Construction and Property Corner ::: 21 July 2023

[Bulls n Bears]

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Construction and Property  Corner ::: 21 July 2023 

 


 

 


 <https://www.hyundai.co.zw/> 

 


 

 


 

ü  Major boost for Zim’s new administrative city

ü  Summit seeks to close transport infrastructure gap

ü  Tigere to invest in Bulawayo  

ü  Building Africa's first mRNA vaccine facility

ü  African Development Bank Group rallies behind Zambia and plans up to $150 million in budget support as country succeeds with debt restructuring

ü  Reinvigorating property development in SA through the right legislation

ü  The $2 billion Rwandan airport that could help African aviation take off

ü  South Africa: City of Cape Town Has Built Fewer Than 20 Social Housing Units in the Inner City in Six Years, Say Activists

ü  EAC: Construction of Inter University Council headquarters underway

ü  Homebuilders Rally Stalls After D.R. Horton Disappoints Bulls

ü  Billionaire Sternlicht Sees ‘Category 5 Hurricane’ Spurred by Fed Rate Hikes

ü  China Eyes Next Pandemic in Push for New Emergency Facilities

ü  Sweden’s Property Rout Drags Down Result of Another Pension Fund

ü  Office REITs Rally Into Earnings, But Investors Want to See Cash

ü  Adani Aims to Transform Famous Mumbai Slum Into Glitzy Hub

ü  Popping Real Estate Bubbles Will Prove Painful

 


 

 


 <https://www.willdale.co.zw/> Major boost for Zim’s new administrative city

The growing new city at Mount Hampden, which starting with the new Parliament building and will gradually become the administrative centre of Zimbabwe, needs to be planned and serviced properly, and now the Ministry of Local Government and Public Works has signed an agreement with the New Administrative Capital of Egypt for technical assistance.

 

The objective of this memorandum of understanding is to strengthen bilateral cooperation in the planning, design, construction and management of the new city in Mt Hampden, based on the experience of the planning, design, construction, financing and management of the administrative capital in Egypt.

 

Further to this objective, the cooperation will see the two countries facilitating the exchange of experts in relevant fields as well as branding and marketing of the new city in Mt Hampden as an attractive investment destination.

 

In Egypt, the new administrative capital is a new urban community but still in the Cairo Governate and still a satellite of Cairo City. Under construction since 2015, it is planned to be Egypt’s new administrative capital and is considered one of the projects for economic development, and is part of a larger initiative called Egypt Vision 2030.

 

It is yet to be given a name and a competition has been launched on the new capital’s website to choose a new name and logo for the city.

 

Speaking during the signing ceremony yesterday, Local Government Minister July Moyo said Zimbabwe will benefit from Egyptian expertise. He had been impressed with the development of their new administrative capital.

 

 

“We were both amazed about how you were turning a desert into a residential and commercial hub and administrative capital of your country. We are happy that you are the first organisation with which we have signed a memorandum in order to interact in the area of planning and in the area of management, taking cognisant of your advanced advancement.”

 

The last time he visited Egypt, the minister was surprised by how much had changed in just six months.

 

Egyptian chairman and managing director of Administrative Capital For Urban Development, Engineer Khaled Mahmoud Abbas, said they were eager to host a Zimbabwean team for their learning tour.

 

“I think today is only a start. We are going to meet several times and if you allow me to invite your team, then they can also meet our team and see what’s on the ground and to see how we are developing it.”

 

Engineer Abbas said their story only started in 2017 but a lot of progress has been registered.

 

The model of the new city in Mount Hampden, which currently houses the spectacular and iconic new Parliament Building built by the Chinese, is anticipated to court investment of US$2,8 billion, setting the stage for further urban developments that are emerging across the country.

 

In July last year, President Mnangagwa led a groundbreaking ceremony of the multi-million dollar Cyber City being built by a United Arab Emirates-based company, Mulk Holdings, a direct result of Zimbabwe’s engagement and re-engagement agenda and its participation at the Expo 2020 Dubai.

 

The Cyber City will host the signature Mulk Tower, a five-star hotel, duty free mall, office buildings, luxury villas and recreational facilities, among other features.

 

herald

 

 

 

 

Summit seeks to close transport infrastructure gap

THE massive transformation and growth of the mining and agriculture sectors under the Second Republic has piled pressure on the existing transport infrastructure amid calls for enhanced rehabilitation, maintenance, and construction of new roads, expanded rail and aviation facilities linking production zones to key markets and exports.

 

Although Government has scored major successes in driving massive infrastructure projects across the sectors in the last five years in line with the National Development Strategy (NDS1), the available transport infrastructure is failing to cope with the renewed level of economic activity in the country, stakeholders have said.

 

The mining sector in particular, has attracted more than US$6 billion in investments since 2018, growing its earnings from an average US$2,7 billion to about US$10 billion last year, according to official reports, and is building momentum towards the ambitious US$12 billion milestone by the end of the year.

 

This has been largely driven by the renewed investor confidence as “Zimbabwe is Open for Business”, leading to the opening of new small-scale and large-scale mining projects in different mineral sub-segments.

 

Small-scale miners have emerged stronger, mainly in gold and chrome mining, while signature projects are now thriving on new coal-to-energy projects in Hwange and lithium sectors, and more still coming on precious and non-precious minerals, including the massive US$1,5 billion Dinson Iron and Steel plant in Manhize area, Midlands province.

 

The agriculture sector has recorded a huge jump in output through accelerated Government and private sector support schemes targeting both smallholder and large-scale commercial farmers, which have yielded good results on grain and cash crop output.

 

 

The sector has not only achieved national food security, but has seen Zimbabwe hit the US$8,2 billion agriculture economy ahead of the 2025 target.

 

The country is now considering exporting excess maize and wheat while more focus is also being directed at maximising domestic raw material supplies while substituting imports and tapping into more lucrative horticulture exports.

 

Speaking during the ongoing Infrastructure Summit and Expo being hosted by the National Economic Consultative Forum (NECF) here yesterday, participants said with such production milestones, the existing transport infrastructure is now inadequate to service the needs of the economy.

 

They noted that transportation of mining and agriculture output to key domestic and export markets using haulage trucks, for instance, was now straining major roads, leading to their quick dilapidation while farmers in poorly connected rural communities incur heavy losses from higher transport costs.

 

Reference was made to the now dilapidated Bulawayo-Victoria Falls Highway, as a typical case study.

 

“Over-reliance on the road transport system is accelerating the decay of most roads as the volumes of cargo we are carrying must be on the rail,” said Engineer Theodius Chinyanga, Permanent Secretary in the Ministry of Transport and Infrastructure Development.

 

“Agriculture is the backbone of our economy and we need to provide good roads to farmers and ensure ease of doing business and cost efficiency in the sector.”

 

National Railways of Zimbabwe (NRZ) general manager, Ms Respina Zinyanduko concurred saying the rehabilitation, maintenance, and construction of new railway lines linking new mines and farming areas must take centre stage if Zimbabwe is to realise desired logistics efficiencies that buttress the economic growth momentum.

 

Without a viable railway system, she warned that major roads will continue to deteriorate due to an increase in haulage trucks.

 

Ms Zinyanduko also expressed concern over the adverse impact of theft and vandalism of railway infrastructure.

 

Local Government and Public Works Permanent Secretary, Mr Zvinechimwe Churu said aggressive rehabilitation and development of new roads would ensure that “no one and no place is left behind” in terms of development.

 

“We need to expedite transport infrastructure projects linking new agriculture and mining production zones, which are mainly in rural communities so as to promote smooth business operations and trade within the country, the region and beyond,” he said.

 

Mr Churu said the situation in which the country relies on cash budgets to fund infrastructure projects like roads and rail is not sustainable. He called for the revival of infrastructure bonds and other long-term funding facilities.

 

Mr Churu noted that since 2019, Government has prioritised the utilisation of devolution funds for key infrastructure projects including roads, but was quick to say this was not enough.

 

Infrastructural Development Bank of Zimbabwe (IDBZ) chief executive, Dr Thomas Zondo-Sakala, said given the growing production by key sectors, Zimbabwe must move with speed and address the pressing transport infrastructure gaps in order to tap into the huge trade benefits under the African continental free trade area.

 

Zimbabwe National Road Administration (Zinara) chief executive, Mr Nkosinathi Ncube, acknowledged that road maintenance and rehabilitation projects were not satisfactory.

 

He blamed stalled projects on inadequate funding linked to non-compliance to paying road user fees by some players, poor quality works by some contractors, skills flight, and exchange rate depreciation, which erodes budgeted funds.

 

Deputy Chief Secretary to the President and Cabinet, who is also NECF steering committee co-chair, Mr Willard Manungo, said collective stakeholder efforts are required in reclaiming the country’s infrastructure gap. He challenged participants to use the summit to devise strategies for harnessing funds to drive massive infrastructure projects.

 

Rural Infrastructure Development Agency (Rida) director-general, Mr Christopher Shumba, weighed in, saying developing efficient rural road transport systems and aviation is critical in unlocking more opportunities for ordinary Zimbabweans in line with the inclusive upper middle-income vision by 2030.

 

Urban Councils Association of Zimbabwe (UCAZ) secretary general, Mr Livison Mutsekede, said Government and private sector must work closely to capacitate councils, and proposed a road funding model outside of what is existing.

 

Zimbabwe Institute of Engineers CEO, Dr Sanzan Diarra, said delayed infrastructure projects implementation must be scaled up to meet set deadlines.

 

He pledged his institution’s support with research and development to bridge the skills gap. He also called for concerted efforts in luring skilled Zimbabwean engineers whose labour is benefiting foreign nations.

 

Transport Operators Association of Zimbabwe chief executive officer, Mr Wilfred Ramwi, said given that 90 percent of goods in Zimbabwe are transported by road, it is urgent that authorities prioritise road rehabilitation financing to ease the wear and tear burden on businesses.

 

Association of Rural District Councils’ chief executive, Dr Isaac Matsilele, called for the harmonisation of operations by road authorities for smooth coordination through an integrated approach and suggested the establishment of special levies for roads.

 

During plenary sessions, participants noted that since Zimbabwe is under sanctions, there is a need to ride on public-private partnerships to harness adequate resources for sustainable development.

 

Others felt strong monitoring and evaluation was the biggest hindrance and suggested that transport infrastructure must be buttressed by enhanced telecoms infrastructure to aid e-commerce development.

 

The summit continues today with President Mnangagwa expected to lead the official opening session.-herald

 

 

 

Tigere to invest in Bulawayo   

LISTED real estate investment trust (REIT) Tigere Property Fund (Tigere), which is an affiliate of Terrace Africa Asset Management is eyeing to invest in the property market in the southern region of the country with Bulawayo being one of the targets.

 

Tigere is the first and the only REIT listed on the Zimbabwe Stock Exchange (ZSE).

 

The company was listed last year and it has already declared dividends twice to investors with the third one scheduled in the next three weeks.

 

 

In his presentation during the just-ended REITs inaugural conference in Bulawayo, Terrace Africa managing director Mr Brett Abrahamse said the listing of the firm has boosted its profile. 

 

He said the focus is on seeking investment opportunities in Matabeleland.

 

 

“We want to be represented in Bulawayo and other towns such as Gweru because we believe this is an important corridor. Over time, we will definitely grow and diversify into other areas   

 

REITs are investment securities that enable the issuer to pool investors’ funds for the purpose of investing in real estate. In exchange, the investors receive units in the trust and as beneficiaries of the trust share profits from the real estate assets.

 

 

 

Terrace Africa Asset Management has properties in South Africa, Zambia, and Mozambique.

 

Other new investments are also in the pipeline, where Mr Abrahamse told the delegates at the conference that work has already commenced for the construction of an integrated office park as well as a shopping mall at the Showgrounds in Harare.

 

He also said Zimbabwe has good potential in the growth of the properties sector saying that following the history  of the country, its citizens believe in fixed assets as a store of value.

 

 

“I expect the sector to continue performing well. There are subsectors within the properties sector that we think can perform better than others.

 

“We are still seeing a shortage of houses as people want to own their homes than rent, and on the commercial side, we are about to witness a strong uptake in activities which are industrial, warehousing as well as retail.

 

“In the next 10 years we will see cities that will develop from these developments which are about to come,” he said.

 

To buttress the point that Zimbabwe has potential in real estate investments, Mr Abrahamse said their properties in Harare have 100 percent occupancy.

 

 

THE Zimbabwe Stock Exchange

 

The Government has been calling for public-private partnership in infrastructure development which also consists of residential houses in which Bulawayo alone  has a backlog seating at                                                            125 000.

 

The Second Republic is moving aggressively to clear a 1,2 million housing waiting list backlog with plans to pull down colonial structures in the country’s old suburbs to build back better facilities that are in tandem with the country’s vision to be an upper-middle-income economy by 2030.

 

This has seen the Government launching the Zimbabwe National Human Settlements Policy (ZNHSP).

 

Under ZNHSP, the country aims to build 225 000 housing units by 2025 with construction, which will have a ripple  effect on other sectors of the economy such as the manufacturing industry,  already underway. —chronicle

 

 

 

 

Building Africa's first mRNA vaccine facility

For Africa, mRNA vaccines are beneficial and could be used to combat various bacterial and viral infections other than COVID-19 in the continent. mRNA vaccines can be produced in large quantities and are efficient and safe. Moreover, these vaccines can also be produced quickly, with minimal effort and without previous knowledge of biological pharmacological agents.1,  2 With mRNA technology, malaria and tuberculosis vaccines can be developed, giving African nations good chances to fight these diseases endemic to the region.

 

Africa is the second most populous continent and carries 25% of the global disease burden;3,  4 however, Africa imports 99% of its vaccines and 95% of its medicines.4 Africa consumes nearly 25% of globally produced vaccines and this percentage will rise due to the expected 2·5% yearly population growth.4 The African Development Bank has been funding the Africa Centres for Disease Control and Prevention and pledged to spend US$3 billion over the next 10 years to enhance vaccine manufacturing and meet the African Union's target of producing 60% of the needed vaccines on the continent by 2040.2,  4 Because of their long-lasting responses, ease of production, ability to encode complicated protein designs, and safety as immunogens, mRNA vaccines are an excellent platform for HIV vaccine development. In May, 2022, the International AIDS Vaccine Initiative and Moderna announced the first participant screenings for a phase 1 clinical trial (IAVI G003) of an mRNA HIV vaccine antigen (mRNA-1644) in Rwanda and South Africa, which is still underway, as each participant is to receive two doses of the eOD-GT8 60mer mRNA vaccine.

Owing to collaborative efforts between Rwanda, Ghana, Senegal, the African Union, WHO, and the EU, Rwanda will be the first African country to host an autonomous mRNA manufacturing facility.

 

In June, 2022, BioNTech started constructing its cutting-edge manufacturing facility in Kigali (Rwanda) for the production of mRNA-based drugs and product candidates. The facility is anticipated to be the first node in an extensive and decentralised end-to-end manufacturing network in Africa. It will initially house two sets of BioNTainers for the synthesis of bulk mRNA vaccines.5 The Rwandan mRNA vaccine facility is made up of six bio-containers, which are mobile factories that use renewable energy to run climate-neutral operations and will be provided by the Rwandan company Izuba Energy. Each of the six containers make up one BioNTainer (module) for drug substances and drug products.5 In March, 2023, the first of BioNTainer's six ISO-sized containers were transported by air to Kigali, which were finished in Europe in December, 2022.

 

Staff from BioNTech will first supervise and operate the facilities and, after training local personnel, ownership and expertise will eventually be handed to local companies, so they can take over the intricate process of creating vaccines. Other African Union member states will receive vaccines produced in the Rwanda-based mRNA vaccine manufacturing facility at a not-for-profit price. Moreover, BioNTech is working to build facilities in Senegal and South Africa.1

Currently, several mRNA vaccines require ultra-cold chain delivery and storage. Investments made in ultra-cold chains for COVID-19 vaccines in Africa can be repurposed into future research centres and facilities for storing new mRNA vaccines.2,  4 Building vaccine production capacities in Africa is still fraught with challenges, largely due to a scarcity of trained personnel, highly specialised equipment, cold chain infrastructure, power outages, and public health infrastructure.1,  4

Apart from improving the cold chain system within the supply chain, one strategy for successfully stabilising mRNA vaccines is lyophilisation, which involves freeze-drying.2 Making some vaccines thermostable would eliminate their need for a cold chain, increasing the capacity in the cold chain for vaccines that would still need cold or cooler temperatures.2 Thermostable vaccines have been proposed as a possible way forward in managing these challenges and a feasible solution for increasing vaccination coverage in low-income and middle-income countries with fluctuating energy supplies.

 

In conclusion, the commencement of large-scale mRNA vaccine manufacturing in African countries is important for a real sustainable health-care system in Africa.6 This manufacturing is a good opportunity for enhancing vaccine training opportunities in African countries, as the know-how is often learned in vaccine manufacturing facilities.

 

Rwanda has emerged as a pioneering country, hosting the first mRNA vaccine manufacturing facility in Africa. In the near future, Senegal, South Africa, and Kenya will be the other African countries to have mRNA vaccine manufacturing facilities in the continent.

 

 

 

 

African Development Bank Group rallies behind Zambia and plans up to $150 million in budget support as country succeeds with debt restructuring

African Development Bank Group (www.AfDB.org) President Dr Akinwumi Adesina has completed a two-day official visit to Zambia where he met with President Hakainde Hichilema to discuss further support for the country as it emerges from a successful $6.3 billion debt restructuring for bilateral debtors, concluded with bilateral debtors under the G20 Common Framework on debt treatment.

 

President Hichilema noted that while his government had made a significant achievement on official creditor debt, more work needs to be done to tackle debt owed to local and external commercial creditors including Eurobond holders. “We have lost a lot of time under the ‘python of debt’. We want to now unlock growth and prosperity for our people,” said President Hichilema.

 

Adesina congratulated the government of Zambia for reaching an agreement with its bilateral creditors under the G20 Common Framework on debt treatment. The agreement puts Zambia back on the path for economic recovery and sustainable debt management.

 

“You have created a sense of hope in the country and confidence in the economy, paving the way for investments to return and accelerate the drive to achieve prosperity for the country,” Adesina told President Hichilema during the meeting on Tuesday at State House in the capital Lusaka.

 

The Bank chief outlined several measures including an initial up to $150 million in budget support for consideration for approval by its board of directors; and several other investment projects in key sectors of the economy, including agriculture, energy, and transport. He said the Bank will immediately make available to Zambia the full services of the Africa Legal Support Facility (ALSF) to support Zambia efforts to renegotiate the terms and conditions of debt with private external creditors. The ALSF, established in 2008, has assisted several countries in creditor engagement and negotiations related to debt restructuring and relief.

 

Adesina said, “The starting point is to now make sure the debt treatment works and that Zambia does not again return to a debt crisis.” The Bank chief offered Zambia a raft of technical and advisory support from the Bank, including support for public financial management; public debt management; public investment management; strengthened procurement rules and systems, public-private partnerships, and domestic resource mobilization.

 

In addition to the planned $150 million in budget support, Adesina said the Bank will help Zambia to access another $168 million per year from the non-concessional window of the Bank.

 

The Bank will also support Zambia to access regional financing window of the ADF to finance large transformative infrastructure, including energy, road and rail transport connections with Mozambique, Angola and the Democratic Republic of Congo.

 

The Bank will provide support to reform Zambia’s farm input support program to be more efficient, transparent and delivered by the private sector, using biometric registration of farmers and use of electronic vouchers to deliver support directly to farmers.

 

The Bank will also provide support for the establishment of Special Agro-Industrial Processing Zones and a Youth Entrepreneurship Investment Bank to build new financial ecosystems around the businesses of the youth and create jobs. Adesina urged the government to optimize on its debt used for infrastructure by considering ‘asset recycling’ which would involve selling its assets to the private sector to free up liquidity for investment in new infrastructure projects.

 

The African Development Bank currently has 25 active projects with total financing of $1.02 billion.

 

The Bank chief also met with private sector leaders, including the chief executive officers of the financial industry in Zambia, and called on them to take advantage of these opportunities to invest more in the country.

 

President Hichilema thanked Adesina for his “tremendous work for the African Development Bank and Africa.” Your leadership has raised the bar in terms of the Bank’s status and performance,” he said.

 

Adesina was accompanied by the Vice President for Regional Development, Integration and Business Delivery, Marie-Laure Akin Olugbade, the Vice President for Agriculture, Human and Social Development Dr Beth Dunford, the Director General for Southern Africa Leila Mokaddem, Director of Agriculture and Agro-Industry Martin Fregene, Director of Water and Sanitation Osward Chanda, and the Bank’s Country Manager for Zambia, Raubil Olaniyi Durowoju.

 

On his part, President Hichilema was accompanied by Minister for Science and Technology and acting Finance Minister Felix Mutati as well as Central Bank Governor Denny Kalyalya.

 

Adesina praised President Hichilema for his “drive, passion and resolute approach to debt resolution and restructuring for the country,” and added, “Zambia is back. Zambia is bankable; and you, Mr President, you are bankable. You can count on the African Development Bank’s support all the way.”

 

Distributed by APO Group on behalf of African Development Bank Group (AfDB).-zawya

 

 

 

 

Reinvigorating property development in SA through the right legislation

In recent times, the South African property market has experienced significant changes in property laws, aiming to address various concerns and challenges within the real estate sector.

 

However, in addition to these changes, there is a pressing need to examine the legislation that would benefit the property development sector today and into the future. South Africa's socioeconomic challenges, such as housing needs, water, broadband connectivity, infrastructure, and electricity supply, necessitate a change in approach to how we build and the legislation supporting development.

 

When it comes to property development, there is a growing recognition that building specifications and regulations play a crucial role in meeting modern-day needs. With the increasing demand for affordable housing and sustainable infrastructure, it becomes critical to establish guidelines that promote efficiency, quality, and affordability in construction projects.

 

This not only addresses the pressing need for adequate housing but also contributes to the overall socioeconomic development of the country, while attempting to rectify historical injustices. The history of spatial planning to reinforce segregation can be seen in the lack of space in townships, which hampers proposed developments.

 

Addressing challenges within real estate sector

 

Property law changes highlight South Africa's commitment to addressing challenges within the real estate sector and promoting fairness, transparency, and efficiency. While opinions on these changes may vary, they reflect the evolving nature of property ownership in the country. To navigate these changes successfully, stakeholders must stay informed and seek professional advice to ensure compliance and make well-informed decisions.

 

Sectional Titles Amendment Bill

The Sectional Titles Amendment Bill that is currently before parliament aims to establish regulations for developing schemes, including property and extensions. The bill’s main goal is to fill gaps left by other laws pertaining to the management of sectional titles.

 

This bill will have a bigger impact on how complex managers, body corporates, and homeowners associations interact with section titles. It will also allow lessees of sectional title schemes to put questions to developers.

 

Expropriation Bill

The Expropriation Bill is set to undergo further amendments to incorporate additional safeguards and guidelines for compensation. The bill aims to provide for the expropriation of property for a public purpose or in the public interest.

 

It aims to strike a balance between addressing historical injustices and protecting property rights, ensuring a fair and equitable expropriation process. It further deals with the payment of compensation.

 

Housing Consumer Protection Bill

The Housing Consumer Protection Bill seeks to provide added protection to buyers of homes and new properties by ensuring they are covered in terms of having registered homebuilders and a home warranty fund.

 

The bill was tabled two years ago, but it has taken its time to pass through the various houses of parliament before it is signed into law. Despite these delays, the bill was designed to deepen and expand the protection of housing consumers while transforming the regulatory environment in the sector. It will further ensure the integrity of building and renovating contractors.

 

Property Practitioners Amendment (PPA) Bill

Another piece of legislation that further regulates and aims at professionalising the real estate industry is the Property Practitioners Amendment (PPA) Bill, which builds upon the existing Property Practitioners Act.

 

The PPA resolves a lot of the grey areas in previous legislation, proposing stricter compliance requirements, mandatory continuous professional development, and the establishment of a Property Practitioners' Ombud Service to handle consumer complaints. These measures aim to strengthen consumer protection and elevate industry standards.

 

Navigating the changing landscape

 

Overall, these proposed property law changes reflect a concerted effort to create a more transparent, efficient, and fair environment for property owners, buyers, and tenants. Staying updated with these developments will enable individuals and organisations to navigate the changing landscape successfully and make informed decisions that align with their objectives and obligations.

 

Progressive thinking is only progressive if it's able to take into account the people who have been left in the margins when it comes to development. Leaving people on the margins and in lower-income suburbs out of the development of property will continue to reinforce the unjust and discriminatory legacy of past laws and regulations some of these bills aim to address.

 

Human-centred approach needed

 

Property and property development is a multi-layered issue and developers need to rethink many of the requirements that older developments never would have had. The infrastructure in South African developments currently falls short when it comes to issues such as load shedding.

 

New developments need to take a human-centred approach and ensure they work to the benefit of people. Despite basic requirements, such as water and power that are enshrined in the country’s constitution, there are still millions of people who live without these basic needs.-zawya

 

 

 

The $2 billion Rwandan airport that could help African aviation take off

Some 40 kilometers south of the Rwandan capital of Kigali in the Bugesera District, construction vehicles and high-visibility vests swarm across an arid expanse of land.

 

Here, two strips of tarmac are the cornerstone of a $2 billion airport, whose developers want it to be the jewel in the crown of Africa’s aviation industry.

 

Slated for completion in 2026, the new facility will boast a 130,000-square-meter main terminal building capable of accommodating 8 million passengers a year, a figure expected to rise to over 14 million in the following decades. Adjacent will be a dedicated cargo terminal, capable of accommodating 150,000 tons of cargo a year.

 

It’s a significant upgrade on the existing Kigali International Airport, which is set to remain operational for special arrivals, some chartered flights, and a pilot training school.

 

Pre-pandemic, the airport was shuttling close to 1 million passengers annually, but its geographic limitations – perched on top of a small hill and surrounded by human settlements – meant a move was necessary to allow expansion.

 

“I’m amazed, it’s like a dream come true to see the impact and magnitude of this project to the population,” said Jules Ndenga, CEO of Aviation Travel and Logistics Holding, the Rwandan government-owned company that is overseeing construction.

 

“We are really impassioned to see the efforts completed and starting operations.”

 

Qatar Airways will have a 60% ownership of the new airport. The Middle Eastern airline will also acquire 49% of shares in the African country’s flag carrier airline, Rwandair, offering access to over 65 locations around the world.

 

It is a partnership that intended to help Rwanda – landlocked in the center of Africa – achieve its aim of becoming the continent’s centerpiece for air travel. “The main objective of this effort is basically to make sure that Rwanda becomes an African hub where everyone will be transiting either for tourism, but also for business and different industries,” Ndenga added.

 

“The impact will be in terms of providing a platform for all the economic life of the country to develop sustainability. We see that as not only an impact on the economy but in the neighborhood … we know that this area will become a satellite city of the city center.”

 

Yet benefits could spread far beyond Rwanda’s borders. The arrival of the new airport will help chip away at the critical problem of a fragmented network of routes that means passengers often have to travel via Europe or the Middle East when flying between African countries.

 

A lack of connections across the continent is grounding Africa’s untapped potential in the aviation business. Despite boasting 16.75% of the world’s population with 1.4 billion people, the continent has less than 4% of the global air market, according to a 2018 report by the Single African Air Transport Market – an initiative set up by the African Union.

 

For RwandAir CEO Yvonne Manzi Makolo, the problem of connectivity presents the “biggest challenge” to the African aviation industry.

 

“The continent is huge, it’s vast, but it’s difficult and unpredictable traveling within it … and it’s extremely expensive,” Makolo said.

 

“What what’s making it more challenging is the conditions of operating within the African continent. The cost of operations is so much more, whether it’s airport fees, whether it’s ground handling, parking, overflight (flying from one country’s airspace to another’s) – everything is much more expensive. Sometimes up to 50% more than in the Middle East and Europe, which makes the ticket prices even more expensive and makes (some) routes unviable.”

 

But solutions are touching down, starting with the Single African Air Transport Market (SAATM).

 

First proposed in 2018, if implemented the policy would create a single market for African aviation, facilitating the free movement of people, goods, and services. The continent currently operates under bilateral air service agreements, a highly restrictive policy that makes it difficult to open new routes.

 

So far, just 35 of the 55 African states have signed up for SAATM. Secretary General of the African Airlines Association Abderahmane Berthe, heavily involved in the policy’s implementation, believes more will follow.

 

“Since 2018 all the stakeholders of the industry are working to make it happen,” Berthe said.

 

“Liberalization is not an easy subject – even in other regions, it took a lot of time. So, we are working on it. What is missing is the willingness of states to really implement it.”

 

A new single market would dovetail with the African Continental Free Trade Area (AfCFTA). Coming into force in 2021, AfCFTA eliminates tariffs and other non-tariff barriers to allow easier movement of trade and people between the continent’s countries.

 

It is set to increase intra-African trade to an estimated 52%, according to Kenya Airways CEO Allan Kilavuka, who plans to work with other African airlines – such as South African Airways – to unite a “fragmented” industry.

 

“We have so many airlines in the continent. Most of them are not viable, truth be told,” Kilavuka said.

 

“We need to consolidate, so that you create bigger entities which are more economical from a scale perspective, and they can respond to high costs. They can together talk to suppliers and get more bargains when it comes to purchases, bringing down the unit cost of operation. Because of scale, they can then open up the African continent a lot more.

 

“The fragmented state which we are in is not going to make it.”-CNN.com

 

 

 

South Africa: City of Cape Town Has Built Fewer Than 20 Social Housing Units in the Inner City in Six Years, Say Activists

City says it has made more than 32,000 square metres of land available but there are challenges, including "hijacking" of buildings

 

The City of Cape announced in 2017 that 11 pieces of land in the city centre would be used for social housing.

Since then, the City says, it has made more than 32,000 square metres of land available for social housing.

But housing activist groups Ndifuna Ukwazi and Reclaim the City say progress has been slow and fewer than 20 units have actually been built.

The City of Cape Town says it has made more than 32,000 square metres of land available for social housing in the past six years. But civic organisations say fewer than 20 housing units have actually been built.

 

In July 2017, the City announced that 11 pieces of public land in the city centre, Woodstock and Salt River would be used to develop social and transitional housing. These are located at Pine Road, New Market Street, Drury Street, Upper Canterbury Street, Woodstock Hospital, Woodstock Hospital Park, James Street, Dillon Lane, Salt River Market, Pickwick Road Transitional and Pickwick Road.

 

 

In July last year, the City also tabled the release of land for two major social housing projects: in the Salt River Market precinct and the Pickwick Road site. The Salt River site will deliver 216 social housing units in a nine-storey mixed-use development. The Pickwick Road site in Salt River is to offer 600 social housing units in an eight-storey development.

 

James Vos, the City's acting mayoral committee member for Human Settlements, told GroundUp that in the last six years, 32,666 square metres of land has been made available by the City for social housing. These include: Salt River Market (14,468 square metres), Pine Road (7,239 square metres), Dillon Lane (4,278 square metres) and Maitland (6,681 square metres)

 

 

He said the City has also acquired more than 900 hectares of land for its integrated Human Settlements Development purposes, while 6,500 city-wide social housing opportunities are in the pipeline.

 

But housing activist groups Ndifuna Ukwazi and Reclaim the City say since the 2017 announcement only 19 units of social housing have been completed in the inner city.

 

"Out of the 11 sites, the Pine Road site has been sitting vacant since 2019. The Salt River Market site was released last year, but there has been no resolution for the relocation of the people living on the site for the last decade which is required for the development to proceed."

 

They said the "lack of progress on inner-city social and affordable housing projects and ongoing delays in releasing an inclusionary housing policy directly contribute to poor and working-class people being pushed out of well-located areas".

 

 

Vos said there were statutory and other hurdles to releasing land for affordable housing. "Additional challenges include building hijacking, as we have seen in Woodstock and Sea Point, for example," he said.

 

The Woodstock Hospital property had been "hijacked", he said. "This property -- and the provincially owned Helen Bowden Nurses Home -- were subject to orchestrated building hijackings by Ndifuna Ukwazi's Reclaim the City campaign in early 2017, following the government's announcement of plans to develop social housing there."

 

Vos said the building's hijacking was followed by "subsequent calls for financial contributions to "sustain and build" the illegal occupation. What was initially claimed by Ndifuna Ukwazi to be a "symbolic" occupation, has spiralled out of control."

 

He said there are pending eviction proceedings following the Western Cape High Court's 2021 order which granted the City permission to survey the number and individual circumstances of occupants at Woodstock Hospital.

 

"The City will now be proceeding with the planning and development of social housing, as well as taking engagements forward with unlawful occupants," said Vos.

 

He said the spotlight should also be placed on land release by the national government. "While the City's advocacy efforts go back years, there has been little progress under successive Public Works ministers," said Vos. He said the City has repeatedly asked national government to release its "large, well-located tracts of land for City housing development".

 

Several "mega-properties" owned by the national government could potentially yield over 100,000 social housing units, he said. These are located in Wingfield, Youngsfield, Ysterplaat, Culemborg and the Parliamentary Village.

 

"The release of these national mega-properties for housing would make a huge difference given the sheer scale of the well-located military land compared to the very limited land with housing potential owned by the City and Province close to the CBD," said Vos.

 

Robyn Park-Ross, a researcher at Ndifuna Ukwazi, said after six years, construction of social housing had still not started in the inner city. "While Mayor Geordin Hill-Lewis has announced the release of land in the City Council, this has little material impact on people's lives until the homes are actually built," she said.

 

Park-Ross said although proper legal processes to release land did have to be followed, "there is a clear lack of urgency to deliver".

 

"Each day tenants facing exorbitant rents and rates approach our clinic in search of inner-city affordable housing. These delays are shredding people's connection to place and neighbourhoods, rather than redressing the injustices of the past," Park-Ross said.

 

-GroundUp.

 

 

 

 

EAC: Construction of Inter University Council headquarters underway

The Inter-University Council for East Africa (IUCEA) held a groundbreaking ceremony for the construction of the second phase of its Headquarters in Kampala.

 

The project worth over USD8.4 million (Ksh1,191,120,000.00) is expected to be completed within 18 months.

 

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Speaking at the groundbreaking ceremony held at IUCEA Headquarters in Kampala, the Chief Guest, the 1st Deputy Prime Minister and Minister for East African Community (EAC) Affairs, Republic of Uganda, Rt. Rebecca Kadaga, reiterated the commitment of EAC Partner States to support IUCEA to deliver its mandate including operationalisation of EAC Common Higher Education Area.

 

She commended IUCEA for supporting regional integration through harmonisation and quality assurance of higher education system and supporting regional mobility of staff and students in universities and other tertiary institutions. “Higher Education should ensure increased access to relevant education, improve competitiveness of graduates, ensure comparability and acceptability of qualifications and graduates,” Kadaga said.

 

The groundbreaking ceremony was attended by high-level dignitaries from all EAC Partner States.

 

The Executive Director, Civil Aviation Safety and Security Oversight Agency (CASSOA), Wanjiru Mwita, who represented the EAC Secretary General, said the new facilities will enhance collaboration among higher education institutions through research and innovation.

 

The Executive Secretary, IUCEA, Prof. Gaspard Banyankimbona appreciated the Government and the citizens of Uganda for the support they have given IUCEA over the years.

 

“I wish to pay special tribute to the Government of the Republic of Uganda, our host through the Ministry of Education and Sports, for offering to IUCEA this land on which our offices sit and in which we shall witness the groundbreaking ceremony,” Prof. Banyankimbona said.

 

The Deputy Chairperson, IUCEA Executive Committee, Prof. John Mugisha, said he hoped the new building will provide facilities that can be used by universities, researchers, and all other stakeholders to advance quality higher education and integration agenda.

 

The IUCEA new building facility will sit on part of the 5-acre piece of land at Kyambogo Hill in Kampala. It will include offices, resource centre, innovation and incubation centre for research, a cafeteria, a conference hall, and a data centre.

 

The land was offered by the Government of Uganda as part of its commitment to host the body as an institution of EAC.

 

 

 

 

Homebuilders Rally Stalls After D.R. Horton Disappoints Bulls

The rally in homebuilding stocks has hit a stumbling block after results from industry bellwether D.R. Horton Inc. missed some lofty investor expectations.

 

A sector benchmark, which has logged gains in six of the past seven weeks, is dipping once again as Wall Street ponders if stock prices have gotten too rich as homebuilding stocks hit new heights amid robust housing demand and lean inventory.

 

D.R. Horton, which targets the entry-level housing market where inventory scarcity is most pronounced, blew away estimates but fell short on bullish expectations for new orders, according to Wall Street analysts. Shares fell 1.9% Thursday after opening at a record of $132.30, eclipsing a prior peak set just last week.

 

Company commentary on upcoming orders and demand was mixed, according to Tyler Batory, an analyst at Oppenheimer & Co. Investors “might make the argument this is as good as it can possibly get,” he said.

 

In the three months through June, D.R. Horton’s purchase contracts jumped 37% from a year earlier to 22,879. While those orders beat estimates, JPMorgan analysts said they missed the bull-case among investors.

 

Before this week’s slump investors had been flocking to the sector in droves as builders continued to take market share from previously-owned homes and smaller private homebuilders. A gauge of sentiment for the group rose to the highest level in more than a year in July as buyers opted for newly constructed properties.

 

With valuations still elevated, sector headwinds like rising interest rates and lingering scarcity of building materials pose a threat. Rate cuts could also hurt homebuilders as existing homeowners are likely to re-enter the market.

 

And despite elevated demand, just 1% of the nation’s homes have swapped hands this year — the lowest share in at least a decade, according to a report from Redfin Corp. Wednesday.

 

“The increase in present sales and buyer traffic is perhaps not surprising following better-than-expected housing data year-to-date,” Citigroup Inc. analysts led by Anthony Pettinari wrote in a note to clients Tuesday. “However, the prospective buyer traffic index remains well below the positive threshold.”

 

Amid an over 40% rally in D.R. Horton this year, traders have been in no rush to pile on hedges to guard themselves against losses. Earlier this week, the cost of contracts protecting against a 10% decline in the stock in the next month relative to bets for gains of the same magnitude fell to the lowest level since March, data compiled by Bloomberg show.

 

D.R. Horton’s earnings had other positives as the building firm promised further improvements to the time it took to construct a home.

 

“If you can sell and home and then close the home in the same quarter, that’s going to juice your earnings,” said Batory. “This is why builders, especially D.R. Horton, were crushing estimates earlier this year — cycle times have gotten a bit better. How long it takes to build a home has improved.”

 

With faster construction times, builders are able to build, sell and close a home in the same quarter, providing upside to earnings, Batory added.

 

For now, the sector is on track to notch its second weekly loss this month with the S&P Composite 1500 Homebuilding Index falling 3.5% Thursday, the biggest one day drop since November.

 

PulteGroup Inc. and NVR Inc. are the next to report, with their latest earnings results scheduled to be released on Tuesday.-Bloomberg

 

 

Billionaire Sternlicht Sees ‘Category 5 Hurricane’ Spurred by Fed Rate Hikes

Barry Sternlicht, the billionaire investor who built a reputation as a bargain hunter in financially turbulent times, is readying his next bets.

 

The Starwood Capital Group chairman scooped up distressed assets in the aftermath of the US savings and loan collapse and later in the Great Financial Crisis. He’s eyeing opportunities again, as the sharp increase in interest rates deflates commercial real estate values.

 

“We’re in a Category 5 hurricane,” Sternlicht said in an interview taped in June for an upcoming episode of Bloomberg Wealth with David Rubenstein. “It’s sort of a blackout hovering over the entire industry until we get some relief or some understanding of what the Fed’s going to do over the longer term.”

 

 

Starwood, with $115 billion in assets under management, isn’t immune: It has faced redemption requests at a nontraded real estate investment trust. And more recently, the firm failed to refinance or pay off the $212.5 million mortgage on an Atlanta office tower.

 

The predicament is unlike past real estate downturns, when aggressive risk-taking in the property industry bled into the broader financial system. This time around, according to Sternlicht, commercial real estate is collateral damage in the Federal Reserve’s efforts to calm inflation with rate hikes.

 

Financing now is more expensive and harder to come by. Landlords with floating-rate loans are facing the prospect of higher debt payments. While office vacancies pile up in the remote-work era, demand for other property types — apartments, warehouses, hotels — remains strong for now. That could change in a recession.

 

In the meantime, tight credit conditions are complicating developers’ efforts to start projects or refinance existing buildings. In one recent example, Starwood reached out to 33 banks for a loan on a small property and received just two offers, Sternlicht said.

 

Lenders are also reluctant to take possession of struggling assets. In one case where Starwood tried to surrender an office building, the lender instead offered to restructure the loan.

 

As a lender itself, Starwood also has been on the other side of the situation. After the firm provided financing to a well-known landlord that planned to renovate a Washington office building, the borrower walked away from the project. Starwood got the building at a large discount to what the previous owner paid, Sternlicht said, but it’s spending money to lease up the property at a time of sagging demand for office space.

 

Lenders throughout the US face similar challenges, with an estimated $1.4 trillion in commercial real estate debt coming due by the end of 2024.

 

“You could see a second RTC,” Sternlicht said, referring to Resolution Trust Corp., the government entity charged with liquidating assets of the savings and loan associations that failed in the late 1980s and early 1990s.

 

 

“You could see 400 or 500 banks that could fail,” he said. “And they will have to sell. It also will be a great opportunity.”

 

Sternlicht, 62, launched his own real estate firm in the time of the RTC, buying up apartments and selling them 18 months later to the billionaire Sam Zell at triple the purchase price.

 

Starwood also landed deals following the financial crisis, including the $2.7 billion purchase alongside other investors of some assets of Corus Bank from the Federal Deposit Insurance Corp., which provided low-cost financing for the transaction to hasten a sale.

 

Sternlicht sees parallels now as the FDIC looks to sell off commercial real estate loans held on the books of Signature Bank, which failed in March.

 

“The government’s going to prop up the value of that portfolio by providing very cheap financing to it,” he said.

 

In his interview with Bloomberg, Sternlicht discussed the repercussions of interest-rate hikes and tightening credit. He also spoke about his outlook for office landlords, how he got started in real estate and where investors should put their money.

 

For Sternlicht’s full interview, watch Bloomberg Wealth With David Rubenstein at 9 p.m. New York time on July 25. This interview was recorded on June 28th in New York. Questions and answers have been condensed and edited for clarity.

 

Many people think the real estate market’s going to be in trouble because high interest rates are making it more and more difficult for people to service their loans. And we’re going to have a lot of defaults soon. What do you think about that observation?

 

Anything with a fixed income stream is worth less when rates rise. And usually, real estate’s the culprit. We often cause calamities in the economy. Banks get overzealous, lend 100% of cost.

 

In this case, we really were an accidental consequence of the Fed’s actions. We didn’t really cause this problem. Banks hadn’t stretched loan-to-values. And the underlying fundamentals in most of the asset classes in real estate are OK right now. The apartment market, the industrial logistics market, the hotel markets — those are all in good shape.

 

But there’s no question that the Fed has reacted dramatically to try to slow the economy down — quite late, obviously — and that has impacted real estate values. Yields on properties are moving up to reflect this higher interest rate. And the supply of credit to the industry has curtailed dramatically.

 

You’ve been critical of the Federal Reserve. You feel that they raised interest rates too much too quickly. What should they have done in response to Covid?

 

I’m empathetic to the situation of Jerome Powell. We had to increase rates. We should have done that much earlier. Powell shouldn’t have had negative interest rates. He shouldn’t have been buying mortgages into May of ’22. That should have stopped so much earlier.

 

But when he finally stopped, he went in the other direction, and he went so far so fast. And I’m saying, “Just wait. Wait to see the impact of what you’ve done.” Because, like, the real estate complex, we don’t explode overnight. We explode in a series of explosions over the next year and a half as loans mature and people can’t pay them off.

 

When you say these things publicly that are critical of the chairman of the Fed, does it get to be more difficult to get a meeting with him?

 

I’m actually talking to him and the Fed governors on behalf of my industry as a whole. A lot of us, including ourselves, we have interest-rate caps in place on our loans. So currently we have no issue.

 

But the cap will expire. And then instead of paying 1% or 2% because we have a cap, or 4%, we’ll be paying 8% or 9%. And many assets won’t be able to cover debt service. And so you’ll be having negotiations with your lenders. And you’ll have to rewrite these loans. And there’s going to be a serious credit contraction.

 

The country in any asset class has not adjusted to that cost of capital yet. But it’s coming. The economy will slow. You can see the numbers. CEO confidence is down, consumer confidence is down, retail sales are down. The service economy is wickedly strong. It just feels like the last gasp before we actually settle into what should be — what you’d expect to be — I hope it’s a shallow recession. I hope he can pull that off. That would be quite an execution.

 

Sometimes people are saying that the best investment opportunity now is distressed real estate debt — that you can buy the debt from banks at a discount. But do you think it’s too early for that?

 

You know, we were gonna give back an office building. And they said, “Well, not so fast. If you want to, we’ll restructure the loan. And we’ll cut the loan in half. And you put the money in here. And we’ll take this as a junior note.” Because the banks don’t want the assets back. They’re not set up to carry these assets. It’s not their business.

 

So you’re beginning to see stuff. We’re going to see this big trade of the [Signature] Bank portfolio. That’s going to be a benchmark for market.

 

A lot of fortunes were made in the real estate world in ’07-’08 when people bought distressed real estate. The late ’80s too, when the RTC was here. Do you see funds being formed to buy these assets? But you think they won’t be available for a year or two?

 

Right now you have an unusual situation in the real estate markets because everyone’s sort of looking at the yield curve. And it says rates will be lower later. Everyone says, “You know, survive till ’25. Hold onto your assets.” So transaction volumes have plummeted.

 

Unless you have to sell something today, nobody wants to sell anything today. They think tomorrow will be rosier. So for the most part, everybody’s pushing any sales back. But what you’re seeing is when a loan is maturing and a borrower can’t cover the current debt service. Something’s gotta give. Unfortunately, we’re also a lender.

 

Are we going to change the way office buildings are really valued in the future because tenants aren’t going to need as much space? Or do you think eventually the tenants will come back and the employees will come back?

 

The work-from-home phenomenon is a US phenomenon. If you go to England or Germany, rents are up, and vacancy rates in the top German property markets — Berlin, Frankfort, Munich, Hamburg — are less than 5%. People are back in the office. You and I go to the Middle East, they’re full. We have offices in Asia, they’re full. So this is a US situation.

 

In the US you have two markets. The nice buildings will stay rented and my guess is at pretty good rates. And the B and C stuff is going to be — maybe fields of grain or something. It’ll be very pretty. We’ll have all these little mid-block parks in New York City because there won’t be anything else to do with those buildings.

 

The other thing about office is AI. AI is going to hit a couple of these industries that have been big users of office space. So that’s sort of a big question mark in the investment equation.

 

Let’s suppose I’m an average person. Where should I put my money as an investor in real estate?

 

High interest rates are depressing the number of single-family home units that have been built so now you’re having an ever-increasing scarcity of residential. Given the cost of construction, the whole residential complex — including single-families for rent, multifamily, the housing market, even residential land — I think they make interesting investment opportunities today.

 

Is it a good thing for people to now invest in a real REIT?

 

I think real estate has a nice place in the balance sheet of any individual. In the pandemic, we raised a special-situations fund and bought 15 names in the REIT business, and we were up, like 70% at one point. We’re going to do that again. And if you take a long-term view, some of these are good companies with the wrong interest-rate environment. I wouldn’t even say they have the wrong balance sheet, but they are so out of favor. There are some really good buys out there. So if you’re clever, you could buy some public REITs.

 

What kind of return should an average REIT investor expect?

 

In the mortgage REIT, Starwood Property Trust, we’re paying a 10% dividend. So you get that and any appreciation in the stock, and the stock’s currently trading below book value. It usually trades above book value. It used to trade at 1.23 times and now it’s trading at .9. So if it reverts, you’ll get a 15% return. We’ve averaged 11.3% over 10 years.

 

Why should somebody want a career in real estate? Why is that a good business to be in?

 

You’ve got to find niches, and there are a lot of niches in real estate. And it’s very micro, block by block. If I didn’t have my firm today, could I buy — even in a city like New York — and redo apartments and housing. I could make money doing that. I have a friend of a friend who’s bought 300 homes. He turned living rooms into bedrooms, put them all on Airbnb. He’s earning a fortune and using Airbnb as his distribution set. It’s a giant industry. There’s always something to do.

 

You were based in the northeast part of the US for much of your career. You grew up in Connecticut, you were born in Long Island. But you picked up and moved to Miami. Why did you do that a few years ago? And any regrets about moving to Miami?

 

Well, my mom’s down there. And I got divorced. That was one reason. Change your life, start over. There was obviously a tax benefit to doing so. And I had sold an interest in my firm at the time. I was based in Connecticut. I was based in Greenwich, our headquarters was there. I looked at my travel calendar in a normal year and I was only home for about a third of it. So I didn’t think it’d be that hard to move and make that my base of operations. It turned I caught the wave perfectly.

 

I was an early settler into Miami. And, you know, the home prices probably tripled there. I should have bought everything with my house. I would have had the best-performing real estate fund in the world.

 

If your mother came to you and said, “I have $100,000. I need to invest it somewhere. Where should I invest it?” You would say where, real estate?

 

Today if you look at my portfolio, I have a significant amount of cash that I never had before because I’m getting 5% for the cash. Pretty soon I’m going to just start deploying that capital when I can see the sun coming through the clouds of the Fed’s movement. When the Fed basically tells you they’re done, I think real estate will catch a very firm bid.

 

Also, I would look offshore for a bit of my money. I’d invest in some of the nations without the deficits of the United States and enjoy some diversity to my investments.-Bloomberg

 

 

China Eyes Next Pandemic in Push for New Emergency Facilities

China ordered its largest cities to step up preparations for future medical emergencies by building leisure and recreational facilities that can be used for quarantine during a pandemic, several months after the leadership abandoned its zero-tolerance approach to Covid-19.

 

The so-called “dual emergency and normal use” facilities will be “actively” built in megacities across the country, the official Xinhua news agency cited Vice Premier He Lifeng as saying during a conference on Thursday. The facilities will be used for tourism, recreation and healthcare in normal times. During emergencies, they will serve as medical treatment and quarantine centers as well as storage spaces for supplies, according to the report.

 

He labeled the infrastructure drive as part of efforts to “balance development and security,” a term used by President Xi Jinping to refer to combining economic growth with measures to better prepare for major risks such as pandemics.

 

China’s government wants to rally private capital in the construction and maintenance of the facilities, according to the report, which didn’t specify how much investment will be needed.

 

The comments also followed Beijing’s latest pledges to rebuild a shattered private sector after limited steps so far this year have done little to bolster its weakening economic growth.

 

Read more: Xi’s Big Private-Sector Push Runs Into Wall of Skepticism

 

The private sector produces more than 60% of gross domestic product and accounts for more than 80% of urban jobs. Investment by private firms contracted 0.2% in the first half of the year, official data showed this week, compared with an 8.1% expansion by state-owned businesses.

 

Covid Zero

Cities across China rushed to build quarantine facilities and emergency hospitals from 2020-2022, when the country enforced a strict zero-tolerance approach to battle the pandemic. That policy suddenly ended in December, leaving those facilities unused. They have since been converted into housing or tourism sites.

 

The ruling Communist party’s politburo, the top decision making body, called for the construction of these “dual emergency and normal use” facilities along with shantytown reconstruction at a meeting in April. China’s top economic planning agency said in a statement later that month that the largest cities should plan to build homes and hotels which can be used as emergency accommodation, as well as large-scale makeshift hospitals.

 

Building the facilities is “an important measure to balance the country’s needs for security and growth, and to advance high-quality development of cities,” according to the July 14 State Council meeting presided over by Premier Li Qiang.-Bloomberg

 

 

 

 

Sweden’s Property Rout Drags Down Result of Another Pension Fund

Sweden’s pension system is increasingly caught up in a property crisis that’s hit commercial landlords, with one of the state-owned pension funds joining peers that have taken losses on its investments in real estate assets.

 

Forsta AP-fonden, more commonly known as AP1, saw the value of its investments in properties shrink by 7%, or 5.2 billion kronor ($450 million) in the six months through June. Real estate assets were the biggest drag, followed by private equity funds (-0.77%) and fixed income securities (-0.35%).

 

“Very few transactions took place on the market during the period, leading to valuations depreciating somewhat, particularly in the Nordics,” Chief Executive Officer Kristin Magnusson Bernard said in a statement. “In markets where external valuers made larger write-downs more rapidly, such as the UK, the market seemed to stabilize faster,” she said.

 

The development echoes peers in Sweden. The Nordic nation’s largest private pension fund, Alecta AB, earlier this week reported a 1% loss on its alternative investments in the first half of the year — a portfolio comprising mainly real estate assets. Sharply rising funding costs have rattled Sweden’s real estate sector, where many companies have relied on cheap floating-rate bonds to finance rapid growth.

 

On a more positive note for the AP1, the real estate companies it owns “have retained their excellent credit ratings and continuous access to capital,” it said in the report. Strong development for equities still helped the fund generate an overall return of 6.6% after expenses.

 

 

 

Office REITs Rally Into Earnings, But Investors Want to See Cash

Investors in US office real estate stocks are focused on two crucial themes as the sector kicks off earnings this week: leasing activity and the ability to tap capital markets for financing.

 

Real estate investment trusts are bouncing of late, outperforming the broader market. But they’re still battling fierce headwinds, from elevated borrowing costs to falling property valuations to the tough economic backdrop in metropolitan areas, where office use cratered during the pandemic.

 

The key question for investors is still, “Who will put money, whether debt or equity, into these properties with cash flow declining,” said Bloomberg Intelligence analyst Jeffrey Langbaum.

 

New York-based SL Green Realty Corp., which reports after the market close, gave the sector a boost late last month with news that it sold an almost 50% stake in a Midtown Manhattan office skyscraper to a US affiliate of Mori Trust Co.

 

The S&P Composite 1500 Office REITs Index is on track for a fourth straight weekly gain, something it hasn’t done in more than a year. Since the start of June, the index is up more than 17%, beating the roughly 9% gain in the S&P 500. The advance has trimmed the REIT gauge’s 2023 loss to 12%, from as much as 57% in late May.

 

The big challenge for the firms, obviously, is that far fewer workers are streaming into office buildings than they were before the pandemic. In 10 of the largest U.S. business districts, office use was 49% of pre-Covid-19 levels in the week ended July 12, according to data from Kastle Systems.

 

A $500 Billion Corporate-Debt Storm Builds Over Global Economy

However, things may not actually be as bad as they seem, says Michael Lewis at Truist Securities. Of the nine office REITs he covers, eight are operating at more than 90% occupancy.

 

“Office REITs are actually holding up much better than anybody probably would’ve expected in this environment,” Lewis said. He has a buy rating on both SL Green and another New York City bellwether, Vornado Realty Trust.

 

Dipping Toes

The move that SL Green announced last month jolted the market broadly because it shows an investor dipping their toes in the water.

 

“A lot of peers jumped on that simply because it was the first data point we’ve had in a while where somebody was willing to throw a big chunk of money at a New York City office building,” said BI’s Langbaum.

 

And now, earnings season gives companies a chance to provide more clarity on leasing and financing, he said.

 

Vornado’s results and those of Kilroy Realty Corp. are scheduled for the end of July, while Boston Properties Inc. is expected to report Aug. 1.

 

Sunbelt markets, especially Atlanta, continue to see stronger leasing activity than others, while the West Coast is still struggling with weak demand from the tech industry, Wells Fargo & Co. analysts led by Blaine Heck wrote in a note. New York City, meanwhile, is faring a bit better given its outsized exposure to financial services, they said.

 

Of course, financial institutions have their own worries related to capital requirements and commercial real estate exposure, leaving investors wondering if the lenders will have adequate appetite to extend financing to office landlords, Langbaum said.

 

Goldman Sachs Group Inc. drove home the tough position banks face on Wednesday, when it said writedowns of real estate investments helped drive a nearly $1.2 billion hit in the second quarter.

 

 

 

Adani Aims to Transform Famous Mumbai Slum Into Glitzy Hub

Gautam Adani, the Indian tycoon who controls the port-to-power conglomerate, intends to turn Dharavi, one of Asia’s largest slums that sits in the heart of Mumbai, into a modern city hub after his real estate unit received the government’s approval to start redevelopment.

 

Adani said he intends to “transform Dharavi into a modern city hub,” by supporting small industries and promoting new jobs focused on young people and women, he wrote in a LinkedIn post Thursday. Last week his group won the right to redevelop the area, after posting a bid for 50.7 billion rupees ($618 million) late last year.

 

Adani wrote that the transformation will be achieved with the help of experts and civil society. The redevelopment is likely to be through a combination of training centers as well as setting up data, research and development centers, he said. The billionaire added he plans to create an organized marketplace in line with India’s Open Network for Digital Commerce. He did not elaborate.

 

Read: Billionaire Tech Pioneer Takes On Amazon, Walmart in India

 

Adani’s involvement has been met with protests from some political parties and local inhabitants who fear their businesses will be relocated far from the city center leading to job losses.

 

The controversial slum project is spread over roughly 620 acres (250 hectares) of potentially prime real estate in the financial capital, which is home to more than 20 million people. Dharavi, made famous by the film Slumdog Millionaire, neighbors the Bandra Kurla Complex, an upmarket district of shopping malls, embassies and banks, including offices of Citibank N.A and JPMorgan Chase & Co.

 

Indian administrators have struggled for decades to modernize the neighborhood, because of the difficulty of acquiring large tracts of land, attracting investors to a place without stable utilities, and resettling an estimated 1 million people.

 

Adani appeared optimistic that he would be able to deliver.

 

“After we are done, if Mike Tyson does visit Dharavi again, he may not be able to recognise the Dharavi he saw earlier but I am sure that he will still find its soul as spirited and alive as ever,” Adani wrote, referring to the boxer’s apparent desire to visit the famous slum along with the Taj Mahal. “God willing, the likes of Danny Boyle will discover that the new Dharavi is producing millionaires without the slumdog prefix”.

 

 

 

 

Popping Real Estate Bubbles Will Prove Painful

Faith that interest rates would stay low forever fostered a “fool’s paradise,” according to former Bank of England boss Mervyn King. Nowhere is this more obvious than in the unraveling of the global real estate boom, which is now turning into bust as prices start to fall around the world. Fair enough: After so much speculation and overvaluation amid an undersupply of new homes, a healthy correction is exactly what a lot of societies need.

 

But the return to normality looks hellishly unequal amid a broader cost-of-living crisis, high inflation and a persistent lack of housing supply — and brings the risk of more social anger, as interest rates prove to be an even blunter tool on the way up than on the way down. The temptation to soften the blow will be hard for politicians to resist.

 

In markets like the UK with a long history of sustained price rises, the decline has been more muted, but the pain is there beneath the surface. Prices have another 10% to fall from their 2022 peak, according to Bloomberg Intelligence’s Niraj Shah, who says those who stretched their budgets to buy during Covid-19 are in for a shock. The Bank of England estimates that around 4.5 million households have already seen increases in repayments since late 2021, with another 4 million to be hit with higher rates by the end of 2026. A typical borrower refinancing in the second half of this year could see payments rise by around £220 ($288) a month.

 

The flipside of these tales of woe is that, ideally, real estate should become more affordable and give first-time buyers a fairer shake. But this isn’t happening either. Markets are gummed up, and the supply of credit is dwindling. An International Monetary Fund paper from March found that real estate looks overvalued across Europe by as much as 20%, but that rising interest rates have eroded the buying power of prospective homeowners by around 40%. Using average figures to buy a 100-square-meter (1077 square feet) dwelling, the researchers estimate that aspiring buyers face an increase of 33% in debt-service repayments compared with 2021. It’s worse in the UK, where first-time buyers haven’t had it this bad in terms of mortgage affordability since 2008.

 

And as with the recent inflation shocks hitting food and energy prices, lower-income households are suffering the most from increases in property costs, even among those who aren’t homeowners. With landlords trying to pass on their higher bills, tenants in London — where average rents are up 13.5% year-on-year, according to Zoopla Ltd. — say they’re scared of losing their homes. Unlike the big restructuring efforts taking place in European real estate, with companies rejigging their portfolios, often by offloading the weakest buildings, individuals caught in the housing crisis have few ways out.

Note: The Weil European Distress Index (WEDI) provides a measure of the level of corporate distress by aggregating company fundamentals and financial market indicators across key European countries.

 

Central bankers will say the medicine is working, but the option of doing nothing to protect renters and mortgage payers is going to become increasingly politically unpalatable if the promise of a soft landing — or a sudden evaporation of inflation — fails to become reality.

 

crash_course_tout

What should be done? The ideal solution to housing crises has always been to build more homes, but it would take half a century to clear the UK’s backlog, and at a time of high inflation the outlook for construction is getting worse, not better. It’s more likely that more short-term tools will be employed. Pressure will grow on banks — which are loudly broadcasting their impeccable financial health — to go easy on borrowers, rather than repossess. Mortgage relief is being proposed in Sweden and Ireland. Blunter instruments with a poor track record, like rent controls, may also see a comeback if politicians and central bankers fail to pacify voter ire.

 

This will create new risks, from the moral hazard of bailing out the privileged to propping up the equivalent of corporate zombies whose business model only survives in low-rate environments. Ideally, measures will be targeted — and if any demographic deserves help, it’s those who aren’t yet on the property ladder. Either way, exiting a fool’s paradise will have messy consequences.

 

 

 


 


 


Invest Wisely!

Bulls n Bears 

 

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INVESTORS DIARY 2023

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


POSB

AGM

Chapman Golf Club

July 25 2023 |10am

 


Afdis

AGM

Virtual | St Marnocks, Lomagundi Road, Stapleford

July 26 2023 | 12pm

 


RTG

AGM

Rainbow Towers Hotel

July 27 2023 |12pm

 


ZHL

AGM

206 Samora Machel Avenue

July 28 2023 | 10am

 


Delta

AGM

Virtual | Head Office, Northridge Close, Borrowdale

July 28 2023 | 12:30pm

 


 

Heroes’ Day

 

Aug 14

 


 

Defence Forces Day

 

Aug 15

 


zIMBABWE

 

2023 harmonised elections

August 23

 


Companies under Cautionary

 

 

 


 

 

 

 


CBZH

GetBucks

EcoCash

 


Padenga

Econet

RTG

 


Fidelity

TSL

FMHL

 


 

 

 

 


 <mailto:info at bulls.co.zw> 

 


 

 


DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from s believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and d from third parties.

 


 

 


(c) 2023 Web: <http://www.bullszimbabwe.com>  www.bullszimbabwe.com Email:  <mailto:info at bulls.co.zw> bulls at bullszimbabwe.com Tel: +263 4 2927658 Cell: +263 77 344 1674

 


 

 

 

 

 

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