Infrastructure Investments Driving Real Estate Growth in West Africa

Real estate advisory firm, Northcourt, say that the West African real estate market faces some difficulties, but Infrastructure investments across the region are gradually contributing to growing property value. They highlight the role of reforms in simplifying property registration and resolving disputes among others. Ayo Ibaru, Chief Operating Officer and Director of Real Estate Research at Northcourt, joins me now for this discussion.' Thanks so much for your time today, Ayo. Let's first get that overview of the terrain. So combined, the region is GDP value at US$725 billion. And you find that between the Anglophone and the Francophone countries, you find that there is the emphasis on infrastructure. And of course, that as a key driver to ensuring that the market grows. So what we did was to pick up an index framework put together by Kirsten Leiser and Alexander Groh back in 2011 from ESA Business School. And the idea was they went through 66 different countries to assess or to determine investment attractiveness for institutional investors. And so we just picked that up, looked at the six key pillars, everything from economic activity to investor protection to administrative burdens, which you alluded to, to even just the depth and sophistication of the capital markets, such that at the end of the day, we concluded with a robust framework and a ranking as to where money should go, at least from the institutional investor to the countries in the region. And where should that money be going when you look at the makeup of the region? I mean, seeing how widespread CNBC is, one has to be careful so that I don't get into trouble. But let's just say the usual suspects are there in the ranking, top in the ranking. That would be Nigeria, Ghana, of course, and Ivory Coast. But then there are a few other key players. Cabo Verde is doing really well with investor protection. Ivory Coast is keeping their inflation down, which is a component of the economic activity aspects, which in turn ensures that investments run for a longer distance. So, I mean, things like that. I mean, when you look at a country like Liberia now that has just changed its leadership, things like that signal to foreign investors that the political environment is safe. Now, we all know what happened with the three countries in the region earlier in the year, and they are going to have to have separate conversations with investors to see if they'll be interested in bringing money to those countries. Yeah, because the rate of urbanization for the major cities in these countries also plays a key role in all of this. And I'd like you to take me through what your report is saying along those lines. So, urbanization, interestingly, drives the demand for real estate assets, which in turn encourages supply. Now, all of this will feed into the individual demographic framework of the region. So, of course, you know that combined, we're about 400 million plus in terms of our population. Our median age is about 18.2. And this puts a lot of pressure on land for conversion to residential and retail and so on and so forth. So, countries like Nigeria with the Lagos and Abuja cities are pushing a lot of demand. But when you look at places like Dakar in Senegal, you also have the same thing. Now, Dakar has the advantage of being an attraction point for the World Bank and quite a number of DFIs. So, that in turn impacts the quality of infrastructure development. Now, urbanization is important because at the end of the day, when you look at places like Abuja, they have keyed into that already and they have seen that, look, if we get the infrastructure right, we can build on the infrastructure or on the urbanization that we have. So, urbanization can be done organically, which is what quite a number of countries are trying to do. If you look at Benin Republic and Togo, they are really trying to take that route. Or then you can inject quite a bit of investments, which is of course what Lagos is doing, my home city and then of course Abuja and then Praia in Cape Verde. Finally and very quickly, when you look at the exposure to currency risks, how is that impacting sentiment of investors as to where they finally pitch their tent when it comes to real estate investments? To be frank, I was hoping you wouldn't ask that question because if that was not a consideration, without thinking too far ahead, Nigeria would have been the clear and away winner of the entire ranking. But then when you look at it, repatriating funds is a key consideration. It talks about how deep and how sophisticated your capital markets are and how are investors protected and if I can't take my money out. So, that knocked Nigeria off the top spot, so I can tell you that for free. But Ivory Coast is doing a good job with that and also Cape Verde and also Senegal. So, the amount of protection that investors get is a key consideration when you look at all six pillars that were considered. Definitely interesting report to look at there, but we're looking at the rest of that as we close down the year. Thank you so much for your time there. I am Byron, the Chief Operating Officer and Director of Real Estate Research at Northcourt.

Real estate advisory firm, Northcourt, say the West African real estate market faces some difficulties, but Infrastructure investments across the region are gradually contributing to growing property value. They highlight the role of reforms in simplifying property registration and resolving disputes among others. Ayo Ibaru, Chief Operating Officer and Director of Real Estate Research at Northcourt, joins CNBC Africa for this discussion.

Northcourt: Infrastructure investment driving property value in West Africa

Real estate advisory firm, Northcourt, say the West African real estate market faces some difficulties, but Infrastructure investments across the region are gradually contributing to growing property value. 

Northcourt: Infrastructure investment driving property value in West Africa

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Northcourt: Infrastructure investment driving property value in West Africa

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