How To Invest in Prime Property In Africa With $10k or Less

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I'm sure you  have heard this phrase "Invest your money in property and you could double your investment in the next 4 to 5 years!" Admit it, you have probably said so a few times yourself. Anyway I will let you know in detail my thoughts on that statement when it comes to real estate investments in Africa in another post. For this post I want you to assume its an accurate statement.

In early 2015 I had the privilege of connecting with a truly remarkable entrepreneur Emeka Okeke who runs a printing business in the city of Enugu in Eastern Region of Nigeria. Prior to meeting him, Emeka told me his dream had always been to invest in real estate to "double his money" the only problem was he didn't have enough savings, he couldn't get a loan or mortgage either as his status and mortgage market conditions in Nigeria meant it was almost impossible for him to borrow to purchase a property.

His primary objective was capital appreciation, and investing in residential properties made sense as returns were very good. So he decided to explore the co-ownership route. On one of our meetings he told me proudly " Bro, I can now afford a part of prime property that guarantees I will double my money and I have no issue sharing ownership with 6 others".

Not a new thing

This type of co-ownership arrangement which is an existing practice in the commercial and retail property space, is now becoming popular in the residential sector too. I feel it will opened many doors of opportunity for the ordinary individual investors whose primary goals are capital appreciation.

Prime property is good business not only in Nigeria but also in every urban node around the continent for example Nairobi, Accra, Luanda to mention a few, you can do that research in your own time. However in most of cases you will need a minimum capital running into the hundreds of thousand USD to enter into the market. So if like Emeka you don't have enough resources to get in on the action then maybe you should consider co-ownership where you can enter with just a few thousand. Emeka invested $10000 USD equivalent back in Feb of 2015 and has seen it appreciate by about 15%.

Start-ups jumping on the train

Historically practical co-ownerships of property have not been run in an organised manner and have been vastly informal seeing investment by friends and family. But there are a growing number of start-ups looking to bring organisation to this market.

Their investment platform allows you to invest directly in real estate with other investors and. Their schemes are different from REITs where you invest in a pool real estate across several geographies and asset classes. Here you invest in a specific residential property which you can visit before buying into, you will also know your co-owners.

How their schemes work

You either get a Joint-ownership or a share in a company that owns the property and this depends on the number of investors involved. In other cases an SPV (Special Purpose Vehicle) is formed with the investors as its shareholders.

Alongside assisting the investors with various parts of acquiring the property they also manage the property assisting investors with finding tenants, negotiating rent and also assisting with the sale of the property.

To exit you will need to find a buyer for your stake or wait for the sale of the property. There maximum investment life time is 5 years but they can begin the sale process after 3 years.

To conclude

If you want to invest in real estate in Africa and you do not have huge amounts of cash at your disposal. The you should consider the co-ownership route only and only if your primary objective is to grow your money.

Africa is no longer a leap of faith work fast and smart and you will be part of the growth.

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