ESG set to drive Real Estate Sector Forward – EAPI Summit

East Africa’s real estate market continues to attract significant international attention according to major decision-makers that attended this year’s 9th annual EAPI Summit taking place at Kempinski Hotel on 18 & 19 May.

According to the EAPI Summit’s host, Kfir Rusin, East Africa’s economic recovery has prompted a lot of interest in the sector and this year’s event from leading funders and players across the value chain.

“Every year Kenya and the broader regional real estate sector continues to develop and becomes more resilient and is able to withstand cyclical shocks. Our view is that this is a key driver for the increased activity by local, regional and international investors in the market, despite the impact of covid and upcoming elections.”

According to Rusin, the interest from sponsors, delegates, and real estate players in this year’s EAPI Summit has been overwhelming with over 25 leading sponsors and partners joining and over 300 attendees from 15 countries expected. And while the uptake in interest is partly due to the covid-19 hiatus, the fact is that East Africa’s diversifying and evolving real estate sector provides some of the most compelling opportunities across a number of sub-sectors which is reflected in this year’s theme.

As he explained, “This year’s theme, A Re-Newed Focus provides an opportunity for leaders to plan their strategies based off of a new set of increasingly entrenched and resilient fundamentals.”

These fundamentals include: continued Improvements in infrastructure development; new statutory reforms supporting the real estate sector; emerging sub-sectors now at the forefront of development opportunities; Nairobi and Kigali establishing themselves as economic and innovation hubs; ESG principles driving investor, consumer and occupier behavior government’s continued focus on initiating and implementing affordable housing projects.

Somaya Joshua, Head: Commercial Property Finance – Africa Region – Absa Group

For Absa’s Head of Africa Real Estate, Somaya Joshua, the Bank has continued to debt fund commercial property across various sub-sectors, from retail in Uganda to offices in Tanzania. She indicates that a lot more funding has been extended in Kenya across the sectors, including offices, retail, housing and industrial.

“We have increased interests in Environmental Social Governance (ESG) projects and have had notable successes on qualifying structures in other geographies where we’ve been able to structure specific milestones into transactions that, if met, may translate into a funding benefit to clients on a case-by-case basis. These benefits typically flow to clients upon meeting specific targets in

terms of solar capacity, water consumption and socially important aspects like transformation and housing.

Other trends of note and of value to Absa include affordable housing, student housing and the promotion of regional multi-national property enterprises.

Tilda Mwai, Research Lead, Estate Intel

According to Estate Intel’s Tilda Mai, the East African real estate market is being driven by the

following trends:

“Flight to quality and the need for flexibility are emerging as clear drivers in the East African market driving demand across a range of sectors. For example, despite a supply glut in Nairobi’s office market, Grade A offices have continued to outperform other classes with some office parks such as the Garden city office park recording occupancy rates of up to 90%. The same can be said for Kampala and Dar es Salaam. With an influx of oil and gas occupiers expected in these markets, we expect demand for Grade A offices will only intensify.

These trends are also trickling down to the logistics sector. Demand for purpose built warehousing has been increasing over the past 5 years leading to the build up of global investors and developers such as GRIT and agility setting their sights on the region. We expect this is a dynamic that will continue to play out in the market.”

Gerhard Zeelie, Divisional Executive: Property Finance Africa, Nedbank CIB

According to Nedbank CIB’s Head of African Property, Gerhard Zeelie, commented that future developments are in danger of becoming irrelevant if they are not ESG compliant.

“Massively, European, US, Middle East investors are all focused on ESG and it is unlikely that assets will be marketable that does not comply with basic ESG.”

From an opportunity perspective, Zeelie confirms that it is actively pursuing opportunities in Kenya and the broader region with a specific interest in retail and light logistics.

As he commented, “Nedbank is increasing our presence in the market and we are focusing on light industrial and retail.” And while the market has shown resilience this year’s event is critical to the future prosperity of the sector as it provides a much-needed platform to engage and reconnect and network he adds.

Niyi Adeleye, Head of Real Estate Finance, Africa Regions, Standard Bank

Echoing his peers in the banking sector, Standard Bank’s Head of Real Estate Finance Africa Regions, Niyi Adeleye; however, believes it is increasingly critical to consider ESG not from a purely green perspective.

“ESG continues to be an increasingly serious factor in our deal considerations and selection.

From an African perspective, we think it is important to consider all the parameters (Environmental, social, governance) of the measures as they continue to be topical and relevant as the sector evolves across markets. It thus remains critically important to Standard Bank that our financing facilities are ESG compliant.”

“Our preferred real estate segments need to be relevant to domestic and international capital sources in the mid to long-term horizon, positively impact quality of life, enhance the creation

of social and commercial real estate infrastructure, achieve environment and social impacts; and support the development of the real estate capital ecosystems in these markets. In this regard, we see interests in the industrial sector, affordable residential sector, corporate accommodation, demand-matched commercial assets and alternative asset classes such as digital real estate, student housing and other similar alternative segments.”

Shamim A. Malowa, Marketing Supervisor – GTC Kenya, Avic International Real Estate

For GTC Kenya’s Shamim Malowa, the HOPSCA themed complex is symbolic of an economy that is developing very fast, as there is a need for development to cater to the lifestyle aspirations of city dweller. As she comments, “GTC provides Nairobi’s elite population with a premium, high quality, convenient and safe one-stop working and living platform. We are proud that we have skillfully initiated and implemented this project. It is a hub of economy, business and living consumption within Nairobi, Africa and International communities. A true launchpad for global business Elites to enter this land of fortune.”

Featuring a JW Marriot Hotel, GTC Office Tower, which is a 184m landmark, GTC Opulent Apartments of 1,2 and 3 bedrooms and GTC Boutique Mall. GTC raises the standards in both service and scale among city complexes in the region, says Malowa.

Conclusion

In conclusion, Rusin believes this year’s #EAPI2022 Summit is poised to propel the regional real estate market forward. “With hundreds of delegates in attendance from 15 countries and more than 80+ speakers, EAPI is once again the centre of fast-tracking opportunity and growth in a sector that continues mature and provide increasing opportunities for funders; developers, and others across the value chain.

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