WHILE most South African property pundits will agree that the saying Africa is not for sissies rings true when it comes to property investment, some commentators believe there are major opportunities for local property companies on the continent.
This is despite a host of problems with title deeds, property administration and legal systems outside SA and certain other southern African states.
According to this months issue of Business in Africa, it is estimated that sub-Saharan Africa alone is sitting on dead capital in the form of a dysfunctional property market to the tune of $970bn.
The magazine says this figure has been widely contested but does suggest the potential wealth that could be unlocked in Africa.
Business in Africa also reports that one major obstacle to unlocking value is the fact that very little property in Africa is available in clearly identified and titled individual freehold.
It reports that outside SA, Namibia and Zimbabwe, most land is state-owned, and that it is either commonage under traditional management or available only as a limited leasehold.
Arnold Meyer, CE of property services group Broll Property Group, which operates in SA, Botswana, Nigeria and Namibia, says that while he agrees with the sentiments expressed in the report, north Africa should be excluded because these countries do have title deeds and good administrative machinery in place.
Meyer says there are often no title deeds in place in Saharan and sub-Saharan Africa.
In cases where title deeds do exist, it is often difficult to trace the owners of the land.
For all African governments it is very important for them to centralise title-deed offices, and to respect and uphold the title and value of a title deed, says Meyer.
The Broll CE says there is a need for an effective justice system and title-deed administrative system in Africa.
Meyer says that even if full title is not recognised, it will be acceptable as long as the system supports and upholds 99-year lease agreements.
He says there is enormous scope for value creation in Africa, and there are many buildings built in pre- and postcolonial times in Africa.
But they have not been maintained and, had they been, their values would have been much higher.
David Green, MD of Pace Property Group, says most property companies in SA see many opportunities in the rest of Africa, particularly in the property services arena, which includes property management, facilities management, as well as all aspects of property development and other professional services such as architectural and engineering.
This is largely driven by the fact that other African countries perceive SA to be a powerhouse, and also believe that South African companies have a better understanding of doing work in Africa than their European counterparts, says Green.
He says problems in Africa as far as property development is concerned relate to ownership of land because very few African countries have well-entrenched legislation relating to ownership.
And in many countries in Africa it is only possible to obtain land for development through leaseholds directly from governments, says Green.
The political instability of African governments can also be perceived by companies as a risk.
Green says economic situations can change quickly in African countries.
In many countries property development is still regarded as pioneering. Its being done for the first time.
Having said that, certain African economies have shown substantial growth, and so have presented very good propertyrelated opportunities for South African property professionals.
Countries such as Angola and Mozambique in particular are attractive because of their proximity to SA, he says.
African countries of preference include Nigeria, Senegal and Morocco.
Green says that many hotel groups are working on leisure developments in other parts of Africa such as Kenya, Tanzania, Uganda and Madagascar.
Developments under way in west Africa include commercial, industrial and retail properties.
Article Supplied by: www.businessday.co.za