Real Estate Property Funds

South African Developer HBW Group Plans Property Fund IPO

South African real estate developer HBW Group Pty Ltd. plans to raise $85 million (£55 million) by selling shares in an African property fund as retailers look for land to expand in the world’s second-fastest growing region, *Bloomberg* reported on April 25.

The newswire quoted HBW’s Chief Executive Office Tony Vassilopoulos as saying that the company’s planned property fund, African Land Investments Ltd., will list on the Johannesburg Stock Exchange (JSE) in July and on the Lusaka Stock Exchange. The investment vehicle – the latest in a string of African property funds – will invest in key African locations including Kenya, Zambia, Mozambique and Ghana. Vassilopoulos further revealed that African Land Investments will have an initial distribution yield of 8.5 percent a year.

In its coverage of the news, *Bloomberg* also noted that JSE did not immediately respond to an e-mailed request for comment, while Beatrice Nkanza, chief executive officer of the stock exchange in Zambia’s capital Lusaka, said that she was unaware of the planned initial public offering.
**Retailers Encouraged by Africa’s Fast Economic Growth**
Explaining the reasons behind HBW’s move, Vassilopoulos said that as South Africa’s commercial property market becomes saturated, retailers are looking to other countries on the continent for expansion. According to him, Sub-Saharan Africa is also attracting an increasing number of European retailers struggling in their domestic markets.

According to Johannesburg-based Rand Merchant Bank, six of the 10 fastest-growing countries in the world over the past decade were African. Sub-Saharan Africa proving to be one of the world’s fastest growing regions, according to recent data. The International Monetary Fund (IMF) has forecast economic growth of 5.6 percent in Sub-Saharan Africa this year, compared with projected global growth of 3.3 percent. Only developing Asia has been forecast by the IMF to post a higher growth rate this year, at 7.1 percent. As the HBW CEO opined, with growth accelerating, the African property market will become more competitive in the next decade.

**Increasing Popularity of Property Funds in Africa**
!m[South African Property Funds Target Continental Expansion ](/uploads/story/2009/thumbs/pic1_inline.png)
HBW is not the first South African real estate developer aiming to tap into increased investor interest through a property fund. As iNVEZZ reported earlier this month, (Liberty Holdings to Launch African Property Development Fund), Johannesburg-based investment and insurance provider Liberty Holdings (JSE:LBH) has also announced plans to launch a $150 million (£97.1 million) property development fund for countries including Nigeria and Kenya as part of its strategy to expand its presence in Africa. The property unit of South African financial services company FirstRand Ltd raised $350 million (£226.6 million) last October for developing real estate in West Africa, encouraged by strong demand for retail and commercial property in the region.
“A number of [property] funds are putting money into Africa,” said Ndibu Motaung, head of South Africa research at global property consultant Jones Lang LaSalle, as quoted by *Bloomberg*. “That is starting to gain momentum.”

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