Retail investor Vukile leaves Namibia
Vukile owns the Katutura Shopping Centre, Ondangwa Shoprite Centre, Oshakati Shopping Centre, Oshikango Shopping Centre and Windhoek 269 Independence Avenue.
Augetto Graig
The Vukile Property Fund is pulling out of Namibia. As part of their recently launched Debt Capital Market Deal Roadshow, the retail property giant let slip that is intends to shift its focus exclusively to South Africa and Spain.
Vukile owns the Katutura Shopping Centre, Ondangwa Shoprite Centre, Oshakati Shopping Centre, Oshikango Shopping Centre and Windhoek 269 Independence Avenue. According to chief executive officer Laurence Rapp, these properties are no longer part of the fund's plans for the future.
“Vukile has come a long way since we first invested in Namibia over a decade ago. Now our clear focus is investing in retail properties in South Africa and Spain, which means all our Namibian assets have become non-core to our capital allocation strategy,” he said.
New strategy
Part of the new strategy is to improve the loan-to-value ratio of the fund, but it is not in a hurry to part with the multimillion-dollar properties in Namibia though.
“The possibility of exiting our Namibian assets has been on the table for some time, and was clearly spelled out to Vukile stakeholders at our FY20 interim results, which were announced last year. We are currently in negotiation for a trade sale, and while the terms of this are confidential, I can confirm that Vukile would only consider a transaction that is right for our overall investment strategy, at the right price,” Rapp said last week.
Vukile came into the Namibian market as part of its expansion and acquisition phase through 2005.
“We entered the Namibian market as part of our bigger takeover over of the then named MICC Property Income Fund over ten years ago which held a few properties in Namibia at the time,” Rapp said.
He says the move is not due to any particular concerns regarding retail property investments in Namibia.
“We are disposing of our Namibian assets because we have focused our capital allocation strategically in our two primary markets, South Africa and Spain, and certainly not because of worries about the Namibian retail property market,” he said.
Market
Nonetheless Namibia's property market is going through difficult times, if the housing market is any indication. According to the latest First National Bank housing index, on average, national housing prices last year recorded the lowest prices yearly since 2015, and by June, it cost a household roughly N$1.068 million to buy a house, compared to N$1.110 million in 2015.
In an effort to address this concern the Bank of Namibia has taken the initiative to loosen up the property market by reducing the size of deposit required for one to get additional residential property, local media reports.
The government gazetted amendments to the loan-to-value (LTV) ratio law on 7 November 2019 by repealing the 2016 regulations which required buying residential property buyers to pay a high deposit on additional properties. As from November 2019, commercial banks can fund up to 90% of an individual's second residential property.
Investors
For local property investors good news from last year is that rental yields, indicating the return a landlord is likely earn on the rental of a property, showed a moderate increase from 7.6% recorded at the end of September 2018 to 7.8% recorded at the end of September 2019.
“The Namibian rental market provides much higher yields when compared to other jurisdictions in sub-Saharan Africa including Kenya, South Africa and Zambia where rental yields are 6.7%, 3.9% and 0.14% respectively,” according to the 20 January 2020 rental index report, released by Ruusa Nandago, FNB Group Economist.
– [email protected]
The Vukile Property Fund is pulling out of Namibia. As part of their recently launched Debt Capital Market Deal Roadshow, the retail property giant let slip that is intends to shift its focus exclusively to South Africa and Spain.
Vukile owns the Katutura Shopping Centre, Ondangwa Shoprite Centre, Oshakati Shopping Centre, Oshikango Shopping Centre and Windhoek 269 Independence Avenue. According to chief executive officer Laurence Rapp, these properties are no longer part of the fund's plans for the future.
“Vukile has come a long way since we first invested in Namibia over a decade ago. Now our clear focus is investing in retail properties in South Africa and Spain, which means all our Namibian assets have become non-core to our capital allocation strategy,” he said.
New strategy
Part of the new strategy is to improve the loan-to-value ratio of the fund, but it is not in a hurry to part with the multimillion-dollar properties in Namibia though.
“The possibility of exiting our Namibian assets has been on the table for some time, and was clearly spelled out to Vukile stakeholders at our FY20 interim results, which were announced last year. We are currently in negotiation for a trade sale, and while the terms of this are confidential, I can confirm that Vukile would only consider a transaction that is right for our overall investment strategy, at the right price,” Rapp said last week.
Vukile came into the Namibian market as part of its expansion and acquisition phase through 2005.
“We entered the Namibian market as part of our bigger takeover over of the then named MICC Property Income Fund over ten years ago which held a few properties in Namibia at the time,” Rapp said.
He says the move is not due to any particular concerns regarding retail property investments in Namibia.
“We are disposing of our Namibian assets because we have focused our capital allocation strategically in our two primary markets, South Africa and Spain, and certainly not because of worries about the Namibian retail property market,” he said.
Market
Nonetheless Namibia's property market is going through difficult times, if the housing market is any indication. According to the latest First National Bank housing index, on average, national housing prices last year recorded the lowest prices yearly since 2015, and by June, it cost a household roughly N$1.068 million to buy a house, compared to N$1.110 million in 2015.
In an effort to address this concern the Bank of Namibia has taken the initiative to loosen up the property market by reducing the size of deposit required for one to get additional residential property, local media reports.
The government gazetted amendments to the loan-to-value (LTV) ratio law on 7 November 2019 by repealing the 2016 regulations which required buying residential property buyers to pay a high deposit on additional properties. As from November 2019, commercial banks can fund up to 90% of an individual's second residential property.
Investors
For local property investors good news from last year is that rental yields, indicating the return a landlord is likely earn on the rental of a property, showed a moderate increase from 7.6% recorded at the end of September 2018 to 7.8% recorded at the end of September 2019.
“The Namibian rental market provides much higher yields when compared to other jurisdictions in sub-Saharan Africa including Kenya, South Africa and Zambia where rental yields are 6.7%, 3.9% and 0.14% respectively,” according to the 20 January 2020 rental index report, released by Ruusa Nandago, FNB Group Economist.
– [email protected]
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