[h=2]UK investor enters E Africa market[/h] The East African property market has once again attracted the interest of an international real estate company, barely a year after Rutley Capital Partners of UK launched a Sh13 billion East Africa property fund.
Another UK based real estate company, Integrated Property Investments Ltd, is flexing in preparation for entry into the market this year. The firm is seeking a dual listing in the Nairobi and Dar es Salaam stock exchanges.
Managing Director, Mr Suleiman Dualeh told Real Estate that East Africa has developed a vibrant property market, which investors, both local and international, want to be part of. "We have applied to the Capital Markets Authority at the NSE and the Capital Market and Security Authority at the DSE for approval for the floatation of a REIT, and we are waiting feedback from them".
REITs (Real Estate Investment Trusts) are public or private traded companies that own, develop and operate commercial properties. Reits serve as vehicles for raising liquidity in the property sector, by pooling individual and institutional investors, allowing them to diversify their investment portfolio in real estate. "Because banks borrow short, they are not able to sustain medium and long-term financing on fixed interest rates. REITS allow for the securitilisation of equities, and through this secondary market, investors can own real estate proportionate to their financial capacity," says Dualeh.
The investment opportunity is offered to a select group of private investors and institutional investors who are identified for their ability to assess the investment opportunity with or without the help of outside advisors. The proceeds of the funds will be used to fund Bahari Beach resort, a mixed-use gated community off Dar es Salaam, that Integrated Property Investments (Tanzania) Limited, a sister company in Tanzania, is developing.
The Dar project is a development of 700 units with the attendant social and commercial amenities- schools, a shopping, mall a clinic, office park, and a hotel. "We are developing the neighbourhood with the aim of starting a satellite centre in a bid to ease congestion in the city," explains Suleiman.
Bahari Beach resort is an upper middle-class development of apartments, townhouses, and villas, targeted at individuals, corporates and expatriates. Having broken ground last month, the firm plans to construct the neighbourhood in four years and in six phases. The first phase of 396 units sits on 50 acres of land.
"Dar es salaam is plagued with a severe shortage of housing and a proliferation of unplanned houses. What we are aiming at is to create "self-contained cities" outside the city in order to upgrade the stock in urban residential housing and reduce traffic at the nucleus," says Suleiman.
Having operated in the UK property market for the last eight years, IPIL is careful to integrate local professionals in the development. "We want the locals to participate and own the project. Local professionals understand the culture and taste of the people. Most of the International specialists, like MC20, a Chinese contractor, and Cowi Engineering (T), have also played in the East African market for long," he explains.
Kenyan firms have joined the wagon with In-House Project consultants as the architects and Eldon Developers as the selling agent. "We have secured half of the funding from international participants from London and New York interested in East Africa. We seek to integrate modern models of financing to serve both our local and international investors," says Suleiman.
Funding has been arranged with both Tanzanian banks and American institutions. The foreign banks will provide cheaper mortgage rates for Tanzanians. In the developed world, interest rates are at single digit units.
"We intend to list the REIT so as to mitigate the cost of financing. Securitizing the real estate market opens up the secondary market, which makes for fast and easy liquidation of investments in real estate. Any excess funds, says Suleiman, will be used to develop similar projects throughout the region," says Suleiman.
However, in East Africa, policies governing the listing of Collective Investment Vehicles for property are yet to be set.
Despite having set March this year as the time for entry of REITs into the Kenyan market, the CMA is yet to publish a report on the viability of real estate investment trusts in Kenya. The study should inform the laying of appropriate policy and legal framework. Four international and local real estate companies have expressed interest in listing at the stock exchange, among them a local company with US ties, Bora Capital. Some of the policy issues that need addressing before Collective Investment Schemes can to be adjusted into REITs are the proportion of a company's assets that can be invested in real estate, which is currently set at 25 per cent by the Retirement Benefits Authority. Collective Investment Scheme rules will have to change to allow companies to invest 100 per cent of their capital in real estate.
Just like equities, fixed income securities and mutual funds, REITs are bound to boost activity at the bourse.
Tanzania is only now engaging the private sector in ownership of property, and Suleiman calls on Kenyans to set their sights on the Tanzanian property market. "We need to reposition property in East Africa for wider consumption, and especially, cross-boarder exchanges," advises Suleiman.
Source:
East African Standard, Nairobi. 26 June 2008
UK investor enters E Africa market « 70.71 Group Blog
Another UK based real estate company, Integrated Property Investments Ltd, is flexing in preparation for entry into the market this year. The firm is seeking a dual listing in the Nairobi and Dar es Salaam stock exchanges.
Managing Director, Mr Suleiman Dualeh told Real Estate that East Africa has developed a vibrant property market, which investors, both local and international, want to be part of. "We have applied to the Capital Markets Authority at the NSE and the Capital Market and Security Authority at the DSE for approval for the floatation of a REIT, and we are waiting feedback from them".
REITs (Real Estate Investment Trusts) are public or private traded companies that own, develop and operate commercial properties. Reits serve as vehicles for raising liquidity in the property sector, by pooling individual and institutional investors, allowing them to diversify their investment portfolio in real estate. "Because banks borrow short, they are not able to sustain medium and long-term financing on fixed interest rates. REITS allow for the securitilisation of equities, and through this secondary market, investors can own real estate proportionate to their financial capacity," says Dualeh.
The investment opportunity is offered to a select group of private investors and institutional investors who are identified for their ability to assess the investment opportunity with or without the help of outside advisors. The proceeds of the funds will be used to fund Bahari Beach resort, a mixed-use gated community off Dar es Salaam, that Integrated Property Investments (Tanzania) Limited, a sister company in Tanzania, is developing.
The Dar project is a development of 700 units with the attendant social and commercial amenities- schools, a shopping, mall a clinic, office park, and a hotel. "We are developing the neighbourhood with the aim of starting a satellite centre in a bid to ease congestion in the city," explains Suleiman.
Bahari Beach resort is an upper middle-class development of apartments, townhouses, and villas, targeted at individuals, corporates and expatriates. Having broken ground last month, the firm plans to construct the neighbourhood in four years and in six phases. The first phase of 396 units sits on 50 acres of land.
"Dar es salaam is plagued with a severe shortage of housing and a proliferation of unplanned houses. What we are aiming at is to create "self-contained cities" outside the city in order to upgrade the stock in urban residential housing and reduce traffic at the nucleus," says Suleiman.
Having operated in the UK property market for the last eight years, IPIL is careful to integrate local professionals in the development. "We want the locals to participate and own the project. Local professionals understand the culture and taste of the people. Most of the International specialists, like MC20, a Chinese contractor, and Cowi Engineering (T), have also played in the East African market for long," he explains.
Kenyan firms have joined the wagon with In-House Project consultants as the architects and Eldon Developers as the selling agent. "We have secured half of the funding from international participants from London and New York interested in East Africa. We seek to integrate modern models of financing to serve both our local and international investors," says Suleiman.
Funding has been arranged with both Tanzanian banks and American institutions. The foreign banks will provide cheaper mortgage rates for Tanzanians. In the developed world, interest rates are at single digit units.
"We intend to list the REIT so as to mitigate the cost of financing. Securitizing the real estate market opens up the secondary market, which makes for fast and easy liquidation of investments in real estate. Any excess funds, says Suleiman, will be used to develop similar projects throughout the region," says Suleiman.
However, in East Africa, policies governing the listing of Collective Investment Vehicles for property are yet to be set.
Despite having set March this year as the time for entry of REITs into the Kenyan market, the CMA is yet to publish a report on the viability of real estate investment trusts in Kenya. The study should inform the laying of appropriate policy and legal framework. Four international and local real estate companies have expressed interest in listing at the stock exchange, among them a local company with US ties, Bora Capital. Some of the policy issues that need addressing before Collective Investment Schemes can to be adjusted into REITs are the proportion of a company's assets that can be invested in real estate, which is currently set at 25 per cent by the Retirement Benefits Authority. Collective Investment Scheme rules will have to change to allow companies to invest 100 per cent of their capital in real estate.
Just like equities, fixed income securities and mutual funds, REITs are bound to boost activity at the bourse.
Tanzania is only now engaging the private sector in ownership of property, and Suleiman calls on Kenyans to set their sights on the Tanzanian property market. "We need to reposition property in East Africa for wider consumption, and especially, cross-boarder exchanges," advises Suleiman.
Source:
East African Standard, Nairobi. 26 June 2008
UK investor enters E Africa market « 70.71 Group Blog
