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Our Investment Asset Class or the target asset class for ARF is real estate.

African Real Estate Investment
African Real Estate Investment 1
Africa Real Fund Investments

Criteria for real estate investment

The expected rental yield on real estate assets must be at least 4%. For example, this means that for a property with an expected annual rent of $5,000, ARF would not pay more than $125,000 ($5,000 divided by 4%)

Asset would be in regions with a stable economy, stable currency, and strong real estates markets such as South Africa, Abu Dhabi, Europe, and North America.

Residential real estate for young adults and small families (e.g., 1or 2-bedroom apartments are relatively easier to let than 3 or 4-bedroom apartments or luxury suites).

Urban and commercial areas with relatively high property price appreciation and relative ease of resale.

Regions with a relatively stable currency, especially in comparison to the NGN (Nigerian Naira). For example, the Nigerian Naira (NGN) has depreciated 3x more than South African Rand (ZAR) over the last ten years and this is equivalent to an average annual yield of 7% on ZAR-NGN foreign exchange low operating/ management supervision: properties with limited monitoring requirements and costs (e.g., serviced apartment).

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Investors should consider the following factors before investing

Duration

ARF’s fund is a long-term fund: investors should only commit to funds that are available for long-term investments.

Source of Returns

Investors would be able to earn returns from rental income, property price appreciation, and foreign exchange gains.

Expected Return

While the conservative minimum annual expected return is 15%, returns are not guaranteed because the fund is not backed by government security and is vulnerable to risks associated with traditional real estate assets. The risk of loss is however very low because of the nature of the asset class (i.e., real estate).

Return Calculation

Investors' earnings are per contribution to the investment pool and duration of the investment.

Current Macro-Economy

The current macro-economy presents a good time to invest. Due to the impact of the Covid pandemic, property prices are relatively low, and the market is essentially a ‘buyer’s market’. The current macro-economy presents a stronger expected return.

Minimum Investment

The minimum investment is NGN1m (or $2,500) per investor.

Investment Risks Here's What We Look At.

The risk of a vacancy on the property can lead to lower-than-expected returns. This risk is mitigated by the criteria for asset selection.

This risk is limited by the relatively more structured real estate market in target markets in comparison to the Nigerian market. In South Africa for example, the process for vetting and registering of legal titles is fully handled by the local banks. Properties would also be fully insured against damage/ disasters.

Investors need to bear in mind that withdrawals in the short term cannot be immediate-upon-request because of the nature of the underlying asset (real estate). Withdrawal requests from investors would be met using cash from proceeds.

The sale of the property would be driven by commercial reasonableness and not by a request for withdrawal by an individual investor.

Where the excess cash has not yet been deployed to the real estate portfolio.

Where excess cash has not yet been deployed to the real estate portfolio.