The Potential for Developing a Residential Real Estate Investment Trusts (REITs) market in Africa with a focus on Morocco, Ghana, Nigeria, Kenya, Rwanda, Tanzania, Uganda and Zambia

Real Estate Investment Trusts (REITs) were first introduced in the United States (US) in 1960, with the legislation amended over time until in 1976 the legal and regulatory structure recognised in most countries had been developed. The purpose of REITs was both to encourage construction and property investment as well as enable access to real estate investment for lower income earners and bodies typically exempt from taxation, such as pension funds and charities. To enhance this proposition, most jurisdictions aimed to reduce risk by not allowing any REIT to be controlled by a single shareholder or small group of shareholders and restricting the amount of debt that could be leveraged.

The global REITs market is estimated to be worth around U$4 trillion and 44 countries are recognised as having legislation that could be described as REIT-based, with that number likely to increase in the near future. In August 2019, more than 85 percent of REITs by asset value worldwide were concentrated in five countries, of which nearly 80 percent were in the US.

African governments are increasingly acknowledging the need to develop capital markets, to facilitate economic growth and finance the development of key priority sectors, including increasing the provision of affordable housing for low- and middle-income segments of the population. Eight African countries stand out as being particularly interesting, with institutional investors, concessional funders, international lenders and other capital providers showing interest in the affordable housing sector where the value chain for such investment appears to be improving. Therefore, the purpose of this report is to explore whether, in these cases, the residential REIT market might offer an opportunity to move the sector along in the right direction, or if not REITs, were there proven models that could facilitate access to the capital markets to fund the volume provision of affordable housing.