New real estate opportunities emerge in Africa
MAIN IMAGE: Bolaji Edu, CEO of Broll Nigeria; Jose Castiho, Managing Partner of Broll Mozambique; Moses Lutalo, MD of Broll Uganda; Meshack Kimatu, Finance Manager at Broll Kenya
Leading Pan-African professional real-estate services provider Broll Property Group has observed various trends across the broad range of countries in which it operates. Highlighting and analysing these trends is an important part of Broll’s strategy to look ‘Beyond 2021’, in addition to ‘Strengthening the Core’ of the business as it focuses on the specific requirements of occupiers and investors during the Covid-19 pandemic. While this has disrupted the property market across the board, new niche asset classes are also emerging.
“Our success is built on our in-depth knowledge and expertise, based on our tangible understanding of local markets across Africa. This allows us to provide end-to-end real estate solutions based on strategic, fully-integrated property services for both the occupier and investor segments,” says Broll Group CEO Malcolm Horne.
“As a leading provider of end-to-end real estate solutions, an interesting correlation that we are monitoring is the potential relationship between the vaccination rollout in Africa and the associated economic recovery across the continent,” says Horne. This is particularly important to Broll’s mission of leveraging its industry-leading, patented technology platforms to enhance asset values in a sustainable real estate market.
Broll maintains a diversified portfolio of clients and services across 13 African countries, including Botswana, Cameroon, Eswatini, Ghana, Ivory Coast, Kenya, Madagascar, Mauritius, Mozambique, Namibia, Nigeria, Réunion, Seychelles, South Africa, Uganda, Zambia. Level 1 B-BBEE and 51% black-women owned, it has leased 737 325 m2 of retail space across Africa in the past five years.
“It is important to be future-focused, and while we are all looking forward to returning to the ‘new normal,’ this is playing out differently across different countries,” says Jose Castiho, Managing Partner of Broll Mozambique. For example, while elsewhere there is an accelerating trend for multinationals to return to the office, this trend is not yet that noticeable in Mozambique.
“Besides Covid-19, there are other factors that have affected the oil and gas projects under development in our country. These were halted temporarily, which has had a major impact, as they are the main drivers of our economy. The good news is that these are likely to kickstart again from 2022 to 2024,” says Castiho.
While Mozambique waits for its oil and gas sector to bounce back, many companies are taking the opportunity to reorganise their office space and relocate to higher-grade buildings. “This is, in fact, what we anticipate for the next 24 months, as companies are obligated to ensure that their workspaces comply with all Covid-19 regulations,” says Castiho.
While many multinationals are back in the office in Uganda, they are still mainly operating in shifts to reduce the number of people in-office due to Covid-19 protocols, says Moses Lutalo, MD of Broll Uganda. “In the short to medium term, this is going to impact space requirements for some of our clients considering space reduction.”
In Kenya, most multinationals are still operating from home, with a slow trickle back to the office. “As a result, the demand for office uptake has reduced drastically. Now there are few enquiries, and notably these are for smaller spaces,” says Meshack Kimatu, Finance Manager at Broll Kenya. To counter this trend, investors are issuing flexible leases and improved commercial terms to attract tenants.
“On the other hand, developers may opt for buildings with flexible floor plates to tap into the new requirement of occupiers for smaller spaces. At the same time, we have seen some emerging trends like affordable housing, which is championed by the government as one of its major social development agendas, as well as the emergence of data centres,” says Kimatu.
“The longer-term trends in the Nigerian property market are currently unclear and difficult to project,” says Bolaji Edu, CEO of Broll Nigeria. Lagos has a distinct multinational and domestic market segment, with little overlap between the two. The occupancy rate of Grade A office buildings is currently under 40%, as workers continue to work from home or opt for a hybrid model.
“This is leading to a fairly downbeat short-to-medium forecast,” says Edu, with the uptake of Grade A office space in H1 2021 at its lowest level since Broll started tracking the market. “We are not projecting a significant increase in H2 2021. However, with the rollout of vaccinations and the introduction of vaccine passports, business travel should bounce back and boost commercial activity. It is unlikely that multinationals with Nigerian operations will reverse the space-consolidation plans they have already started to implement.”
Any market change or disruption is likely to see the emergence of contemporary trends, and Nigeria is no different. “Affordable and social housing remain a prominent topic of discussion. Other sectors seeing a rise in institutional activity and with long-term growth prospects include student housing, data centres and healthcare and medical offices,” says Edu.