The globally recognised real estate-focused West African Property Investment (WAPI) Summit (www.WAPIsummit.com) which recently took place between the 28th and 29th of November 2017 provided delegates with insight into a real estate sector that is set to rebound strongly in 2018.
During the summit, two of the continent’s foremost real estate analysts presented a collaborative white paper: Nigeria’s Real Estate Investment Trust (REITs) market, which provides cause of optimism in one of the most underinvested and marginalised markets of the Nigerian stock market.
The white paper is authored by Stanbic’s (www.StanbicIBTCcapital.com) head of real estate finance for West Africa, Adeniyi Adeleye, and global commercial real estate provider JLL’s (http://ir.JLL.com) advisory head for Sub-Saharan Africa, Thomas Mundy. It provides an analysis of underlying structural weaknesses that have contributed to the historical negative performance of this market.
Despite its existence for more than ten years, the Nigerian REITs market is underdeveloped with only three established and with a combined market capitalisation of $151 million, or 0.36% of the local stock market.
This low investment is a result of Nigeria’s deficit of A-grade real estate compared to similar urbanising environments combined with an inherently volatile and non-diversified economy overly reliant on crude oil. These factors have created cycles of boom and bust which have negatively impacted the real estate sector and crucially investor confidence. An additional factor cited was a lack of assurance on ambiguous ‘tax pass through’ laws, that have not provided comfort to institutional investors, both local and foreign, resulting in a REITs market that has failed to develop to its potential, which new reforms hope to address.
Mundy and Adeleye predict that an evolving and reformed REITs market will strengthen and deepen capital markets. It will also assist in providing greater transparency and data to a traditionally opaque market, which has resulted in mispricing and undermining confidence in real estate assets. Additional benefits stated include greater diversification of portfolios to help break concentration risk and result in increased exposure for Nigeria’s pension funds to the property market. Currently, the pension fund exposure is 0,36% compared to South Africa’s pension fund exposure to REITs which stands at 2.6%.
Provided that regulatory improvements take place coupled with the sustainable creation of assets to reduce the supply gap in Nigeria, Adeleye and Mundy are optimistic that these changes will lead to a vibrant REITs market, which will transform the real estate sector and the larger economy.
Distributed by APO Group on behalf of API Events.
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Contact: Murray Anderson
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JLL (NYSE: JLL) (http://ir.JLL.com) is a leading professional services firm that specialises in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2016, JLL had revenue of $6.8 billion and fee revenue of $5.8 billion and, on behalf of clients, managed 4.4 billion square feet, or 409 million square metres, and completed sales acquisitions and finance transactions of approximately $145 billion. At the end of the third quarter of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of over 80,000. As of September 30, 2017, LaSalle Investment Management had $59.0 billion of real estate under asset management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit http://ir.JLL.com.
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About Stanbic IBTC
Stanbic IBTC Capital Limited (Stanbic IBTC Capital) (www.StanbicIBTCcapital.com), a subsidiary of Stanbic IBTC Holdings PLC (Stanbic IBTC), provides investment banking services to corporate clients. It is registered with the Securities and Exchange Commission as an Issuing House and Underwriter.
Stanbic IBTC retained all its subsidiaries following the repeal of the universal banking license by the Central Bank of Nigeria in 2010, when a holding company structure was adopted by Stanbic IBTC Bank (the Bank), carving out non-banking businesses from the Bank in compliance with the regulation. The Bank completed its reorganisation as a holding company in November 2012 when the investment banking division was transferred from the Bank to the newly incorporated Stanbic IBTC Capital.
Stanbic IBTC Capital is the leading investment banking franchise in Nigeria with excellent capabilities in advisory, capital markets and financial arranging.
The various investment banking teams within the Standard Bank Group have a seamless working relationship.
Standard Bank has a controlling stake of 53.2% in Stanbic IBTC Holdings and we can draw on the deep resources within the Standard Bank Group.
About API Events
The West Africa Property Investment Summit (WAPI) (www.WAPIsummit.com) is hosted by well-established API Events (www.APIevents.com), Africa’s leading real estate conferencing company. WAPI is one of four annual conferences hosted by API Events, including, East Africa Property Summit (Kenya), Africa Property Investment Summit and Expo (South Africa) and ZamReal Property Forum (Zambia).
API Events deliver Africa’s most renowned events in real estate investment and development. Our events across the continent have become the ultimate meeting places for Africa’s property market to learn, network and most importantly to do deals.
The company also hosts the API Awards – these prestigious awards provide a platform for distinguished developers, suppliers and owners in the African real estate industry, to showcase their best projects and services. Other services provided by API Events include training programmes and the recently launched Skyline Magazine.
For more information, you can visit: www.APIevents.com