Opportunities abound, but there are challenges

Posted On Monday, 23 August 2010 02:00 Published by eProp Commercial Property News
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African Development Bank expects growth in Africa to rebound from the economic global recession to a healthy average of 5,2% next year.

Broll Property GroupWITH the African Development Bank expecting growth in Africa to rebound from the economic global recession to a healthy average of 5,2% next year, it makes sense for local businesses to look to the continent for opportunities to expand.

However, they must be aware of the challenges, says Johan Venter, Broll Property Group Africa executive.

“South African businesses looking to establish operations elsewhere in Africa need to understand that, in most cases, there are significant differences in buying, renting or developing space. For example, in West Africa it’s common practice to pay retail rentals a year in advance and office rentals up to three years. When you consider typical retail rentals in Nigeria are in the order of R600m² per month, that can constitute a significant upfront cash cost.”

Broll has offices in four African countries — Namibia, Malawi, Ghana and Nigeria — and each is a joint venture with local partners.

“Our local partners understand the environment, and we bring additional expertise with connections to South African and international tenants and investors.”

Oil and gas revenues have become the primary drivers of development and increasing disposable income, and this has led to an exponential growth in demand for shopping centres across the continent, opportunities that local retailers such as Shoprite and Game have taken advantage of, Venter says.

The 20000m² Palms shopping centre that opened in Lagos in 2006 was the first enclosed, fully air-conditioned regional shopping centre in Nigeria. It has been a runaway success and expansion plans are being finalised. Broll Nigeria is involved in leasing a further five shopping centre developments encompassing about 83000m² of new space, projects that are due to come on stream in 2011 and 2012, with the 23500m² Ikeja Mall the biggest, he says.

The 23000m² Accra Mall in Ghana is still the biggest of its kind in West Africa.

The Mall of Mauritius is a new 32000m² retail centre between Port Louis and the airport, the country’s first regional shopping centre set to open in September next year.

“With an average growth rate of 6% over the past three decades, an average household income of R90000 and a healthy tourism industry, Mauritius is an interesting country to consider for growth.”

Venter says demand for professional property services has often come from the external investing partner, but once in place buy-in from local players has been enthusiastic.

“It’s not only South African companies that are doing business in Africa — multinationals like Nokia Siemens Network have a growing presence.

“Doing business in Africa does have its own set of challenges and idiosyncrasies. For those willing to do their homework and work with locally experienced partners and service providers, the rewards are great,” says Venter.

Source: Business Day

Publisher: I-Net Bridge
Source: I-Net Bridge

Last modified on Monday, 14 April 2014 13:37

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