New research by real estate services consultants Cushman & Wakefield reports that proper risk management allows a number of emerging African markets to present opportunities and remain attractive to occupiers and investors. The 2015 Risk Index results reveal that Botswana retains the most attractive market for occupiers.
Other African countries included in the top 10 are South Africa, Ghana, Morocco and Tunisia. It should be noted that the diversity of the African markets with Angola, the Democratic Republic of Congo, Zimbabwe and Nigeria perceived to carry greater risks.
The third edition of the Emerging & Frontier Markets report assesses the risks and opportunities on offer for corporate occupiers in the most sought after emerging markets in Africa, the Americas and Asia Pacific.
Uruguay, Argentina and El Salvador are the three countries in the Americas that have risen considerably, narrowly excluding Mexico from the top ten.
“Due to a number of global economic shocks throughout the past 18 months, risks are rising in certain emerging markets. At times of uncertainty, real estate portfolio strategies come under close review and the emerging markets risk index helps identify opportunistic locations for occupiers,” says Richard Middleton, head of account management & client services, Global Occupier Services, EMEA.
According to the report, a growing middle class population, better infrastructure and technological improvements in a number of countries possessing transparent real estate markets, led to Africa securing half of the top ten most attractive emerging market locations.
Even though Southeast Asia is one of the fastest growing regions in the world and performing very well from an economic perspective, Vietnam, Indonesia and Philippines have slipped slightly down the rankings with ease of property ownership. This has created issues in Vietnam and the Philippines, while Indonesia has higher costs for registering property. Despite the higher costs, these three locations are significant growth markets for a number of industries.
“As emerging markets become increasingly integrated into the global economy it is important to remember the sheer size and diversity of developing economies,” adds Middleton.
Although a number of macroeconomic and political global shocks such as fluctuating commodity prices, financial turbulence and policy bottlenecks were created in the BRIC economies of Brazil, Russia, India and China, they are carrying implications for emerging markets as well. The BRIC economies are excluded from the Index as they are considered to be more mature locations.
The report also looks at emerging markets from a more micro perspective. Through a survey of the best property operators in each of these countries, local challenges surrounding accessibility of real estate were evaluated.
The factors considered in this survey include:
- The overall transparency of property market.
- The ease of commercial property ownership for foreign companies.
- The ease of leasing space for foreign companies.
- The speed of transaction conclusion.
“Emerging markets are often mistakenly viewed as homogenous, however, in reality real estate dynamics vary considerably as do the sets of risks and opportunities on offer for occupiers across differing geographies and business sectors. Africa is a good example of this with countries offering very different operational profiles. Real estate strategies need to reflect this,” concludes Middleton.