real Estate Summit in London.

"Basically everything that investors are looking for to access opportunities is there," said Welborn, who is also head of Africa for global property services firm Knight Frank, Rutley's parent company.

Once dubbed the final frontier for real estate investors, Africa has been steadily blossoming, he said.

Welborn, who started on the continent in 1979 helping Western energy firms and governments with their property needs in Lagos, said many investors see Africa as a viable emerging market alternative to the Middle East or China.

Other attractive markets include Libya, where investors are looking to build service offices and apartments, and in Tanzania and Mozambique, where tourism-related properties like hotels and resorts are being developed, he said.

"There are more inquiries from U.S. hedge funds, sovereign wealth funds from China and the Middle East, as well as endowment funds of U.S. universities, seeking to diversify from the more traditional Western real estate markets," Welborn said.

"The one thing about Africa that interests many American investors is that it does not correlate with the U.S. economy. It's the perfect diversification tool," he said, adding that funds are seeking internal rates of return of about 20 per cent.

Knight Frank, which has been operating on the continent since 1965, has 19 offices in nine African countries including Nigeria and directly employs more than 380 people and a further 600 indirectly.

Welborn acknowledged, however, that investing in African has its risks, including problems of corruption, but felt most of those could be managed by working with partners familiar with the market.

"We see relative political and economic stability across all areas that we advise in Africa, and feel they are sufficiently stable to recommend investments in," he said.