Setting up new offices has been the most popular choice for international real estate companies looking to expand across the continent.
A survey of property companies operating on the continent from 1960 to 2010 found that 59 percent of all the companies chose new office establishment as the preferred strategy for pan-African expansion.
Despite the challenges of establishing a new office from scratch, this as the most sought after and the most successful entry strategy by most multinationals looking to build a presence on the continent (91 percent success rate).
The past decade, however, saw a reduction in this strategy to 32 percent as market players sought to diversify their strategies through introduction of franchise agreements, acquisitions and partnership/affiliate agreements.
According to the survey by estate intel, the acquisition and office establishment strategy proved to be the most successful as it enabled service providers the capacity to gain quick access to local knowledge and keep firsthand contact with clients.
Partnerships were less successful due to difficulties in obtaining alignment, leading to frequent churn.
Although not the most used strategy, franchise agreements were also very successful on the continent in cases where they were used, recording a success rate of 100 percent.
Without the right local market knowledge, understanding of nuances, typical rates and more– it is almost impossible to offer real estate clients good quality service. Though improving, little or no access to information is the norm.
Multinationals in the real estate sector have been eyeing the African market since the 1960s. The survey revealed that up to 22 offices have been opened in 12 African countries since 1960 with Knight Frank accounting for well over a third.
Some of the major players who have dared to venture into the markets with relative success include Knight Frank, JLL, Broll, Actis, Savills, CBRE and others.