THE AFRICA OPPORTUNITY

Size: px

Start display at page:

Download "THE AFRICA OPPORTUNITY"

Joan Gibbs
5 years ago
Views:

1 PETER WELBORN THE AFRICA OPPORTUNITY API CONFERENCE 2016

2 Africa: the growth 1continent

3 AFRICA S POPULATION GROWTH Africa has the fastest population growth of any global region. Africa s population has more than doubled since 1980 to stand at over 1 billion. UN forecasts suggest that the population of Africa will reach 2 billion by 2050 and 4 billion by Nigeria is expected to overtake the USA as the 3 rd most populous country in the world by Population (billions) Population (millions) Global population forecasts Africa Asia Europe Latin America and the Caribbean Northern America Oceania Sub-Saharan Africa population forecasts Source: United Nations Population Division

4 AFRICA S GROWTH CITIES Sub-Saharan Africa is home to many of the fastest growing cities in the world. UN projections indicate that the populations of cities such as Nairobi and Dar es Salaam will grow by over 70% in the period. Although only 40% of Africa s population currently lives in cities, this is expected to rise to over 60% by Source: United Nations Population Division

5 AFRICA: ECONOMIC TRENDS Sub-Saharan Africa has averaged GDP growth of more than 5% p.a. over the last decade. GDP growth slowed to 3.4% in 2015, largely due to falling commodity prices. Growth of around 3.0% is forecast for However, there are wide variations in current growth rates oil exporters have been hardest hit, but oil importers have benefited from cheaper oil. % % Sub-Saharan Africa GDP growth rates Sub-Saharan Africa GDP growth forecasts, 2016 Oil-importing countries (exc. South Africa) Sub-Saharan Africa Oil-exporting countries South Africa Source: International Monetary Fund

6 AFRICA: TRADE TRENDS Africa accounts for only around 3% of global trade, although its share has been gradually rising over the long term. % African imports by region of origin Asia EU Intra-Africa North America Others Asia s importance as a trading partner with Africa has steadily grown; more than 40% of imports to Africa come from Asia and around one-third of African exports are to Asia. % African exports by region Asia EU Intra-Africa North America Others 0 Source: International Trade Centre, Knight Frank

7 2Investment hotspots

8 INVESTMENT HOTSPOTS: RETAIL Sub-Saharan Africa is experiencing a wave of modern shopping centre development. This trend is underpinned by Africa s population growth and its growing consumer classes. Despite recent development, many cities remain extremely undersupplied by international standards. Source: Knight Frank, Shop Africa 2016

9 INVESTMENT HOTSPOTS: PORTS Around 90% of Africa s trade happens by sea, making its ports crucial points in transport and logistics networks. Numerous port development projects are proposed or under construction across Sub-Saharan Africa. Logistics property developers will target sites close to Africa s growing ports. Source: Knight Frank, Logistics Africa 2016

10 3Who s investing in Africa?

11 AFRICA: THE WAVE OF CAPITAL

SOVEREIGN WEALTH FUNDS Sovereign wealth funds are state-owned investment funds that typically have long long-term investment horizons. SWFs that have entered African markets include ADIA and GIC.

UAE US$773 bn Global Direct, Listed, Private Real Estate Funds 5-10% China Investment Corporation China US$650 bn Global Direct, Listed, Private Real Estate Funds Kuwait Investment Authority Kuwait

12 SOVEREIGN WEALTH FUNDS Sovereign wealth funds are state-owned investment funds that typically have long long-term investment horizons. SWFs that have entered African markets include ADIA and GIC. Fund Country Assets under management Government Pension Fund Global Geographical focus Route(s) to Market Real estate allocation Norway US$873 bn Global Direct Up to 7% Abu Dhabi Investment Authority UAE US$773 bn Global Direct, Listed, Private Real Estate Funds 5-10% China Investment Corporation China US$650 bn Global Direct, Listed, Private Real Estate Funds Kuwait Investment Authority Kuwait US$592 bn Global Direct, Listed, Private Real Estate Funds GIC Singapore US$344 bn Global Direct, Listed, Private Real Estate Funds Up to 10% Not published 9-13% Qatar Investment Authority Qatar US$256 bn Global Direct, Private Real Estate Funds Not published Source: Preqin, Sovereign Wealth Institute

13 DEBORAH WATT THE INVESTMENT CASE FOR EUROPE API CONFERENCE 2016

14 European Investment 4Why, How and Where

WHY EUROPE? Europe Big, Diverse Market Place Transparency Risk Adjusted Returns All Property Total Returns (% pa) 25.0 15.0 5.0-5.

15 WHY EUROPE? Europe Big, Diverse Market Place Transparency Risk Adjusted Returns All Property Total Returns (% pa) South Africa Pan-European Average UK Source: MSCI

EUROPEAN CURRENCY, GROWTH & DEMAND Currency Fluctuations GDP Growth Population Growth 90 80 70 60 Population (millions) 50 40 30 20

16 EUROPEAN CURRENCY, GROWTH & DEMAND Currency Fluctuations GDP Growth Population Growth Population (millions) Poland Germany UK 10 0 Forecast Source: UN

17 COMMERCIAL PROPERTY & PRICING Big market - $2.4 trillion/ South Africa $33bn. Largest single market UK - $707bn. International capital flows. Liquidity, diversification & opportunity. 100% 90% 80% Sector Share of Investible Universe European Inbound Capital H H1 2016(%) USA UK Germany France Canada Qatar Switzerland Sweden 70% 60% 50% 40% 30% 20% 10% 0% Austria Belgium Denmark Czech Republic Finland France Germany Hungary Ireland Italy Netherlands Norway Poland Portugal South Africa Spain Sweden Switzerland UK Pan-Europe Other Industrial Office Retail Source: Real Capital Analytics, MSCI

18 RECENT AFRICAN INVESTMENT UK Germany Poland Direct Investment by African Investors (H H1 2016) Source: Real Capital Analytics

PRICING Low yields, low interest rates, low 10yr bond yields Yield gap European Office Yields & Risk Premium (%) 7.00 6.50 European City Office Yields (%) 6.00 5.50 5.00 4.50 4.

19 PRICING Low yields, low interest rates, low 10yr bond yields Yield gap European Office Yields & Risk Premium (%) European City Office Yields (%) Paris Frankfurt Milan Madrid Amsterdam 3.50 London 3.00 H H H H H H H H H H H H H H Source: Knight Frank

20 RETAIL & INDUSTRIAL More income yield, less volatility Retail structural change European Retail Yields (%) European Industrial Yields (%) Brussels Prague Paris 8.00 Berlin 6.00 Munich Dublin 4.00 Milan 2.00 Brussels Prague Berlin Munich Budapest Dublin Milan 0.00 Warsaw 0.00 Warsaw H H H H H H H H H H H H H H Madrid H H H H H H H H H H H H H H Madrid Source: Knight Frank

21 DEALS & HOTSPOTS London, UK Office Tenant: KPMG 9 years 97m /NIY 3.77% Leeds, UK Office Tenant: Addleshaw Goddard 17.5 years 43.75m /NIY 5.42%

22 DEALS & HOTSPOTS Logistics Portfolio, Germany Logistics Tenant: DHL 8 years EUR 188m / GIY 6.75% Office Portfolio, Netherlands Offices Tenant: Multiple 6 years + EUR 382.7m / GIY: 7.12%

23 DEALS & HOTSPOTS

24 EUROPEAN RESEARCH

PROPERTY EU EUROPEAN LOGISTICS INVESTMENT BRIEFING

PROPERTY EU EUROPEAN LOGISTICS INVESTMENT BRIEFING RICHARD HOLBERTON, SENIOR DIRECTOR, EMEA RESEARCH, CBRE FEBRUARY 19 TH 2015 AGENDA Economy Market Activity Forecasts Issues ECONOMY 2014 Some Alarms and