Real estate financing as a catalyst for economic development

The real estate sector remains resilient and has continued to grow across the various asset classes. This has evolved with the post-pandemic recovery, with expansion being seen across the traditional asset classes including retail, offices, industrial, residential and “new” alternative asset classes such as digital (data centers), education (student accommodation) and medical assets. In addition, the participants in the market continue to grow with increasing offshore and local players.

The real estate market has evolved and matured over the last ten to fifteen years whilst transiting through an asset creation and stabilisation phase. This saw the development of several retail offerings across both primary and secondary cities and resilience through two economic down cycles and the COVID-19 pandemic to the current consolidation or portfolio optimisation phase with the initial seed capital and investors being substituted with permanent capital to complete the investment cycle.

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From a geographical perspective, Nigeria and Ghana are core markets in the region given the size and scope of opportunities across segments. The real estate asset class is long-term in nature and will naturally be susceptible to macro headwinds. However, this has also demonstrated the resilience of the asset class as it has navigated a number of shocks over the past five to six years. A key impediment to growth remains capital and whilst we had seen a growth in offshore capital investments over the past decade which developed several retail mall and commercial office assets in the market, activity levels have been somewhat muted in recent years from a scale perspective. Liquidity in the asset class is key to further unlocking investment in the sector and there needs to be a deepening of both institutional investors and developers to fully complete and optimise the investment cycle. In this regard, Stanbic IBTC has worked collaboratively and continues to engage key stakeholders as a thought leader in unbottling constraints.

Stanbic IBTC Bank continues to support its key clients with bespoke and innovative debt structuring solutions tailored specifically to the funding requirement, which is critical for developing real estate infrastructure on the continent.

Financing real estate projects requires a deep understanding of each asset class and underlying cash flow capabilities through economic cycles given the long-term nature of the asset class. Thus, being able to engage collaboratively with clients in proffering unique solutions, which support asset creation and stabilise fundamental to growth, is critical.

In addition, given our strong investment banking capabilities, we are able to deliver end-to-end capital formation benefits through the asset creation cycle via traditional debt solutions to each special purpose vehicle until the consolidation phase with portfolio-type deal structures which are increasingly flexible and accretive to the client growth strategy.

For more enquiries on our real estate financing solutions, email [email protected].

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