Our researchers around the world operate in established and functioning markets alongside experienced market practitioners but the world is a bigger place than these key centres alone and the real fun comes in predicting which markets our next generation of researchers will be sitting in in twenty years time. Looking out along a broader time horizon, some of the biggest changes and developments in the world of real estate are likely to happen outside or on the edge of their current geographies. Some of the most exciting opportunities for investors will be in places many of us have not yet heard of.
Indulging a taste for the exotic, and even extreme, my three tips are opportunistic and for those willing to take a long term position, high on the risk curve.
Opportunistic tip: Urban land and edge city land in growing (but as yet obscure) African cities – Long term
Africa is a huge continent and while many eyes are focussed on the mega cities of Lagos and Nairobi, its huge potential economic growth will likely play out in cities of which most people in the Northern Economies have never heard. Oxford Economics forecast that seven of the ten fastest growing cities in the world to 2030 will be in Africa, (three are in Tanzania and two in Malawi). Cities where real estate opportunities are likely to arise are in the fastest growth areas like Kigali, Dar Es Salaam and Addis Ababa and those countries experiencing a peace premium and prosperity will be more-favoured by investors.
A word of caution though: opportunities may not be conventional; institutional, western-style holdings such as big-box, plate glass offices (which do not always perform well in challenged, emerging and hot countries with unreliable power supply). The purchase of land for expansion or redevelopment as well as small retails, workshops and logistics with the potential for appropriate development and redevelopment could play out better. Participation in the purchase of land rights in what are currently slum areas ripe for pacification and gentrification by their occupants may also be an area for investigation. Real estate capital will be needed for the development of neighbourhood commercial uses in these areas. Western-style legal systems and transparent property markets meanwhile will make some locations more attractive for the more risk-averse so conventional asset classes in South Africa will have a place within a value add strategy.