July 2, 2022
  • July 2, 2022

ESG should drive the real estate industry forward, say industry players

By on May 18, 2022 0

NAIROBI, Kenya May 18 – Environmental, social and governance (ESG) factors have become a key driver in the real estate sector, industry players have said.

Speaking at the 9th Annual East Africa Real Estate Investment Summit (EAPI) host, Kfir Rusin noted that it will be a driving force following the said increased activity from local, regional and international investors in the market, despite the impact of Covid-19 and the upcoming elections. .

ESG primarily focuses on sustainability, which is a key objective for the majority of investors these days.

According to Tilda Mai of Estate Intel, the East African property market is driven by the flight to quality and the need for flexibility.

“For example, despite a glut of supply in the Nairobi office market, Class A offices continued to outperform other classes, with some office parks such as the Garden city office park registering drop rates. occupancy of up to 90%. The same goes for Kampala and Dar es Salaam. With an influx of oil and gas occupiers expected in these markets, we expect demand for Class A office space to only intensify,” she said.

Mwai noted that these trends are also spilling over to the logistics industry, with the demand for purpose-built warehouses increasing over the past 5 years.

Nedbank CIB’s head of African property, Gerhard Zeelie, said future developments risk becoming useless if they are not ESG compliant.

“Massively, European, American and Middle Eastern investors are all focused on ESG and there are unlikely to be any tradable assets that are not basic ESG compliant.”

From an opportunity perspective, Zeelie confirms that she is actively seeking opportunities in Kenya and the wider region with particular interest in retail and light logistics.

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As he commented, “Nedbank is strengthening its market presence and we are focusing on light manufacturing and retail.”

And while the market has shown resilience, this year’s event is critical to the future prosperity of the industry as it provides a much-needed platform to engage and reconnect the network, he adds.

Echoing his peers in the banking sector, Niyi Adeleye, Head of Real Estate Finance for Africa Regions at Standard Bank; however, believes that it is increasingly essential to consider ESG, and not from a purely green perspective.

“ESG continues to be an increasingly important factor in our considerations and selection of deals. From an African perspective, we believe it is important to consider all parameters (environmental, social, governance) measures as they continue to be timely and relevant as the sector evolves in the markets.

“Our preferred real estate segments must be relevant to domestic and international sources of capital in the medium and long term, have a positive impact on the quality of life, improve the creation of social and commercial real estate infrastructure, have environmental and social impacts ; and support the development of real estate capital ecosystems in these markets. In this regard, we see interest in the industrial sector, affordable residential sector, corporate housing, demand-responsive commercial assets and alternative asset classes such as digital real estate, student housing and other similar alternative segments.