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Gateway Real Estate Africa seeks over $200m for property development

By David Whitehouse
Posted on Friday, 6 November 2020 18:48

Gateway Real Estate is betting on developing data centres in Africa. REUTERS/Dylan Martinez

Gateway Real Estate Africa (GREA) will seek to raise more than $200m in equity early in 2021 to help develop its property pipeline, CEO Greg Pearson tells The Africa Report.

GREA’s development pipeline stands at more than $400m, Pearson says from Mauritius. New African data centres will account for more than 30%, with oil and gas, embassies, corporate offices, logistics and light industry also key sectors.

The COVID-19 pandemic has prompted public and private sectors to rely more heavily on data centres to keep essential infrastructure operating. According to Kabir Chal and Funke Okubadejo of the Actis investing firm, African data centre challenges include securing power, real estate and fibre connectivity.

That “may deter international strategic players” from entering on a greenfield basis, increasing the opportunities for investors experienced in developing African real-estate assets, they write.

As well as leading GREA, Pearson is co-founder of the Grit Real Estate Income Group, which trades on the London stock exchange, and in Mauritius. Grit seeks to attract income-seeking investors such as pension funds, while GREA concentrates on higher-risk property development which can provide higher returns, says Pearson. Grit has a 20% stake in privately held GREA, which it hopes will help to increase its net asset value (NAV), adds Pearson.

GREA is operating across Africa, except in South Africa. The company is willing to follow its clients into new countries, adds Pearson. Previous developments include the Anfa Place Shopping Centre in Casablanca, the OBO Ethiopia Corporate Accommodation Tower in Addis Ababa and a Bollore Africa Logistics warehouse in the Pemba port region of northern Mozambique.

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Despite a three-year old Islamic insurgency in the north of Mozambique, which has so far forced over 300,000 people to flee their homes, Pearson says GREA hasn’t been deterred from investing in projects there.

  • The country has been plagued by internal strife since the early 1990s, he notes.
  • “If there are good investment cases in Mozambique, we will continue to invest.”

Freedom of Movement

Grit said on October 26 that its NAV per share for the year to the end of June 2020 will fall about 19% from a year earlier, mainly due to a drop in value of its retail and hospitality assets.

  • Office, light industrial and corporate accommodation have been relatively unaffected by COVID-19.
  • Rent collection averaged over 90% in August and September.
  • Grit, which omitted its final dividend, expects to resume interim and final payouts for the year to June 2021.

Mauritius risks being a net loser from COVID-19 unless it can give visibility on freedom of movement. Gateway and Grit both have their head offices on Mauritius. Inability to leave the island since March has made managing the portfolios more difficult.

Restrictions on travel have been partly eased. Since October 1, Mauritian nationals can re-enter the country, along with residents and long-stay tourists. Passengers need a negative COVID-19 test prior to travel, and face a 14-day quarantine on arrival.

Both companies are considering moving managers from Mauritius to Dubai to ensure greater freedom of movement, says Pearson. Since, development managers need to be able to get on site, presently there’s no visibility on when managers can travel, he adds.

Although the Gateway plans to move managers are more advanced, the HQs of both companies will stay on Mauritius.

Bottom line

Data centres and infrastructure are set to displace retail and hospitality as Africa’s key construction markets.

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