Prof. Dr. Karl-Werner Schulte Masterarbeiten Themen: 1. Requirements for real estate related financing in selected African markets 2. Development of a new mortgage financing system in the youngest state of the world: South Sudan 3. Reward-risk profile of African property investment and financing 4. Cloud Financing von Immobiliendevelopments und Investments 5. Immobilienindizes fuer der dt. Immobilienmarkt - Anwendungsmoeglichkeiten und Aussagefaehigkeit 6. Kirchliches Immobilienmanagement - Besonderheiten, Handlungsfelder und Entwicklungstendenzen 7. Quality Management in Real Estate Transactions 8. Anwendung von Behavioral Real Estate Erkenntnissen auf gewerbliche Immobilienakquisitionsprozesse 9. Immobilienmanagement bei Stiftungen 10. Immobilienmanagement bei Family Offices 11. Development of a Databank for Institutions and Programmes Funding Real Estate related Research Projects in Subsaharan Africa Bei Interesse Bewerbung an: karl-werner.schulte@irebs.de
1. Requirements for real estate related financing in selected African markets Mortgage financing has proofed to be a major driver for the development of housing and real estate markets and in a follow of general economic development in Western states. Short overview and benefits of Western-style mortgage systems High security low cost of capital publicity of land register Pfandbrief and other MBS as supportive capital market products Why mortgage financing? Gives households access to proper housing Provides households with a means to acquire wealth Significant component of an economy: 25%+ GDP in the USA Contributes to the development of retail banking Provides source of long-term investments In many African markets a functioning real estate financing system is missing. Overview banking sector in selected developing African countries, with particular view on mortgage: Status of development, liquidity, player, institutions, refinancing options, specifying sub-sectors o Long term retail housing financing o Commercial mortgage financing o Development financing o Financing alternatives, such as peer-to-peer-financing, micro finance Snapshots African Mortgage Market Initiative of USA, 2003 Nigeria: 'Lagos Committed to Providing Effective Mortgage System' Lagos State government has reiterated its commitment to putting up an effective mortgage scheme that will ensure that low income earners in the state can afford their own homes. Commissioner for Housing, Mr. Bosun Jeje, stated this during a recent inspection tour of a project site Yaba. He said was planning mortgage systems comparable to those in
developed climes, noting that the Fashola administration adopted the Public Private Partnership (PPP) initiative for project execution because government alone cannot solve the housing problems in the state. "We want to put in place an effective mortgage scheme that can match the ones we have in developed societies. When you have an effective mortgage scheme, all you demand from home seekers is an equity contribution. When that is done, the mortgage scheme will take care of payment for the balance which will be spread over a long period of 20-25 years. Ghana needs efficient mortgage system for affordable housing - ET Mensah Ghana needs to establish an efficient mortgage system to enable ordinary Ghanaians to access decent and affordable housing, Mr Enoch Teye Mensah, Minister of Water Resources Works and Housing (MWRWH) said on Friday.The Sector Minister made the remarks when Mr Rajinder Bhagat, Indian High Commissioner to Ghana, paid a courtesy call on him in Accra, ahead of the visit of an official housing and construction delegation from India into the country. The delegation, which is expected to visit the country by next week, is from Punglliod Company, a three-billion-dollar housing and construction firm, interested in starting their business operations in West Africa, particularly Ghana. Mr Mensah, who welcomed the noble intention of the Indian company, stressed that it would be useful to learn from the Indian experts on the housing techniques to solve Ghana s rapid urbanisation problem, especially in the city of Accra.He said the housing deficit in the country stood at 1.4 million, adding that, the situation was worrying. Mr Mensah gave the assurance that Government was committed towards welcoming private and public sector partnership in the water and housing sectors for development. Speaking to the Ghana News Agency later, Mr Bhagat said management of Punglloid Company chose Ghana as a worthwhile destination because of her democratic credentials, respect for rule of law, political stability and a conducive business environment. World Bank: Developing Kenyas Mortgage Market: Mortgage Market The Kenyan housing finance system has grown rapidly over recent years in both value of loans and number of loans. The market has now gone through the initial germination stage and is preparing to enter its next development phase. Consideration now needs to be given to the
requirements for ensuring continued growth. The mortgage market is the third most developed in Sub-Saharan Africa with mortgage assets equivalent to 2.5 per cent of Kenya s GDP. Only Namibia and South Africa rank higher, with Botswana just slightly smaller. Tanzania s NHC signs mortgage finance deal with banks "The absence of a mortgage financing system has adverse effects on our country's economy... the majority of Tanzanians have been forced to build their houses incrementally through (their) own savings," Tanzania's minister for lands, housing and human settlement Anna Tibaijuka said on Monday. DAR ES SALAAM Oct 31 (Reuters) Tanzania s state-run National Housing Corp signed a mortgage finance deal with seven commercial banks including National Bank of Commerce, a unit of South African group ABSA, Kenya Commercial Bank and National Microfinance Bank. The absence of a mortgage financing system has adverse effects on our country s economy the majority of Tanzanians have been forced to build their houses incrementally through (their) own savings, Tanzania s minister for lands, housing and human settlement Anna Tibaijuka said on Monday.Tibaijuka said it takes up to 10 years for an average Tanzanian family to build a house using its own savings, tying up substantial capital.tibaijuka said most banks in Tanzania were hesitating to start mortgage financing, while overall lending rates remained high. Affordable interest rate and repayment period are issues that need to be addressed urgently. Interest rates of 15 to 20 percent are very high and unaffordable to mortgage seekers, she said.tibaijuka said state-run Tanzania Mortgage Refinancing Co would start refinancing mortgage lenders in the country before the year-end. NHC Director General Nehemia Mchechu said the company planned to build 5,000 low-cost houses. By Fumbuka Ng wanakilala, Reuters What should be done to improve the situation? Observed obstacles of development o Legal framework: enforceable property rights, foreclosure, evictions o Retail operations: loan origination programs, load products, branch network o Credit risk management: Underwriting, servicing, insurance, loss mitigation programs
o Funding: Securitization, capital markets, refinancing, deposits, loan sales, second floor banks o Economics of underlying real estate markets o Affordability o General economy and political stability o Global financial crisis o International lenders hesitate to lend in Africa, because Supported by views of international lenders Potential country selection East Africa: Tanzania, Kenya, Ethiopia, Rwanda West Africa: Nigeria, Republic of Congo, Ghana Southern Africa: South Africa, Botswana, Namibia Northern Africa: Egypt, Morocco, Syria, Libya
2. Development of a new mortgage financing system in the youngest state of the world: South Sudan South Sudan: A new state to emerge The youngest state of the world faces huge challenges in building up a state system and a functioning infrastructure. Richness of oil and a On the other hand, this means also to develop systems from scratch on a white peace of paper. a) A White Paper Approach Comparison of existing models Theoretical superior solutions b) Actual Situation and Solutions In South Sudan, nearly everything needs to be built up from scratch. This results in large projects. Description of plans for financing of such projects, including international aid, private non-profit and profit initiatives. New capital Ramciel Development needs in Juba Actual plans of government (can be supported with contacts to Government) c) A model for South Sudan Financing is the main obstacle of infrastructure and real estate development in South Sudan. How could an ideal system look like for a new, developing country with oil richness but mainly rural structures? Legal framework: enforceable property rights, foreclosure, evictions Retail operations: loan origination programs, load products, branch network Credit risk management: Underwriting, servicing, insurance, loss mitigation programs Funding: Securitization, capital markets, refinancing, deposits, loan sales, second floor banks Underlying real estate markets General economy and political stability Global financial crisis
3. Reward-risk profile of African property investment and financing Some countries in Africa have made it from a development stage to an early or advanced emerging market stage. The continent as a whole is expected to double its population to two million and offering promising economic prospects. But still political instability and corruption create recurring setbacks in this positive development. As a foreword to a real estate investment guide with detailed views on the specific investment frameworks in certain countries, this paper should give an overview over the financial requirements and give answers to the questions Why to invest in Africa? and Why to lend in Africa?, or, more concrete: What can and what should an international investor or lender expect from an investment in Africa? What are the risks? How do they compare to developed and other emerging regions? What risk mitigation strategies can be applied, from international aid, guarantees to structuring and due diligence? How does property compare to other asset classes in Africa: stock market, government debt,? What are the returns (per country/zone and per property class?) What are the risk-adjusted cost of capital for property in Africa? For equity/debt/weighted average? Which property classes offer the optimal reward-/risk spectrum? Housing, office, retail, leisure/hotel? How could an African real estate investment fit in a global portfolio strategy? Yield enhancement? Diversification? Long term growth? Practical views on RE investments and lending