The African Property Fund: A Quick Guide to Investing in Africa

Africa is the world’s fastest-growing continent. With its growing middle class and technological advancements, Africa has the potential to become one of the world’s richest continents. The African real estate market is projected to grow at a CAGR of 5.3% from 2015 to 2020. There are a number of reasons for this growth. First, the population of Africa is expected to continue to grow. Second, the influx of foreign capital from the West is creating a new middle class in many African countries. Third, Africa’s natural resources are attracting major corporations and international investors.

With all of these factors working in its favor, why aren’t more people investing in African real estate?

Real Estate in Africa: A Brief History

Real estate has been an important part of African economies for centuries. In fact, some of the oldest real estate in the world can be found in Africa. The Great Pyramids of Giza and the Hôtel de Crillon in Paris are among the world’s most famous examples of ancient African real estate.

As the continent’s population began to grow in the 20th century, so did its demand for real estate. By the end of the century, most African countries had begun to liberalize their real estate markets. As a result, foreign investors snap up large tracts of land in some of the most desirable real estate locations in Africa.

Barriers to Investing in Africa

Some of the largest financial institutions in the world have begun to offer investment products targeted specifically at the African market. However, only a few of these products have made it to the U.S. market. The primary reason so few investment funds are available to American investors is that the regulations surrounding funds that are allowed to sell to Americans are very strict. These regulations are in place to protect American investors from being taken advantage of by overseas companies.

Currently, the only way for most Americans to invest in African real estate is through the African Property Fund (APF). This fund provides American investors with the opportunity to buy a portion of the equity of a real estate portfolio managed by African professionals.

What is an African Real Estate Fund?

An African real estate fund is a pooled investment vehicle created by an African investment company to buy and hold a variety of real estate assets in Africa. The investor owns shares in this pooled fund, which typically invest in a number of real estate projects throughout the continent.

The investor pays a management fee to the African real estate fund in addition to a performance fee based on the fund’s accrued returns. The management fee covers the costs of investment management, marketing, and due diligence. The performance fee is charged in order to compensate the fund for any profits the fund’s assets generate.

How to invest in African Real Estate Funds

The first step toward acquiring shares in an African real estate fund is to look into open-ended mutual funds or exchange-traded funds (ETFs) that invest in Africa. Many of these funds are listed on American exchanges, but some are available only to foreign investors.

The major obstacle to investing in African real estate funds is the high minimum investment of $10,000 required by most American firms. This is a very large sum of money for most people to invest, and it’s an even larger sum for those without financial backing from a company or wealthy relatives.

Fortunately, there are a number of investment platforms that allow individuals to invest in African real estate funds and earn profits through a rental program. This allows individuals to invest as little as $25, and it pays them a small return each month.

Conclusion

It is clear that Africa has a great deal of promise as a region for real estate investment. However, the African real estate market remains relatively underdeveloped, particularly compared to Asia and Latin America. This is likely to change in the coming years, as the continent’s population continues to grow and major corporations and investors begin to take an interest.