Despite the challenging economic environment over the past three years, the East African property market appears to be offering exciting potential for patient investors. While emerging market property faces certain headwinds – including inflationary pressures, rising global interest rates and liquidity squeezes – there are reasons to feel optimistic about the sector as a whole.

Over the past 18 months Absa Corporate and Investment Banking has made significant investments in East African property deals, working on a number of landmark transactions.

We see several key themes emerging in the African commercial property market: Kenya is strong but it’s not just a Kenyan story. While the country has been a standout in the East Africa region, we have seen increased interest in Uganda and Tanzania. This regional hub is seeing increased activity as investors seek out opportunities in growth markets.

With increased regional travel and investment in local infrastructure, we expect these hubs to continue to attract investment. We are keeping a close eye on how the possibility of further lockdowns may affect travel and investment decisions.

The ability to lend in hard and local currency, as well as on a cross-border basis, is a competitive advantage. As Absa has grown its presence in the region, one of the competitive advantages we have enjoyed is that we are able to facilitate transactions in local and hard currencies and on cross-border bases in multiple currencies.

This was highlighted when we executed a property development transaction in Nairobi (while under lockdown restrictions), with SA as the booking centre for the debt transaction and collaborating across four regions in different time zones.

This requires a banking partner with a footprint and balance sheet in multiple jurisdictions and a keen understanding of domestic markets. On top of this, we believe that in a post-Covid world, emerging market lenders can no longer simply rely on vanilla debt structures. The ability to build debt structures which can respond to market shocks will be key.

Shifting focus of property assets

In the past assets such as retail and accommodation property were in vogue as the consumer economy developed with a growing middle-class.

In more recent years, there has been a surge in projects involving data centres, logistics warehouses and, after lockdowns and supply chain disruptions, there has been a focus on on-shore manufacturing that will drive growth in the Industrial sector (an asset class that maintained value during the pandemic).

Environmental, social and governance (ESG) issues integrate well with the property sector.

Affordable and student housing projects are attracting much interest from ESG-focused investment funds and our specialist team and knowledge of our markets are expected to enable a number of new projects over the next 12 months.

We are also excited by the innovations happening in this space.

While there are certain headwinds facing global debt and equity markets as well as geopolitical tensions, we are confident that the East African property market offers clear value for investors.

We take enormous pride in the fact that we have a growing and performing property book in East Africa and across our Pan African footprint. This speaks to the calibre of our clients and the risk mitigation strategies that we have invested in over the past two years, and we look forward to partnering with active investors and developers as they seek to grow their footprint on the continent.

• Joshua is head Commercial Property Finance, ABSA Regional Operations