Научная статья на тему 'The Profile and Significance of Listed Property Companies in Some Selected African Countries'

The Profile and Significance of Listed Property Companies in Some Selected African Countries Текст научной статьи по специальности «Экономика и экономические науки»

CC BY
26
28
Поделиться
Ключевые слова
Africa / profile / listed property companies / market value

Аннотация научной статьи по экономике и экономическим наукам, автор научной работы — Sadiq Tukur, Jamilu Shehu

This study investigates the significance and profile of Listed Property Companies (LPCs) in 10 African countries namely; Botswana, Egypt, Kenya, Mauritius, Morocco, Nigeria, South Africa, Tunisia, Zambia, and Zimbabwe respectively for the period of 10 years from 2006 to 2015., the profile and some key indicators of each respective country has been identified to determine the significance of each respective economy. The study uses secondary data obtained from Thompson Reuters DataStream to extract the number of companies in each country and their respective profiles. Descriptive statistics were used to analyze 64 Listed Property Companies using simple percentages. The study revealed that most of the African countries are Opaque with very few semi-transparent such as Kenya, Mauritius, and Botswana with the exception of South Africa which is the only transparent, the study further revealed that most of the companies are established between 2010 to 2015. Egypt has the highest number of property companies 29 represented by 45.31 % followed by South Africa with 16 Listed property Companies Represented by 25 % while Nigeria, Kenya and Zambia have the least number of companies with 1 each represented by 1.56%.

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Текст научной работы на тему «The Profile and Significance of Listed Property Companies in Some Selected African Countries»

The Profile and Significance of Listed Property Companies in Some Selected African Countries

Abstract. This study investigates the significance and profile of Listed Property Companies (LPCs) in 10 African countries namely; Botswana, Egypt, Kenya, Mauritius, Morocco, Nigeria, South Africa, Tunisia, Zambia, and Zimbabwe respectively for the period of 10 years from 2006 to 2015., the profile and some key indicators of each respective country has been identified to determine the significance of each respective economy. The study uses secondary data obtained from Thompson Reuters DataStream to extract the number of companies in each country and their respective profiles. Descriptive statistics were used to analyze 64 Listed Property Companies using simple percentages. The study revealed that most of the African countries are Opaque with very few semi-transparent such as Kenya, Mauritius, and Botswana with the exception of South Africa which is the only transparent, the study further revealed that most of the companies are established between 2010 to 2015. Egypt has the highest number of property companies 29 represented by 45.31 % followed by South Africa with 16 Listed property Companies Represented by 25 % while Nigeria, Kenya and Zambia have the least number of companies with 1 each represented by 1.56%.

Keywords: Africa; profile; listed property companies; market value.

Sadiq Tukur 1, Jamilu Shehu 1

1 Abubakar Tafawa Balewa University

Tawafa Belewa Way, P. M. B. 0248, Bauchi, 740272, Nigeria

DOI: 10.22178/pos.45-1

JEL Classification: R11

Received 26.03.2019 Accepted 27.04.2019 Published online 30.04.2019

Corresponding Author: Sadiq Tukur modybbo@yahoo.com

© 2019 The Authors. This article is licensed under a Creative Commons Attribution 4.0 License l^O—

INTRODUCTION

The significant increase of real estate securities in financial investment markets made real estate in Africa to continue receiving widespread attention and interest from both corporate bodies and the general public as one of the favorable and consistent opportunities, both the direct and indirect property investment has been regarded as an alternative way of investing in real estate. The acquisition of shares in property investment companies specializing in real estate activities has become a more popular investment in indirect property. Generally, the two fundamental investment decisions attributes are a risk and return. The process, in theory, could be limited to finding an investment option with the best risk-return ratio, uncertainties and risks are the most common features and characteristics of every form of investment not only property investment, and the only way to manage them is by combining the assets, which would yield better returns in a portfolio.

Africa is considered as an attractive expansion destination for investors due to the global mega-

trend such as rapid urbanization and demographic changes. Moreover, Real estate is becoming a driving factor influencing the changing face of entire cities and markets across the continent. Within this context, real estate is increasingly seen not only as a facilitator of business investment and economy but also as a potential source for a competitive advantage [17]. Real estate, according to [20], serves as an effective means of diversifying risk in a mixed-asset portfolio as a result of its long term strategic performance. Despite all of the above, direct investment in real estate is subject to some difficulties, it has for example been traditionally regarded as an investment that is involving so many funds to acquire and illiquid. Moreover, for an ordinary private investor, a direct property acquisition may be difficult as a result of the large amounts of capital needed, as well as the high cost of a transaction. An option for avoiding these difficulties may be the acquisition of shares in investment companies who are specialized in real estate investment. Real estate securitization has been therefore identified as the logical answer to the efficient demand for real estate diversified portfolio.

It provides the investors high liquidity advantage, with an indirect means by which small investors could invest in property and enjoy the economic benefits.

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Listed property companies are companies that own income-producing properties for investment purposes, this entails investing in a portfolio of commercial property assets comprising of, residential commercial, retail, and warehouse which is managed by a specialist property fund manager. The listed property sector reveals information about the changes in property values in a timely manner as opposed to the periodic reports that are compiled either monthly or quarterly [10]. Investors receive a share of the rental income collected from the property depending on the number of shares an investor has in the short term and they will benefit from any capital gain that is realized in the long term. Price fluctuations observed in property investments are often attributable to the changes in property fundamentals [10]. Authors [10] conclude that the stock market provides reliable measures of return for the property market which is considered to be one of the most important asset classes and yet not much research has been done on this subject.

Property companies are one of the major players in the real estate market. Listed property companies are normally engaged with business activities such as real estate development, investment and trading with a diverse portfolio of investment such as residential, commercial property and trading. Listed property companies provide an investment tool for investors to invest in real estate indirectly. Shares in listed property companies allow people to buy real estate ln piecemeal. Shares in these companies are just the same as other stock markets which are highly liquid and are allowed to be traded many times on a daily basis. This contrasts with investment in property trading which takes several months to complete a transaction. This indirect property investment should reflect the performance underlying real estate in certain countries itself. The value of listed property companies relies on company shares which gain from the relationship to the value of the real estate it owns and the income from business operations. In the capitalist system, the value will fluctuate depending on the economic situation and value of real estate owned. Investors are no longer considering property as a single investment and are instead including property investment with other asset classes. Property investment has to compete

against these other classes, primarily equities and bonds. Expected return, risk, and diversification are all important in determining the allocation to these assets.

Previous studies on the significance of the property in mixed-asset portfolios concentrated only on certain countries such as Singapore, Japan, Malaysia, Hong Kong, Australia, the US, and the UK. There is a lack of in-depth empirical research conducted specifically on the African property market; especially on listed property companies. The reason may be due to a lack of data which is related to the property industry. The data concerning the real estate market in African countries has been extremely limited, resulting in a lack of sufficient information regarding real estate assets in many investment portfolios in Africa.

Africa's Property market has traditionally lagged behind many emerging and developed economies in the world. The various levels of property investment in Africa are low compared to global standards and there exist a significant potential opportunity to explore by investors. The African property market is in a good positioned to harness an increasing growth prospect, with over 400 million urbanized populations, constituting about 40 % of the total population in the continent. The African property market is rapidly growing and attracting more interest from international investor's occupiers and developers from different part of the world. RICS is proceeding with its expansion in Africa which as a result will allow property sectors to attain international standards.

Investors are widening and expanding their activities across a wider range of geographical locations, driving development in infrastructure and thereby supporting economic growth. Improvements in property development, alongside wider improvements in the business operating environment, can be important accelerators in achieving greater international investment and fast-tracking economic growth. As mature economies continue to face economic challenges and stagnating economies, more investors are considering expanding into Africa to benefit from its high growth potential. This is resulting in a growing demand for real estate, corporate business infrastructure, and the consequent development of the commercial real estate sector. However, there is lack of extensive research carried out in the past covering any of the African countries apart from few countries such as Nige-

ria and South Africa which brings limited literature on the performance of property listed companies over the past years. The performance of property securities in most of the African countries have not been analyzed due to its infancy stage, problems of access to data, lack of awareness and expertise in countries, particularly on property investment. In order to determine whether property investment has performed well or not, it requires measuring performance so that management of investment and related decisions can be determined on a regular basis.

The limited flow of foreign investment into the property markets in Africa generally, has been attributed in part to lack of investors' confidence, resulting from a low level of research activities and limited information (Lim et al., 2006). The markets are therefore perceived as too risky by international investors. To sustain and increase the flow of investment capital into the real estate securities in the African countries requires research to be carried out on the significance of the property sector from time to time which will reveal the performance of the listed property companies and attract foreign investors (Tables 1, 2).

Table 1 - Key Economic Indicators

Risk World

Country Population rate 2015, million GDP 2015, $Billion Unemployment Rate 2015 Inflation Rate, % Corruption perception index 2014 Global Competitiveness index 2014 Rating (E= Most Risky) bank doing business (189) 2015

Botswana 2.2 15.2 17.8 3.9 28 74 B 174

Egypt 88 286.4 8.1 10.1 88 119 C 112

Kenya 45 60.9 42 6.9 139 90 C 136

Mauritius 1.3 12.6 7.9 3.2 45 39 B 28

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Morocco 33 110.0 5.5 0.4 88 72 C 74

Nigeria 177.2 570.4 6.4 8.1 136 127 D 170

S/Africa 54 350.1 24.3 6.1 61 56 C 43

Tunisia 10.9 26.6 15.2 4.9 76 87 C 60

Zambia 14.6 13.8 15 7.8 76 96 C 111

Zimbabwe 12.6 13.6 70 0.1 150 124 D 171

Source: [8, 12, 22, 23].

Table 2 - Global Real Estate Transparency Index

African countries)

Transparency Country 2014 2012 Difference Score

Rank Score Rank Score

Semi-Transparent South Africa 20 2.09 21 2.18 +1 -0.09

Semi-Transparent Kenya 48 3.09 65 3.70 +17 -0.09

Mauritius 51 3.14 59 3.43 +8 -0.29

Botswana 55 3.29 56 3.36 +1 -0.07

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Low Transparent Egypt 63 3.49 77 3.88 +14 -0.39

Morocco 72 3.67 76 3.88 +4 -0.21

Zambia 76 3.76 78 3.93 +2 -0.17

Uganda 82 3.97 - - - -

Opaque Angola 83 3.98 95 4.58 +12 -0.6

Ethiopia 86 4.03 - - - -

Mozambique 88 4.20 - - - -

Senegal 90 4.20 - - - -

Libya 92 4.23 - - - -

Ghana 95 4.36 90 4.41 -5 -0.05

Algeria 98 4.46 93 4.49 -5 -0.03

Nigeria 101 4.52 96 4.58 -5 -0.06

Tunisia 102 4.63 89 4.38 +13 +0.25

Not Covered Zimbabwe - - - - - -

Source: [13].

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Tables 2 shows the real estate transparency index and ranking of African countries 2012-2014, with South Africa being the only transparent market among the number of countries, South African property market has been the most performing market of real estate in Africa. Botswana, Kenya, and Mauritius are the semi-transparent market, Egypt, Morocco, Zambia, and Uganda are the low transparent real estate markets while most of the countries from Africa are Opaque, these include Angola, Ethiopia, Mozambique, Senegal, Libya, Ghana, Algeria Nigeria, and Tunisia. However, Zambia is not covered in the transparency index of 2012 as well as in 2014. The real estate transparency ranking of the African countries 2014 shows that South Africa is at the extreme top and is being ranked #20 followed by Kenya 48, Mauritius #51 and Botswana #55. Countries in the middle of the ranking include Egypt #63 and Morocco #72. Countries at the bottom of the ranking are Nigeria #86, Zambia #92 and Zimbabwe #192 respectively.

MATERIALS AND METHODS

Data concerning Listed Property Companies from 10 African Countries (Botswana, Egypt, Kenya, Mauritius, Morocco, Nigeria, South Africa, Tunisia, Zambia, and Zimbabwe) covering 10 years from January 2006 to December 2015 was obtained from Thompson Reuters DataStream to analyze the significance and profile of Listed Property Companies in Africa. The profile and some key indicators of each respective country were identified to determine the significance of each respective economy. The quantitative data were analyzed using descriptive statistics, simple percentages are used in analyzing the data obtained (Table 3).

Table 3 - Listed property Companies, Date Listed and Market Value

No Country / Companies Date Listed Market Value, $ Mln

Botswana Listed Property Companies

1 Primetime Prp Holding 2007 49.43

2 RDC Properties 2011 49.08

3 Turnstar Holdings 2002 125.78

4 New African 1996 136.01

Properties

Egypt Listed Property Companies

1 Egyptian Rlst. Consort 2005 0.85

No Country / Companies Date Listed Market Value, $ Mln

2 Arab Rlst. Inv. (Alco) 2011 21.4

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

3 Cairo Development Inv. 1992 22.9

4 Delta Con. & Rebuilding 1992 23.4

5 Golden Pyramid Plaza 1997 783.9

6 National HSE. Prof. Synd. 1995 16.5

7 Rowad Tourism (Al Rowad) 1995 81.3

8 Zahraa Maadi Inv. & Dev. 1996 103.2

9 Gulf Canadian Rlst. 2011 5.4

10 National Rlst. Bank Dev. 1992 5.3

11 Araba Land Reclaim 1996 3.95

12 Obour Rlst. Investment 1998 2.57

13 Egypt Brit National Dev 1999 234.34

14 Taalat Moustafa Group 2007 2956.04

15 Palm Hills Devs. Sae 2006 715.68

16 Development & Engr. 1996 24.78

17 Mena Tourism & Rlst. Inv. 1995 16.71

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

18 Six of October Dev. & Inv. 1998 609.85

19 Egyptians Housing Dev. 1994 72.83

20 Egyptians Inv. & URD. 2011 16.15

21 Ismailia Dev. & RLST. REIT 2011 28.2

22 North Africa Real Estate 2012 45.73

23 United Housing & Dev. 1994 172.52

24 El-Kahera Housing & Dev 1995 115.99

25 Holiopolis Housing 1995 934.23

26 Medinet Nasr Housing 1995 909.96

27 Arab Dev. & Real Estate 2011 21.40

28 Misr Elsalam Dev. & Tech 2015 13.11

29 Emaar Misr for Dev. 2015 1,303.79

Kenyan Listed Property Companies

1 Home Africa 2013 16.38

Mauritius Listed Property Companies

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

1 Covifra 1972 12.35

2 Rockcastle Glre. 2012 1,831.89

3 New Frontier Properties 2014 1.55

Morocco Listed Property Companies

1 Balima 1946 20.82

2 Douja Prom Addoha 2006 1,066.43

No Country / Companies Date Listed Market Value, $ Mln

3 Alnc. Dvppt. Immobilier 2010 174.77

4 Res Dar Saada 2014 456.91

Nigeria Listed Property Companies

1 UACN Property Dev. 1997 84.67

South Africa Listed Property Companies

1 Ingenuity Property Invs. 2000 96.83

2 Tradehold 1970 252.29

3 Quantum Property Group 1984 2.53

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

4 Putprop 1988 24.26

5 Orion Real Estate 1991 15.34

6 Adrenna Property Group 1998 3.40

7 Delta Africa Prop Holdings 2002 83.37

8 Bonatla Pr. 1996 3.09

9 Visual International 2006 5.8

10 Freedom 2014 33.9

11 Attacq Ord 1994 1,503.17

12 The Pivotal Fund 2005 477.88

13 Acsion Limited 2006 371.88

14 Stenprop 2015 460.63

15 Renergen Limited 2015 2361

16 Balwin Properties 1996 2546

Tunisia Listed Property Companies

1 Simpar 1996 28.46

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

2 Sc. Immob. Tunis- 1997 14.53

Seoudien

3 Essoukna 2006 15.03

Zambia listed Property Companies

1 Real Estate 1996 32.45

Investment BIA.

Zimbabwe Listed Property Companies

1 Dawn Properties 2003 24.57

2 Pearl Properties (2006) 2007 34.67

Source: [Thompson Reuters DataStream, 2015]

RESULTS AND DISCUSSION

The main results of the study are presented in Tables 4, 5.

Table 4 above highlights the range of years and corresponding percentages which countries were listed on Various Stock Exchange of each respective country. The highest number of companies of up to 17 represented by 26.56 % were listed between the years of 2011 to 2015 followed by 1996 to 2000 which also recorded 16 companies 25 % respectively.

Table 4 - Year Company Listed on Stoc k Exchange

Year Number of companies Percentage %

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

1986 and 3 4.69

before

1991-1995 13 20.31

1996-2000 16 25.00

2001-2005 6 9.38

2006-2010 9 14.06

2011-2015 17 26.56

1986 and before was the years with least number of listed companies recording only 3 represented by 4.69 % and 2001 to 2005 with 6 companies represented by 9.38 % respectively.

Table 5 - Country LPCs and their respective Market Value

Country No of Companies % of companies Market Value, $ mln % of Market value

Botswana 4 6.25 360.3 1.66

Egypt 29 45.31 9233.69 42.65

Kenya 1 1.56 16.38 0.08

Mauritius 3 4.69 1845.79 8.53

Morocco 4 6.25 1718.93 7.94

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Nigeria 1 1.56 84.67 0.39

South Africa 16 25.00 8241.37 38.06

Tunisia 3 4.69 58.02 0.27

Zambia 1 1.56 32.45 0.15

Zimbabwe 2 3.13 59.24 0.27

Total 64 100 21650.8 100

Table 5 above highlights the number of companies in each respective country, Egypt has the highest number of companies with 29 companies represented by 45.31 % with a market value of $ 9,233.69 million (42.65 %), followed by South Africa with 16 companies with 25 % with a total market value of $8241.37 million (38.06 %). Kenya, Nigeria, and Zambia have the least number of company with 1 each represented by 1.56 % and a market value of $16.38 million (0.08 %), $84.67 (0.39) and $32.45 (0.15).

CONCLUSION

The study investigates on the Significance and profile of Listed Property Companies in some selected African countries. The study also developed a profile of African listed property companies obtained from DataStream. The study explored the number of listed property companies

in each country, the date listed on the stock exchange and its market value in USD. Egypt has the highest number of companies followed by South Africa. The year 2011 to 2015 has witnessed the highest number of Property Companies listed on the stock exchange while 1986 and before has the least number of companies listed on the various stock exchange. This clearly shows that more companies are listed in recent years

This information will help the investors to know well and study about each company they are investing their money into, as investors don't in-

vest blindly into the market but need convincing evidence in reality. The government of the African countries should make Data on property stocks and broader stock market available and accessible in African universities and institutions by subscribing to Thompson Reuters data stream and other sources of readily available data on stock indices which will facilitate and promote research to be carried out from time to time basis, thereby helping stakeholders and investors in directing their capital sum for investment without any fear of losing their money.

REFERENCES

1. Abdullah, N., & Wan Zahari, W. (2011). Performance of Property Listed Companies in Malaysia:

1996-2007. In Global Business and Social Sciences Research Conference, 20-21 June 2011. Retrieved from http://repo.uum.edu.my/3721

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

2. Abdul-Rasheed, A., & Tajudeen, A. (2006). Performance Analysis of Listed Construction and Real

Estate Companies in Nigeria. Journal of Real Estate Portfolio Management, 12(2), 177-85.

3. Astill, J. (2015, January 8). The twilight of the resource curse? The Economist. Retrieved from

https://www.economist.com/middle-east-and-africa/2015/01/08/the-twilight-of-the-resource-curse

4. Baum, A. (2008). The emergence of real estate funds. In A. Peterson (Ed.), Real Estate Finance: Law,

Regulation and Practice (pp. 145-178). London: LexisNexis.

5. Central Intelligence Agency. (2012). WorldFactbook2012. Retrieved from

https://www.cia.gov/library/publications/download/download-2012/index.html

6. Central Intelligence Agency. (2015). World Factbook2015. Retrieved from

https://www.cia.gov/library/publications/download/download-2015/index.html

7. Chong, S. W., Geh, J. W., Tan, Q. S., Tey, C. K., & Yap, K. T. (2014). The risk-adjusted performance of

Malaysia listed property companies: a comparative analysis (Doctoral thesis). Retrieved from http://eprints.utar.edu.my/1443/1/FBF-2014-1201324.pdf

8. Economist Intelligent Unit. (2019). Country Forecast. Retrieved March 1, 2019, from

https://store.eiu.com/product/country-forecast

9. Emele, C. R., & Umeh, O. L. (2013). A fresh look at the performance and diversification benefits of real

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

estate equities in Nigeria: Case study of real estate equity and some selected common stocks. International Journal of Development and Sustainability, 2(2), 1300-1311.

10. Gyourko, J., & Keim, D. B. (1993). Risk and Return in Real Estate: Evidence from a Real Estate Stock

Index. Financial Analysts Journal, 49(5), 39-46. doi: 10.2469/faj.v49.n5.39

11. Hwa, J. K. (2002, January). Listed Property Companies in Malaysia: A Comparative Performance

Analysis. Retrieved from

http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=9F2FEB674F23B48D5C12A0EB21C C7708?doi=10.1.1.195.1308&rep=rep1&type=pdf

12. International Bank. (2014). Doing Business 2015. Retrieved from

http://www.doingbusiness.org/content/dam/doingBusiness/media/Annual-Reports/English/DB15-Full-Report.pdf

13. Jones Lang LaSalle. (2019). Transparency: Data, Disclosure & Disruption. Retrieved from

http://greti.jll.com/greti/transparency-Compared

14. Kim Nguyen, T. (2010). The Significance and Performance of Listed Property Companies in

Vietnam. Pacific Rim Property Research Journal, 16(2), 221-245. doi: 10.1080/14445921.2010.11104303

15. Kim Nguyen, T. (2011). The Significance and Performance of Listed Property Companies in Asian

Developed and Emerging Markets. Pacific Rim Property Research Journal, 17(1), 24-47. doi: 10.1080/14445921.2011.11104316

16. Kim Nguyen, T. (2011). The Significance and Performance of Listed Property Companies in the

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

Philippines. Pacific Rim Property Research Journal, 17(2), 260-286. doi: 10.1080/14445921.2011.11104328

17. Knight Frank. (2015). Real Estate Markets in a Continent of Growth and Opportunity. African Report

2015. Retrieved from https://www.africanbusinesscentral.com/wp-

content/uploads/2015/08/Africa-Report-2015-Real-Estate-Markets-in-a-Continent-of-Growth-and-Opportunity-Knight-Frank.pdf

18. Lim, L. C., McGreal, S., & Webb, J. R. (2006). Perception of Real Estate Investment Opportunities in

Central/South America and Africa. Journal of Real Estate Portfolio Management, 12(3), 261-276.

19. Newell, G., Wing, C. K., Kei, W. S., & Hiang, L. K. (2009). The significance and performance of

property securities markets in the Asian IFCs. Journal of Property Research, 26(2), 125-148. doi: 10.1080/09599910903441721

20. Ratcliffe, J. (2009). Urban Planning and Real Estate Development. London: Routledge. doi:

10.4324/9780203935729

21. The World Bank Africa Region. (2011 March). Africa's Future and the World Bank's support to It.

Retrieved from

http://siteresources.worldbank.org/INTAFRICA/Resources/AFR_Regional_Strategy_3-2-11.pdf

22. Transparency International. (2015). Corruption Perception Index2014: Results. Retrieved March 1,

2019, from https://www.transparency.org/cpi2014/results

iНе можете найти то, что вам нужно? Попробуйте сервис подбора литературы.

23. World Economic Forum. (2014). Global Competitiveness Report 2014-15. Retrieved from

http://www3.weforum.org/docs/WEF_GlobalCompetitivenessReport_2014-15.pdf