Limited housing finance markets, struggle to attract and retain significant investment. Until now, these markets have largely failed to provide investors with targets in the residential real estate space that are sufficiently substantial and/or accessible to warrant their attention. Consequently, the majority of housing investment in most African countries comes from government debt or domestic savings rather than from international capital markets and domestic institutional investment markets, as is the case in developed economies. This contributes to limited financial resources being channelled towards Africa’s housing developers. A key challenge for policy makers is thus to improve housing delivery value chains – specifically, in a way that broadens access to finance for housing developers, and, in doing so, expands access to adequate housing for individuals.
The introduction of Real Estate Investment Trusts (REITs) is one innovative approach that policy makers, property developers and real estate investors in certain African countries are promoting in an attempt to address finance constraints in real estate markets. A REIT is a tax-efficient investment vehicle designed to aggregate diverse sources of funding (from international and institutional investors through to households), and target them into a real estate portfolio that extends beyond the limitations of individual projects. While the REIT structure is found in the context of real estate markets more broadly, it is its potential application in the affordable residential property market which is the focus of this study.
This study outlines the general context of REITs and specifically residential REITs globally and more specifically in Africa, through case studies of REITs in Nigeria, Ghana, South Africa, Kenya, Rwanda, Tanzania and Morocco. An analysis of the study provides a clear indication of what the enabling factors are for the successful implementation of a residential REIT in the African context. This is the full study report produced and segmented reports will follow for ease of digestion of the information and to appeal to varied target markets.Download PDF