Rationale for REITS:

REITS (created in 1960s in US) is a financial instrument that offers both regular income and
growth. Has both debt and equity features. Today REIT in 34 countries worldwide. REIT
reached a market cap of USD1.1 trillion in 2013 compared to less than USD 2bn in 1989.
REITs are thus a relatively attractive investment vehicle for individuals and institutions looking
to invest in real estate.
dividend pay-out requirements tend to vary between 85% and 100% of REIT net income
globally.
Growing African population (currently 1.2bn and expected to reach 2.4bn in 2050), due to
high fertility rates in Africa (highest in the world- average of 4.70 in UN 2015 v/s a Global
fertility rate of 2.5). In Africa, fertility is projected to decline to 3.9 children per woman by
2030 and 3.1 children per woman by 2050.
RAPID URBANIZATION IS PUSHING UP DEMAND FOR HOUSING IN SUB-SAHARAN AFRICA.
Increased demand for affordable housing across African cities.
IFC states that African cities become the new home to over 40,000 people every day. IFC has
committed to do more to develop the property sector, both to provide new and affordable.
housing and to encourage an industry that requires significant building materials and has the
potential to be a major employer.
Real Estate in Africa is a major.

In May, IFC and Chinese multinational construction and engineering company, CITIC Construction launched a $300 million investment
platform, CITICC (Africa) Holding Limited, to develop affordable housing in multiple African countries. The platform will partner with local
housing developers and provide long-term capital to develop 30,000 homes over next five years. Kenya and Nigeria are high on the
priority list for the new effort. Kenyas housing shortage is estimated at 2 million units, while Nigeria is in want of 17 million units. The
soaring demand is being met by scant new supply. Africas housing market has few local developers with the technical and financial
strength to construct large-scale projects.
As Sub-Saharan Africa become more urbanized, the private sector can help governments meet the critical need for housing, said
Oumar Seydi, IFC Director for Eastern and Southern Africa. The platform will help transform Africas housing markets by providing high
quality, affordable homes, creating jobs, and demonstrating the viability of the sector to local developers.

REITS is an innovative way that policy makers, property development and Real estate investors
are promoting in an attempt to address finance constraints in real estate markets.
Residential REITS targeting affordable housing represent an intriguing conduit for channeling
investment into an under-served market.
The World Bank Group estimates that by 2030, three billion people, or 40 percent of the
worlds population will need new housing units.
Real estate advisory firm JLL actually released a report this year wherein it identified that
currency volatility and illiquidity were the two main factors hindering real estate capital flows
into sub-Saharan Africa.

Significantly higher GDP Growth in several key African countries compared to Europe and US
counterparts
By 2032 Africa will have a larger worker population than China and, by 2036 a larger worker
population than India. By 2030 Africas GDP buying power is expected to equal the EU

Exits of Private Real Estate Funds

Hyprop owns 17.6% of Accra Mall in Ghana and 68.8% of Manda Hill in Lusaka, Zambia.
Atterbury Africa is the other main shareholder of both malls.

Actis RE I Sold Capital management to Sanlam Property Fund (on SEM in Mauritius).
A further consideration for investors is the inflation-hedging effectiveness of residential
property investment. In particular, long-run institutional investors such as pension funds
and insurance companies view inflation-hedging as a highly desirable attribute.
Lee, C L & Reed, R 2014, 'The relationship between housing market intervention for first-time buyers and housing price
volatility', Housing Studies, vol.29, no.8, pp.10731095.

Several Key African Real Estate Players

1) Actis Sub-saharan Africa

2) Momentum Nigeria, Ghana, Kenya, Mozambique and Mauritius
3) Novare Africa Property Fund II - Nigeria
4) RMB Westport Real Estate Development Nigeria, Ghana, Angola
5) Momentum Global Investment Mozambique and Kenya

Sources:

http://www.un.org/en/development/desa/population/publications/pdf/fertility/world-fertility-
patterns-2015.pdf

http://www.ifc.org/wps/wcm/connect/news_ext_content/ifc_external_corporate_site/news+and+e
vents/news/trp_featurestory_africahousing

https://fronteranews.com/news/africa/the-5-largest-private-equity-real-estate-investment-deals-in-
asia-in-last-five-years/