- During a virtual conference hosted by East Africa Property Investment more than 1,000 delegates attending from over 35 countries were able to present their real estate figures providing perspectives to get the sector emerge stronger post Covid.
- The real estate sector was under pressure pre-pandemic, but the virus had highlighted the resilience of many of its sub-sectors as well as its future opportunities.
The East African real estate sector has remained attractive to developers and investors despite Covid-19 therefore still has an opportunity to grow, various industry players have noted.
During a virtual conference hosted by East Africa Property Investment more than 1,000 delegates attending from over 35 countries were able to present their real estate figures providing perspectives to get the sector emerge stronger post Covid.
The real estate sector was under pressure pre-pandemic, but the virus has highlighted the resilience of many of its sub-sectors as well as its future opportunities.
“The pandemic has exposed vulnerabilities in certain sub-sectors, such as hospitality, retail and offices, while highlighting the resilience of warehousing and logistics and the future opportunities in healthcare facilities, data centres and technology services,” said EAPI Virtual’s host, Kfir Rusin.
Gerhard Zeelie, Divisional Executive: Commercial Property Finance Africa - Nedbank CIB, South Africa, said Covid-19 had revealed strengths and weaknesses of the East African property sector, but saw Nedbank remaining cautious on the long-term impact of the pandemic.
“We are seeing how the pandemic is impacting our day-to-day lives,but it is too early to speculate on how it will impact the next three to five years,” said Zeelie.
He added that from a project financing perspective there has been a general slowdown, with the sector likely to pick up in the next 12-18 months.
“Pre Covid-19 capital structures had to be cheap, previously investors were only looking for the cheapest funding, which was not always the most flexible. Now, capital structures must be flexible to be able to withstand some uncertainty in the asset’s performance,” said Zeelie.
According to Ben Woodhams, the Managing Director of Knight Frank Kenya, Covid-19 has provided an opportunity for the sector to reset, with underlying supply and demand challenges that the industry needs to address having been exacerbated by the pandemic.
“The Covid-19 pandemic has provided an opportunity for the sector to reset itself. However, it’s important to remember that a slowdown in development will not result in a supply and demand equilibrium, as Covid-19 has exacerbated the demand/supply mismatch, and so it will take longer to settle than if the pandemic had not occurred,” said Woodhams.
Woodhams also shared Rusin’s view that the pandemic has emphasised the demand and resilience of new sub-sectors, that also remain a strong case for flexible working solutions.
“Yes, the pandemic has emphasised the need for logistics and flexible workspace solutions. Our view is that logistics will bounce back quickest and have proved to be resilient and when normality resumes, we expect a lot of activity in this sector. While serviced offices have been hit very hard, we expect that they will also recover very quickly as businesses look for more flexible office solutions,” he concluded.