Africa is forecast to have their population increase from just over 1 billion currently to around 4 billion by 2100. While that's probably too far away for most of us to worry about, much of this growth will be happening in the earlier part of this century. At the same time wealth is increasing in third world countries across the world. So compounding these two factors makes it look to me like there is a killing to be made from real estate investing in Africa. The thing that are stopping me from investing in Africa now is that there is a lot more political instability than we're used to down here. Plus I don't know anything about the property market down there. I presume managing tenants through a PM would also prove more challenging than it does in Australia and I doubt that it would be possible to get much or any finance. But I have been pondering this for a while and maybe I will seriously look into it at one point. Has anyone had similar (or opposing) thoughts or has someone perhaps even looked into it?
Africa is a big continent. Which part of Africa are you looking at? There are some countries I would avoid (Zimbabwe comes to mind) and others are certainly worth looking into more (Botswana). vtt
The car industry has been undertaking research to set up new manufacturing plants in Africa due to the much lower labour costs but the political instability is their main stumbling block
I don't think Africa is any more risky to invest in than australia per se. But for us in Australia, what greatly increases the risk is our lack of knowledge of their legal, political and financial systems and real estate markets and drivers etc. And also how to employ 'muscle' when needed. Imo that is what makes it such a risky proposition. It's like when a foreign buyer wants to buy a unit in sydney. Buying a unit in syd is not really a risky proposition FOR US but how many foreign buyers have we seen buy stock that we wouldn't touch in a million years and at the price they paid? I've seen many. Imo the risk lies much more with the individual and less the country.
I would be very careful with that. I was born and lived in North Africa for 30 years before moving to Australia. You need to consider the corruption in governments, and how to protect your investments. Law is not 100% enforced, and some people with powers / connections can put hand on your investments, and then basically you lose everything. Court battles can take up to 20 years. I will give you an example that happened to my cousin. he bought an investment property. Someone from the neighbourhood got a locksmith, changed the locks, moved his family and his elderly mother into the property. By law, those people cannot be just kicked out. it have to be a court order for police to kick them out (keep in mind that the property is registered under his name). It took him 7 years with zero rent, and he paid them around $5000. around 30K in local currency, under the table to accept to leave. From my experience what I saw very successful is very large investments like car manufacturing, Consumer goods, High rise construction organizations, ...etc.. but if you are a small investor (less than 10 million dollars, and you don't have a local backbone (someone with power paid to protect you). I would think more than twice. If you are really interested, try to get involved with those big multinationals, supply to them, work with them, this will give you protection as well. I used to work for one of the big multinationals over there. Law department head is an x-member of the parliament, Head of security is a x-Senior Police Chief. those are the kind of people you need to hire, so no one can touch your investment, and then you will make money. My example is mainly for North Africa, It maybe disappointing, but some stuff you don't know except from a local. Hope this helps.
yeah, isn't there like 53 countries in Africa. Plus increasing population in Africa in certain areas is still a symptom of poverty not an emerging middle class.
Yup..very true. Generalising a lot there are only 2 things that matter most in developing countries: money and influence/connections.
Watch out for the new wave of Nigerian property spruikers. Apparently they're holding seminars for OTP shanty towns on the outskirts of Soweto. But seriously, there are parts of Africa which have a legal system similar to Oz. I attended a conference (not with a Nigerian) last year. The presenter was a lawyer doing work for Aussie miners in Africa.
I think Luanda has some of the most expensive real estate in the world? As an aside when I was bumming around Nairobi, I wondered why the place wasn't more prosperous, considering the English proficiency and education of much of the people I met.
Botswana is very progressive and straight up scores well in the corruption index and has good legal system. 2 million pop with gdp of USD 15 billion not bad! Have acquantence in biz there and he raves about the place.
I worked in East Africa during 97-98. Frustration and corruption are 2 things that come to mind. The frustration was as bad as the malaria. Great times were had, but investing there is not for me...
yes, Botswana, South Africa, and Zambia are my picks. Buy so full of risk, might not get a single good nights sleep.
I am involved with a group that owns a farm outside of Jo-burg (near Sun City). Things we have dealt with this year alone: - Carjacking (at gun point) - Government attempts at sequestration of the land - A guy claiming his ancestors were buried in a field we dug up for irrigation pipes - funny he never said anything for the past decade we've been there. He came in with the police and lands department, stopping all works. In the past few years: - armed thugs invading (big gate and fence now to deter) - miles of copper stolen (from power lines of all things) - a hippo on the road (ok, funny, but they are seriously dangerous creatures - just pray you can drive real fast in reverse when you come up against one) The Y-man
