Growth in emerging markets presents significant opportunities for investors, including those in the real estate sector, to respond to the demand.
A recent report estimates 20% net annual returns in Sub-Saharan Africa, with urbanisation and population growth. Given the geographical proximity of South Africa to the rest of Sub-Saharan Africa, it is in a unique position to benefit from other aspects of real estate-like construction and financing (as most materials are currently imported). The cost of borrowing money locally is very expensive for investors.
Top tips for investing in emerging African markets include:
- Familiarize yourself with local laws and restrictions
Before investing in emerging real estate markets, investors must gather accurate information about the laws and restrictions, which are specific to the country. Foreign investors face restrictions on buying property in some emerging countries. Make sure you check official government information and get in touch with local lawyers, as well as regularly reading the news to stay up to date on any developments.
- Take a long-term view
Take the time to watch the real estate market and closely examine the long-term outlook before investing. Within regions that are subject to volatility, it is especially important not to rush into a final decision. Instead, try to take a long-term view of the market outlook. Property investments are always long-term decisions that must be well informed. This is particularly true in emerging markets that are highly perceptible to change. The best way to be prepared is to use independent, verifiable sources that offer local and national information to potential investors.
- Find local partners
Finding a suitable lawyer, translator, or certified local real estate broker who can be your contact on the ground. This is necessary in order to navigate the local market. Choose people who are experts in their field and have the local knowledge you need to be successful in the market. This will save you time and money in the long run.
- Build a diverse portfolio
There are constant price fluctuations in global property markets, but emerging markets can be particularly volatile. Therefore, investors need to be flexible and able to adapt quickly to the changes. Investing in a diverse range of property in different regions and also different countries can help balance against these fluctuations in the market.
Adaptability is the key to long-term success in these markets.
- Be understanding of cultural differences
This applies to anyone looking to do business in a country other than their own. If you are planning to visit the country in which you are looking to invest, research local cultural practices and customs before your arrival.
Something as small as how to introduce yourself in a business meeting can vary widely from country to country. Being aware of these differences from the beginning will help you to avoid any issues of miscommunication.