Cross border property transactions on the rise
Cross border property transactions have been identified as the next wave of opportunity for property companies, and internationally, organisations have been gearing themselves up to create shareholder value and diversification away from their traditional hunting grounds.
This is according to Tony Bales of Bales Delaporte, the property investment dealmakers who recently facilitated the sale of BPI House in Namibia to Vukile Limited, who purchased the property for NAD110, 000,000 (Namibian Dollars).
Vukile will shortly be seeking a dual listing on the Namibian Stock Exchange (NSX) and thus have shown the vision that they are able to create additional shareholder value by looking at a relatively new and growing market in Namibia.
Namibia has a solid infrastructure and a well-defined physical property market, yet only have one listed property fund, Oryx. Oryx has performed very well and in essence the market has been waiting for another fund to be created - it took the foresight and skills of a South African company to achieve this.
At the Mipim Property Convention in Cannes this year, where 25,000 of the worlds major property investors gathered, cross border activity was earmarked as one of the major sources of portfolio growth and diversification, advises Bales Delaporte. Many large international companies have hired staff skilled in international property transactions and in recent years we have seen US based companies make major acquisitions in Europe, Australian property companies diversify into the USA and Europe, and Middle East based companies invest in Africa and the Far East.
Unfortunately, South African based companies are not able to unilaterally make meaningful offshore investments at this stage, but some have managed to make small investments, which over time will hopefully grow substantially.
According to Bales Delaporte, the internationalization of SAs listed sector to a Real Estate Investment Trust (REIT) structure, will invite a number of major international players to Africa, which will serve to enhance the cross border activity in the South African market. These large investors would typically only look at investing into a fund that has at least R20bn of property assets.
Although South African exchange controls prohibit major international property investment by SA domiciled companies, we still need to be fully aware of all the cross border activity happening as it is likely to have a major effect on the property market in the Southern African region during the next few years, concludes Bales Delaporte.
Article by Catherine Pate On behalf of Bales Delaporte: www.balesdelaporte.co.za