Africa’s property laws (or lack of)

October 14, 2009

Africa’s emerging commercial real estate markets may look tempting from the outside, but will remain the preserve of those with the highest appetite for risk.

A vendor carries newspapers for sale along the streets of Uganda's capital Kampala September 12, 2009.  REUTERS/Thomas Mukoya

Even the CEO of Growthpoint, South Africa’s largest listed property firm, feels the continent (excluding South Africa) is not for the faint-hearted.

Those interested in investing for the longer term, like himself, are likely to remain on the sidelines for now.
“We’re less convinced about the dynamics in some of these African countries. It is higher returns for that risk, but we’re not convinced that it’s enough,” says Norbert Sasse, while in London for an investors’ conference organised by Australia’s Macquarie Bank.

“We’re sceptical with those African countries further north. Nigeria, Uganda, Kenya, Rwanda etc … you’re never sure if the law protects your property rights. The law around property title is certainly nowhere near as advanced as you would get in South Africa.”

But others are more optimistic. Knight Franks’ head of Africa Peter Welborn told a Reuters Summit in June that Africa opportunities were just as good if not better than other emerging markets such as Asia and Latin America, promising hefty returns.

Growthpoint is the landlord for some 440 commercial properties in South Africa, but owns just two buildings in the rest of the continent, in neighbouring Namibia.

“We’re not unhappy with our properties in Namibia, but we’re not necessarily long-term holders,” Sasse says, adding those were inherited as part of Growthpoint’s past portfolio purchases. Instead, the company is casting its net much further afield to Australia, where he says its new property unit could spend A$2 billion on acquisitions over the next two years.

8 comments

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The article provides useful information on Africa’s property laws and hence it will be helpful for those looking for buying or selling property in any African region.

It seems its like the wild west over there….I am sure though for those who do invest in Africa, and in the right places, there is good money to be had. High risk, yet high reward also..

Have you ever wondered why, from a historical perspective, there were two continents in which the native populations never technologically advanced beyond what might be termed “stone age culture” until Europeans appeared on the scene.

Note for you cultural relativists; I’m not praising or condeming any culture. I’m asking a question?

I don’t believe that race had anything to do with it. Could it have some relation to the absence of a code of legally defined private property rights?

Posted by Norm | Report as abusive

what’s the point in even having property laws when the rule of law is not applied to protect them?

take zimbabwe for example, where land and commercial enterprises can be taken away from you on the whim of a tinpot dictator for his political and patronage purposes. the refusal then to recognise the rulings of a regional tribunal, which are at variance to those seizures, shows that property rights are unenforceable even through the jurisdiction of the international courts system.

lack of certainty regarding property rights means little or no investor confidence.

it seems to me that there is only a veneer of property rights in africa. notional but in reality non existant.

Posted by dave | Report as abusive

Those who think there’s unmitigated danger, & only a veneer of property rights, ALL ACROSS Africa, and those who are like-minded, are encouraged to PLEASE continue in that mindset, while we in Africa (Kenya, Morocco, Nigeria, Egypt, Botswana, Uganda, Rwanda and several others) pre-position ourselves and increasingly develop and acquire what’s just as valuable as yours — out there.

You will be welcome with open arms, when (ever) you are ready to invest(as an adventurous & far-sighted “few” already are) with open minds to see what there is to see and have.

There’s a gold-rush here we don’t necessarily want too many people to get involved in just yet! Perhaps in ten or twenty years. If, in 10-20 years, you figure that it’s too late, don’t say you were not forewarned!

Remember China!

Then I genuinely wish you the best of luck Mauri in your endeavours. I suspect though that the same promises about a gold rush and the potential rewards were made 10,20,30 and even 40 years ago but the situation hasn’t changed much has it?

As for the Chinese, the best of luck to them as well. The concept of the vesting of property rights beyond state control is new terriorty to them but I’m sure they know what they are getting themselves into.

Posted by dave | Report as abusive

There’s a gold-rush here we don’t necessarily want too many people to get involved in just yet! Perhaps in ten or twenty years. If, in 10-20 years, you figure that it’s too late, don’t say you were not forewarned!

http://propertyinvestment.blogebay.com/2 009/10/30/asian-property-investment-%e2% 80%93-is-it-risky-and-badly-performing/

It could be said that the way forward for most major investors who want to buy property should be the BRIC economies – Brazil, Russia, India and China. Their economies are small in comparison to their western counterparts but the rate of growth is quite substantial. To me investing in Africa is not something I would think of due to their lack of laws protecting an investor.

Posted by Greg144 | Report as abusive