COVER FEATURE
as most investors flock to offices and retail first . And while most investors think the highest demand comes from multinationals , it is the fast-growing regional companies that tend to be the first movers , largely because they have higher local growth rates than the international companies . We see the main demand for our facilities from e-commerce , third-party logistics companies , product distributors and retailers ,” he says .
Africa Logistics Properties believe they are helping to solve the logistics infrastructure challenge with their privately-financed distribution and industrial facilities for the rental market .
“ We are disrupting the status quo with our modern logistics and distribution warehouses , offering businesses the chance to consolidate existing go-down based operations into a purpose-built grade-A facility at an affordable cost for the very first time .”
Affordable Housing
While governments can no longer afford to ignore the housing crisis , developers are coming to understand that low-cost housing can be a significant and lucrative market . Innovative financing structures backed by global institutional investors could also allow large-scale implementation .
But a pressing issue many African countries face is the lack of durable , low-cost housing with a minimum standard of infrastructure to prevent the spread of diseases .
“ The target group for low-cost housing , in general , does not have enough equity or credit history to finance the purchase of even low-cost dwelling units . Without innovative financing solutions there can be no mass supply of low-cost dwelling units ,” says Eckardt M . P . Dauck , Chairman for Zero Carbon Designs Ltd .
To address challenges around quality , Zero Carbon Designs has developed solutions that are based on a local value chain including raw-material sourcing , planning , manufacturing , and construction .
“ Our processes ensure job creation and income within the country , while products are manufactured under strict quality controls . They are scalable , allowing for large numbers of housing units to be built , and they quick to construct , ensuring project finance costs are low , and they are also sustainable , environmentally friendly and carbon neutral ,” he says .
Student Accommodation
Student accommodation is very much emerging in greater Africa , with the supply of student housing still low on the continent , South Africa being the exception .
Craig McMurray , Respublica CEO , says that while there are regional and nodal hotspots across all geographies , the African continent primarily sees domestic student demand and one where the highest need is an affordable product .
“ This is in contrast to the more developed markets in Europe , UK , and Australia , which are primarily driven by international student demand and generally higher levels of affordability ,” he says .
Respublica started out eight years ago with their first facility of 300 beds and will be nearing 10,000 beds across the country by January next year .
“ We believe that the demand for tertiary education will likely be driven by increasing urbanisation , higher living standards , mobility , as well as technological advancement in educational content delivery . This will have differing implications for the industry . However , I expect the demand trend to be upwardly steep but continually constrained by affordability at state , university and student levels ,” notes McMurray .
Serviced Apartments
Serviced apartments in Africa represent less than 1 % of all hotel rooms whereas internationally the figure is close to 9 %. Currently , the highest concentration is in South Africa .
The Capital , which dominates the South African market , has combined serviced apartments with its regular hotel and conferencing to give their clients all the services of a hotel such as security , flexibility of stay length , room service , and a concierge at the same high standard expected in 4- and 5-star hotels .
“ Due to historic undersupply , serviced apartments are increasing . Africa requires a secure and affordable alternative to regular hotels for consultants to stay for the many projects in Africa as the continent , unfortunately , imports a lot of skills internationally ,” says Marc Wachsberger , Managing Director for The Capital .
While there is no shortage of long-stay accommodation available , not all experiences are equal . The Capital ’ s model , which has taken 10 years to develop , emphasises operational skills to ensure that extended stay is positioned correctly in the market .
“ In the SA context it must be said that smaller properties are usually also easier and less expensive to secure , and the effect of this concern can clearly be seen not only in the increasing number of estate developments , but also in the steady growth of Sectional Title in SA over the past 30 years . In the late 1980s , secure sectional title developments accounted for only 6 % of new builds in the country , but today they account for 27 % of all new homes .”
The quest for greater security and personal safety , he says , is also one of the main factors driving the current rapid uptake of “ smart ” home technologies in SA . “ Using these technologies , owners can monitor their alarm systems and security cameras via their smart-phones even when they are not at home , photograph any intruders , open or close garage doors and gates , and turn lights on and off to make it seem as though there is someone at home .
“ This is definitely appealing to SA homeowners and according to Statista , the overall value of the smart home automation market in SA is expected to top US $ 60m by 2020 . Meanwhile , there is already sufficient demand for local security companies such as Fidelity ADT to have introduced security-focused smart home packages .”
And finally , says Botha , the trend towards smaller homes is being driven by a growing awareness among SA homebuyers of what it costs in environmental terms to run a larger home . “ Cape Town residents have seen , for example , how much water can be saved just through more conscious usage , while the threat of renewed rolling blackouts this winter is causing many others to revisit the drawbacks of electricity derived from fossil fuels .
“ As a result there is rising demand for smaller homes that use less energy and water and are already fitted with ‘ green ’ equipment such as heat pumps , solar panels and rainwater tanks . And some of the banks now even have special home loan options for owners who want to retrofit such ‘ green ’ systems , because doing so definitely adds value to their properties .”
Sources : API , Betterbond
12 SEPTEMBER / OCTOBER 2018 SA Real Estate Investor Magazine