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Nora Rothacher, Doctoral Candidate IREBS University of Regensburg

Maturity indicators for emerging real estate markets – Exemplified by the comparison of the Tanzanian and South African property market maturity. Nora Rothacher, Doctoral Candidate IREBS University of Regensburg. AGENDA. Background Global Market Indicators, Benchmarking and Indices

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Nora Rothacher, Doctoral Candidate IREBS University of Regensburg

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  1. Maturity indicators for emerging real estate markets – Exemplified by the comparison of the Tanzanian and South African property market maturity Nora Rothacher, Doctoral Candidate IREBS University of Regensburg

  2. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  3. Background Global Market Indicators, Benchmarking and Indices Global Market Indicators – Differentiation to Benchmarking and Indices • Indexing in general considers companies with similar assets in the peer universe; these peers are therefore exposed to similar risks from a shareholder perspective. • Goal of indexing • Performance assessment (like e.g. total return) of investment and asset management activities which exclude the impact of external factors, such as property market cycles • Informing the property investment process (allocation, selection and management)  Basis for benchmarking • The primary goal of benchmarking is the enhancement of particular products and processes compared to a benchmark ("best in class").

  4. Background Global Market Indicators, Benchmarking and Indices Global Real Estate Market Indicators for Country Analysis • IPD global coverage to promote market transparency by providing overall statements of a country’s investment property return, comparing property returns with other assets, identifying trends in major market sectors and segments in each country

  5. Background Global Market Indicators, Benchmarking and Indices Global Real Estate Market Indicators for Country Analysis • Economical and Business Factors • Country Profile (Location, Historical Background and Socio-Cultural Environment, Political and governmental framework, Infrastructure) • Economic and financial environment (Natural resources, Currency, Industries, Export trade, Income and economic growth, Poverty and Private consumption, Inflation, Debt position, Financial institutions/Supervisory authorities, Financial markets) • Business framework (Legal security, Bureaucracy, Fiscal system, Subsidies, National commercial partners/chambers of commerce) • Real Estate Market Factors • The rules of the game in the local real estate market (Market participants and institutions, Transaction process, Residential property market, Commercial property market, User, Return expectations, Lease structures) • Risks and opportunities in the local real estate market

  6. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  7. Introduction Paper Research Overview • Sub-Saharan Africa • Diverse geographical, socio-cultural and historical conditions • Different stages of economic evolution and market maturity Benchmarking tool ‘Market Maturity’ could close gap between investment opportunities and low real estate investment activity • Research Question • How mature are the real estate markets of Tanzania and South Africa? • Goal • Objective analysis & comparison of the real estate market activity in Tanzania and South Africa • Assess the countries position on the global real estate maturity curve • Developing market information in emerging economies

  8. Introduction Paper Research Methodology • Framework Property Market Performance: • ‘Market maturity’ on the basis of Keogh and D'Arcy (1994) • Emerging market study by Jones Lang LaSalle (2010) • The methodological emphasis: • Research of contemporary literature • Empirical survey  Objective evaluation of theoretical information

  9. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  10. Real Estate Market Maturity Paradigm Maturity Factors Socialfactors Political factors Legal factors Institutionalfactors

  11. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  12. Measured Fund logo choice (bottom) Summary

  13. Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market Investible Commercial Property value Source: Own Calculations, World Bank

  14. Strengths and Weaknesses of the Tanzanian and the South African Real Estate Market Selected property market characteristics Source: Doing Business Report

  15. Measured Fund logo choice (bottom) Summary

  16. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  17. Classification of the countries’ property market maturity and economic evolution Maturity potential of real estate markets via a generic life cycle composition

  18. AGENDA • Background Global Market Indicators, Benchmarking and Indices • Introduction of Paper Research • Real Estate Market Maturity Paradigm • Strengths/Weaknesses and Opportunities/Threats of the Tanzanian and the South African Real Estate Market • Classification of the countries’ property market maturity and economic evolution • Conclusion

  19. Conclusion • Great potential in enhancing maturity status in the long-term • Countries have to expedite reforms and policies (i.e. governance, business, legal and social systems) • Governments and aid providing institutions have to insist further on the adherence of regulations and democratic elections • Maturity benchmark of real estate markets - an effective tool to evaluate a specific property market • Market maturity does not necessarily imply efficiency

  20. The topic is now up for discussion. Contact detailsNora Rothacher, B.A. M.Sc.nora.rothacher@yahoo.de

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