The case for multinational occupiers in Africa

Posted On Tuesday, 08 September 2015 09:12 Published by
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With an increased focus on Africa from multinational occupiers, the key trends of portfolio optimisation, flexibility and improved utilisation form part of a specialised real estate service for corporates.

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Occupier Services, a specialised real estate service offering for corporate real estate portfolios, continues to expand in partnership with the growth of multinational occupiers in Sub-Saharan Africa.

According to Jess Cleland, Head of Strategy and Consulting: Occupier Services at Broll Property Group, this migration of multinational occupiers into the continent is driven by the dynamics of demand, supply and growth.

A young and growing population, rapid urbanisation, the emergence of a perceived “middle class” with rising incomes and changing spending patterns all point to an appealing consumer market with largely untapped potential in many areas, often largely driven by growth around minerals and natural resources. Sought-after markets include Ghana, Nigeria, Mozambique, Tanzania and Kenya.

Africa has traditionally been regarded as a high risk low revenue environment but large corporates are becoming increasingly aware of the rising demand and are seeking representation. Market risks are real, however, and perception of growth potential is often tempered by an on-the-ground reality, she explains.

Multinational corporates have specific requirements from their occupied real estate portfolios with a set of needs criteria focused on quality, safety and alignment with the company’s global brand. Business continuity risks are top of mind in Africa, so resilience of services must be built into property solutions, particularly where basic infrastructure is unreliable. The Broll delivery model of occupier services through regional hubs combined with central oversight integrates on-the-ground professionals providing local skills and know-how with centralised process development and quality controls.

Global brands have an expectation of world class service from their service partners – regardless of country of operation – and our platform is based on well-proven processes and technologies using global best practice which have been tailored to African markets, says Cleland. The first movers in the growing trend of outsourcing corporate real estate services in Africa are generally leading financial services companies, with large portfolios of over 300 properties.

“Our clients benefit from leading edge occupier services confident in the experience that Broll brings.

” Trends “Occupiers expect that a property should facilitate flexibility, productivity and efficiency, with a definite move away from the traditional closed office to a modern, collaborative open plan layout,” she says.

Multinational occupiers are savvy when it comes to their real estate requirements, as evidenced by the major trends in this space covering improved space utilisation and flexibility, portfolio optimisation and a focus on total cost of occupation. Occupiers are looking to achieve operational agility as well as scalability for future growth by efficiently structuring their portfolios to provide the right space for the right people in the right location at the right cost.

Growth Opportunities and Risks For client retention and growth, multinational occupiers look for the future hub of business activity within the rapidly shifting and dynamic nodes of many African cities, where proximity to competitors and clients is crucial. Furthermore, Cleland points out that expectations from international standards are driving building quality improvements, especially in Kenya, Ghana and Nigeria.

Newer buildings now target deficiencies within the existing stock especially in terms of flexibility, health and safety standards and parking ratios, she says.

The current limited supply of suitable property, however, is a material limiting factor for incoming corporates in many countries, with long lead times frustrating investment. On challenges, she says business growth is unpredictable so defining future requirements for occupiers is difficult, while justifying the financials in most cases is tough relative to South Africa.

The continued professionalising of development projects in Africa is key to ensure delivery of the final product on time and within budget.

As such, building mutually beneficial partnerships between occupiers, developers, landlords and lenders will benefit the entire sector. The track record of all parties becomes very important and realistic expectations can build better partnerships where risks are shared sensibly.

“Perceptions on Africa have changed somewhat in the past year as an appetite for perceived risk has been put into a more sober reality by a number of shifts in the market.

“This creates a case for more professional and sophisticated corporate representation to empower corporate occupiers to navigate around these risks in partnership with the investor and developer segments of the market,” says Cleland.

She adds that the key message is that it is very difficult to completely remove risk from a project, it can only be transferred which comes at a price.

Last modified on Tuesday, 08 September 2015 10:12

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