12 °c
London
Tuesday, February 7, 2023
No Result
View All Result
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
FurtherAfrica
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About
No Result
View All Result
FurtherAfrica
No Result
View All Result
Home Africa

Standard Bank: Weathering Africa’s commercial real estate storm

FurtherAfrica by FurtherAfrica
August 29, 2017
in Africa, Angola, Economy, Kenya, Mozambique, Nigeria, Real Estate, Zambia
Reading Time: 2 mins read
874 9
0
Standard Bank: Weathering Africa’s commercial real estate storm
Share via QRWhatsappShare on FacebookShare on TwitterLinkedInPinteresteMail

In May last year, Nigeria was in the throes of a USD liquidity crisis. Barely 12 months later this is largely resolved.

Just as tweaking foreign exchange regulations along with positive market changes improved liquidity in Nigeria, an uptick in the oil and copper prices coupled with market-friendly, transparent forex regimes could, equally as easily, change Luanda or Lusaka’s commercial real estate prospects — overnight.

Similarly, large global energy investments touted for Mozambique are currently dispelling default-driven negative sentiment as investors again turn positive about the region.

“The variables that threaten risk in Africa are equally what contributes to making the continent such a rich landscape of opportunity — especially in the continent’s real estate sector,” says Mr Zeelie.

Africa’s commercial real estate sector is currently, without doubt, a tenants’ market. Despite a more settled Naira and easing USD liquidity in Nigeria, challenges importing goods — until recently prohibited for foreign currency allocation — is keeping smaller businesses and retailers under pressure, forcing landlords to continue offering tenants discounts, or capped USD-based deals. New malls remain at 50 – 60 percent occupancy levels as, “tenants shy away from the more expensive USD-based rentals, or remain unsure of whether they will be able to get prohibited, non-essential, stock through ports,” says Mr Zeelie.

Similar concerns follow Africa’s office rental environment as businesses adopt a wait-and see attitude, deferring office moves, upgrades and corporate office expansions. These kinds of challenges mean that commercial real estate developers are struggling to convert Africa’s resilient consumer demand into competitive rentals.

“This is not only constraining income in the sector but also leading to a depreciation in the value of the continent’s real estate stock as, increasingly, space in new developments stands empty or achieves lower rentals than before,” observes Mr Zeelie.

The intensity of the storm in the continent’s commercial real estate sector varies. In Nairobi, for example, “a better regulatory setting, an easier business environment more generally, and a more diverse economy – with multiple earners of foreign exchange – collectively contribute to a more resilient tenant profile and higher occupancy, even though vacancies exist in certain nodes and sectors,” says Mr Zeelie.

Nairobi’s commercial real estate market, is, however, the exception rather than the rule in Africa. “Projects conceived in earlier, more positive, business environments on very different numbers, for example, should be restructured,” says Mr Zeelie.

While a restructure will often involve a higher level of equity finance, “the bank should also display some flexibility in its approach,” he adds.

If financiers have a view on how long negative conditions may last in certain markets they may be able to extend the tenors or repayment terms of financing facilities — provided there is not a significant deterioration in the risk.

Or, if clients have access to shareholder funds, it might be cheaper to put more hard currency into the structure. There may also be options to convert debt into local currency, provided there is enough liquidity in the market.

“Another solution could be to negotiate upfront payment of the present value of all lease payment with key tenants,” says Mr Zeelie.

Over the long term this provides these tenants with predictability — and probably a discount — while injecting much-needed capital, now, into commercial real estate financing structures, enabling landlords to manage rentals with smaller clients in the short term.

Source: The Herald

Related

Tags: AngolaKenyaLuandaLusakaMaputoMozambiqueNairobiNigeriaReal EstateStandard BankZambia
ScanSendShare353Tweet221Share62Pin79Send
FurtherAfrica

FurtherAfrica

Founded in 2015 FurtherAfrica is an online platform centralising news and content focusing on the development and growth story of the African continent.

Related Posts

Tech

Metaverse in Healthcare: Redefining Africa’s medical sector

by Web3Africa
February 7, 2023
Energy

Towards Africa’s US$1.5 Trillion green hydrogen economy

by Energy Capital & Power
February 6, 2023
Fintech

Morocco’s rocky crypto journey

by Web3Africa
February 6, 2023
The Forbes Billionaires’ list: Africa’s richest people 2022
Private Equity

Adenia Capital (V) gets 75% of its target size at first close

by Africa Global Funds
February 6, 2023
Energy

Angola and Belgium talk renewable energy cooperation

by FurtherAfrica
February 6, 2023
Platform Africa 2023
 
Mozambique eVisa
 
MozParks
 

Translate this page

Read the Latest

Tech

Metaverse in Healthcare: Redefining Africa’s medical sector

by Web3Africa
February 7, 2023
0

The applications of the Metaverse have now shifted towards the medical industry to improve its functionalities. According to Accenture’s digital...

Read more

Towards Africa’s US$1.5 Trillion green hydrogen economy

February 6, 2023

Morocco’s rocky crypto journey

February 6, 2023
The Forbes Billionaires’ list: Africa’s richest people 2022

Adenia Capital (V) gets 75% of its target size at first close

February 6, 2023

Angola and Belgium talk renewable energy cooperation

February 6, 2023

FurtherAfrica Partners Network

The Exchange Club of Mozambique Taarifa Rwanda
TechGist Africa Africa Oil & Power Farmers Review Africa
Tanzania Invest Zambia Invest See Africa Today
Africa Global Funds Novafrica CrudeMix Africa
Harambee Africa Botswana unplugged Financial Insights Zambia
O Económico Digilogic Africa Web3Africa

Subscribe to FurtherAfrica

Enter your email address to receive new articles on your email.

Join 100,773 other subscribers.
FurtherAfrica

© 2021 FurtherMarkets

FurtherAfrica is a FurtherMarkets Limited platform

  • Countries
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

Follow Us

No Result
View All Result
  • Countries
    • Angola
    • Botswana
    • Cape Verde
    • DRC
    • Eswatini
    • Ethiopia
    • Kenya
    • Malawi
    • Mauritius
    • Mozambique
    • Namibia
    • Nigeria
    • Rwanda
    • South Africa
    • Tanzania
    • Uganda
    • Zambia
    • Zimbabwe
  • Interviews
  • Understanding
  • Videos
  • Travel
  • Weekend
  • About

© 2021 FurtherMarkets

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?