1. by Dr. Bekithemba Mpofu PhD MBA MSc BSc FCMI CBIFM
Future of Real Estate business in an evolving and challenging African environment by
Dr. Bekithemba Mpofu
PhD MBA MSc BSc FCMI CBIFM
Senior Lecturer in Real Estate Investment, Finance and Economics

2. Main sources
World Economic Forum (2016) Environmental Sustainability Principles for the Real Estate Industry
PwC (2014) Real Estate 2020, Building the future
Prudential Real Estate Investors (2012) A birds Eye View od Global Real Estate Markets: 2012 update
EY (2016) Global Market Outlook: Trends in real estate private equity
Bennet Kpentey (2017) RICS Keynote speech: African economic outlook
United Nations, Department of Economic and Social Affairs, Population Division (2014). World Urbanization Prospects: The 2014 Revision, Highlights
Ian Palmer (2017) Land and infrastructure in African cities, RICS Conference

3. Opportunities Technology Young population Urbanization
Population Growth
Urbanization
Sustainability
PROJECTED ECONOMIC GROWTH
Funding opportunities
Infrastructure Gap
Technology

4. Africa’s demographic trajectory (Ian Palmer)

5. Urban and rural population of the world, 1950–2050
Source: UN, DESAP Division (2014)

6. Urbanization statistics
Urban population to increase to over 6.3billion by 2050 (75%)
1950 (30%), 2014 (54%), 2050 (70%) in urban areas
Global construction to double to US$15trillion in 2025 compared to 2012
Asia fasted growing followed by SSA

7. Urban and rural population as proportion of total population, 1950–2050
Source: UN, DESAP Division (2014)

8. Median age by region (PwC)

9. Youthful African population
Compared to the rest of the world Africa will have a workforce asset come 2050
Over 60 will exceed under 15, thus calling for specialist real estate
Also aging population will limit house prices
Increase in population and aging will lead to several subsectors
Affordable housing, Healthcare, Agriculture, retirement homes etc
Increase in young middle class, will increase demand for real estate

10. Africa’s growth by region, 2014-17

11. Economic growth Real estate integral part of growth
When a country is doing well, there is pressure for the government to invest in infrastructure
By 2025, Nigeria will need 20 million new homes
According to AFDB by 2060, about 1.1 billion Africans will be in the middle class thus increase

12. Key urban development drivers
Source: African Centre for Cities and DfID – using Oxford Economics data

13. Infrastructure gap
US$93 billion required annually over the next 10 years to address its infrastructure gap in SSA
Africa currently has an annual financing gap of over US$50 billion
GDP growth is reduced by 2% annually due to poor infrastructure and productivity by as much as 40% annually

14. Technology
It can be an enabler of real estate business but also a disruption
Online shopping calls for a shift in traditional spaces especially for the digital generation
Agile working enabled by technology supports working from home and satellite offices
As an enabler, technology helps real estate given its heavy reliance on data management

15. Funding
Basel III and US Dodd-Frank regulations, reduces banks and insurers’ direct involvement in real estate funding
EU Solvency II Directive reduces the ability of European insurers to invest
Private capital and innovative funding options need to be developed
RE managers to place a central role in the financial ecosystem.

16. Real estate’s contribution to energy use and CO2 emission
Source: Accenture (adapted from IPCC, USBC, EC)

17. Sustainability By 2030, world population will need:
50% more energy
40% more water
35% more food
UN Climate Change Conference (COP21), Paris 12/15 agreed:
Keep global warming below 2degrees
To stay under 2degrees, RE requires stringent targets
World Bank, 36% reduction in total CO2 emissions in RE required by 2030

18. Green premium
Prime real estate now reflect building’s sustainability credentials through green premium in advanced economies
Challenge for RE managers is large brown discounts

19. Threats Politics stability Sufficiently skilled professionals
Corruption
Funding
Intercity competition
Government policies
Infrastructure Gap
Urbanization
Politics stability

20. Strategies Collaborate with government Joint ventures
Factor technology & and and sustainability
Pursue framework contracts and long-term relationships

21. Strategies…… continued: Specialisation
Subsector specialisation
Urban economic analysis
Deal structuring
Asset value management
Product development

22. THANK YOU!