Geographic Diversification Issues in Real Estate Markets in Africa

Abstract

The purpose of this paper is to establish the barriers to entry in African real estate markets from a South African investor's perspective. Questionnaires were administered to 36 listed property companies on the Johannesburg Stock Exchange and data on diversification strategies was gathered from annual reports. We find that property rights are the most substantial market selection criteria that South African listed real estate companies consider and the main barrier to entry into the African markets is legal and title risk. We also find that geographic diversification within South Africa is a strategy mostly adopted by listed South African real estate companies. Central Africa is ranked as the region with the highest criteria for barriers to entry while Nigeria ranked highest in terms of country. Ghana is an investment destination for South African real estate investors. For African countries to attract real estate investment from South Africa, they need to improve their legal and property rights regulations.