Madison has big plans for Africa


Nick Wilson


LISTED property asset manager Madison Property Fund Managers is planning large-scale property projects in Angola in particular and Namibia.
These are in the main mixed-use developments including retail, residential, offices and industrial property, as well as hotel opportunities.
The company is also “assessing” opportunities in Nigeria and Ghana. But Mike Flax, an executive director of Madison who was speaking to delegates at the 2007 Retail Real Estate World Summit at the Cape Town International Convention Centre yesterday, said that while there were “great opportunities in Africa in terms of extracting high returns” there was also a “myriad of risks”.
Flax said the “main hurdle” for companies trying to do business in other parts of Africa, excluding countries such as SA, Botswana, Namibia and Mauritius, was “getting security of tenure”. He said there were sometimes no deeds offices where properties could be registered.
A second risk was corruption, which “pushes up the cost of doing business in Africa and is contrary to the rules, ethics and corporate governance that SA listed companies and international companies” abide by.
“There is a perception that property development is a gold mine that all government officials feel they have a right to tap into. Everyone is asking for handouts, a percentage of equity payments, to release building materials.”
A lack of infrastructure in certain African countries was also a big problem. In some countries finding a hotel room or getting a flight was challenging.
But he said African countries needed “pioneers to go in there and build up the real estate and infrastructure”.
Flax said that, fortunately, the Chinese were already providing a lot of infrastructure in African countries in terms of barter deals where they built roads and necessary infrastructure in exchange for obtaining mining and oil rights. “China is putting in the infrastructural backbone.”
He said Africa was the forgotten continent and that often the great gains made by SA and other countries were ignored by international financial news reports.
Two issues largely ignored were the excellent returns South African real estate had produced, and that more than 40% of African countries were showing GDP growth of more than 7% this year.
Flax said Angola, for instance, would this year show GDP growth of more than 20%.
He said China, in terms of its barter agreements, was “colonising parts of Africa by stealth”.
“The Chinese are in Africa. They may not be exploiting real estate opportunities, they are there for commodities.”
In terms of Madison’s involvement in other parts of Africa, Flax said the important feature was to have local partners it could trust.
“These are people with access to government, although governments do change and you can’t bank on their government contacts. You bank on their expertise, which is more important.”

PS: I particularly like the sentence:"The Chinese are in Africa. They may not be exploiting real estate opportunities, they are there for commodities.”:lol::lol::lol::lol::lol::lol::lol::lol::lol: What a joke? This guy certainly is completly unaware of the Chinese tactics and strategy! China´s involvement is long-termWell, let him continue to dream...as long as he brings in the real estate projects!

The same American guy during real estate conference in Cape Town


International Council of Shopping Centres World Summit In Cape Town Tackles Pros and Cons of Development in Emerging Countries

Developing retail centres in emerging countries - do the increased rewards outweigh the high risk?

This was the core question discussed by Mike Flax, Executive Director of Madison Property Fund Managers, when this week he joined a panel of high profile international property investors for the Thursday morning session of the 2007 International Council of Shopping Centres Summit at the CTICC.

For the first time in the ICSC's history this conference was held in Cape Town (from 4th to 6th October). Over 2 000 delegates from 40 countries attended. They were offered some 15 talks followed by discussions as well as a tour of South Africa's major shopping centres in Cape Town, Johannesburg and Durban.

Flax's fellow panel members were George Jautze, Chairman and CEO of Ing Real Estate, the giant Netherlands group which operates internationally, Lukas Casey, CEO of IFC (The International Finance Corporation which has headquarters in Washington) and Dr Seek Ngee Huat, President of GIC Real Estate, the Singapore government's property investment arm and one of the major players in property investment worldwide.

The panel focussed on the situation facing property developers looking to diversify into emerging countries. Flax said that First World developers are now showing greater interest in Eastern Europe, China, India and certain African countries for two main reasons: in their traditional operating areas high land and building costs, coupled to over-supply, have made returns unexciting, while in emerging countries those who get it right can achieve significant profit.

In his talk, said Flax, he had discussed mainly the African situation because in the twelve months since he was appointed Executive Director of Madison he had visited nearly a dozen African countries and Madison is confident that it can expand its development operations into some of these.

Right now, he said, the company is working on new developments in Luanda and Windhoek.

Fuelled by the commodities and oil boom, over 40 percent of African countries now have an annual GDP growth of over seven percent. This scenario, said Flax, makes them attractive to developers – but there are problems.

"One of the main challenges", he said, "is the lack of legal structures and sound law ensuring property ownership rights. Many African countries do not even have a Deeds Office and some have not yet grasped the fact that it is essential to guarantee property ownership if you wish to attract investment."

The situation, he said, is particularly difficult for the entrepreneur who in normal conditions would use his property as security for raising further finance to expand and diversify.

Then too, said Flax, in certain African countries there is still a possibility that a change in policy or government could lead to expropriation, a successful land claim or a handover of a significant equity stake. Once a project is initiated, he said, it may be slowed down and have cost overruns as a result of a lack of experienced local professionals, contractors and skilled artisans. Throughout much of Africa, he said, time is still not highly valued and a "hakuna matata" attitude among bureaucrats and business colleagues can be frustrating, while a lack of local suppliers often makes it necessary to import materials and in some cases to deal with corrupt customs officials. Rent and debt collection can also be difficult.

"To be successful in Africa, a property developer needs to be bold and have an insight into local conditions, and if possible a well-connected and reliable local partner – but in recent years we have seen a surprising number of Chinese, French, Portuguese, Brazilian, British, South African, Israeli and other developers making headway in Africa."

The Chinese, Flax commented, had been particularly adept at bartering infrastructural development for commodity rights but in at least three countries, Angola, and Ghana , they had left large numbers of workers without the right to return home once a project was completed.

None of the difficulties he outlined, said Flax, is insurmountable and the future for retail centre development in all emerging countries is better than it has been for some time. The rewards, he repeated, can be significantly higher than in already developed territories, but it may take a decade or more for the emerging world to attract the massive capital inflows which have gone into the Middle East and Asia. If even a portion of these could be diverted to Africa, he said, they would be substantial help in raising living standards.

PS: An increasing number of South African investors making headways into Africa? So SA is not Africa?:lol::lol::lol:

Nevertheless, this sounds really promising....I love the competition beginning to take shape!:cheers:

The same American guy during real estate conference in Cape Town


PS: An increasing number of South African investors making headways into Africa? So SA is not Africa?:lol::lol::lol:

Nevertheless, this sounds really promising....I love the competition beginning to take shape!:cheers:


Those Americans never change. If u want to get in in the business do it now because may be in a near future will be late. Africa is changing faster. Cut the b..l s...t :) and work, show some work. Right now:bash::cheers: