In the past five years, Africa-focused real estate funds have raised half as much as comparable infrastructure funds and only a sixth as much as comparable private equity funds.
The imbalance is “striking”, according to law firm Linklaters, which provided the data in a report.
“Of the three most prevalent fund asset classes in Africa – private equity, infrastructure and real estate – it is undoubtedly real estate which appears the most overlooked,” said the report, ‘African real estate funds: what are we missing’.
The comparative lack of funding is surprising given that there is a substantial need for home building in the continent, said Linklaters, which notes that Nigeria has an estimated housing shortfall of between 12 and 17 million units.
The law firm said the growing popularity of real estate investment trusts (REITs) may hold the key to increasing fund investment in African property. Governments in Kenya, Morocco and Rwanda have enacted legislation to enable REITs, which have been successful in South Africa.
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