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African real estate has unique drivers for growth 

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Global megatrends will drive growth opportunities in the real estate industry across the African continent: PwC report

Global megatrends, such as rapid urbanisation and demographic changes, will drive growth opportunities in the real estate industry across the African continent over the next five years. “The pace of change in the world is accelerating, with a series of transitions, known as global megatrends, transforming the way in which business and society operate,” says Ilse French, Real Estate Leader for PwC Africa (http://www.pwc.com).

 

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(PwC Global Real Estate Leader, Kees Hage)

 

“More and more, investors around the world are seeing the growth potential of Africa, in particular its substantial demographic edge. Economic growth, improving political stability and ongoing investments in infrastructure are opening up previously inaccessible markets.” adds French.

 

Two publications recently released by PwC consider the drivers for real estate growth in Africa and highlight existing and emerging trends in African real estate that are shaping the ‘African opportunity’ for investors.

 

PwC’s inaugural publication entitled Real Estate: Building the future of Africa considers the impact of global megatrends on the African continent. The aim of the report is to provide an assessment of the current state of the real estate industry across Africa and demonstrate how the megatrends will drive growth opportunities in key African markets.

 

The report also considers the real estate market in ten selected countries in sub-Saharan Africa (SSA). These country profiles provide insight into the local, regional and global influences on the real estate markets of individual countries, providing an illustration of the effects of the trends being felt at a national level.

 

The report shows that the opportunities across the African continent are significant and span every sector. In almost all markets the demand for high-quality retail, office and industrial space continues to outstrip supply as international and local occupiers respond to new economic opportunities. Huge shortfalls in residential property across the continent will give rise to private investment on a grand scale.

 

Furthermore, a lack of local funding for infrastructure projects provides a platform for new private partnerships with the public sector. Shifting demographic trends and changes in consumer behaviour are also likely to create a huge demand for new and different real estate by 2020 and beyond.  According to the report, we will also see the entry of more specialist investors into the market.  Projected forecasts of 20% net annual returns from investing in shopping malls, office blocks or industrial complexes in countries across the continent continue to draw in new investors.

 

Among the findings of PwC’s report, the following eight drivers for growth were identified:

 

  1. Africa’s young population will drive the demand for real estate and different types of real estate. Across Africa there will be continued urbanisation, an expansion of current cities and the rise of new cities.

 

  1. Industrialisation will continue across Africa and will be accompanied by a rapid growth in the retail sector.

 

  1. The export of natural resources and agriculture will remain key sources of economic growth, but will expose certain countries to increased risk.

 

  1. Infrastructure shortages will create opportunities for investment.

 

  1. The influence of government policy and legislation on the decision to invest will increase, while local partnerships will become increasingly important.

 

  1. Continued advancement within pension fund, stock exchange and banking regimes will facilitate investment, and an increased range of investors will drive demand for real estate investment opportunities.

 

  1. Technology will impact business and building practices, as well as consumer behaviour.

 

  1. Sustainability will become entrenched in building design and occupier requirements, with Africa’s most ambitious countries changing city design and building practices.

 

When considering these drivers of growth it is also important to note that there are specific risk factors underlying the development of Africa. These include the impact of political instability and changing government policy; complex legal regimes; the volatility of local currencies; and the timeframe of investments and restrictions on possible exit strategies.  Despite these risks, real estate investors and developers continue to see the African market as a huge opportunity.

 

French says: “It would be easy to underestimate the impact of global megatrends on Africa. After all, Africa’s real estate markets have traditionally lagged behind developed and many developing economies. Levels of investment in real estate in Africa are low by a global standard, while significant challenges exist in exploiting potential opportunities.

 

“However, our research suggests the impact of global megatrends on Africa will be huge. This will create a diverse range of opportunities for the real estate industry Africa – opportunities that often differ from those available in more developed markets.”

 

The global impact of these trends are supported by the findings of a second report, Global Emerging Trends in Real Estate® 2015, which is an annual forecast of global real estate investor sentiment published jointly by the Urban Land Institute (ULI) and PwC.

 

The report, based on the views of senior global property investors, identifies several ‘megatrends’ affecting markets around the world, each of which has implications for development and investment: increasing urbanisation (the majority of the world’s population now lives in urban areas); demographic and social changes (including a significant rise in the number of older and elderly people); technology advancements; the rise of economic power in emerging markets (due largely to an expanding middle class); and climate change.

 

PwC Global Real Estate Leader, Kees Hage, says: “There is a wall of capital targeting real estate opportunities in many markets across the globe. The search for better yields has taken some investors into development and secondary markets, moving them up the risk curve. But investors must strike a balance between the need to deploy capital and the ability to achieve good returns, at a time when there is such a difference in the economic conditions across the globe.

 

“Real estate investors have a wide range of issues to consider when making investment decisions. What is clear is that they may have to approach those decisions in a completely different way in the future. Capital allocations may need to be made to a wider range of asset types than ever before, ranging from retirement and student housing to data centres and self-storage.”

 

Also for the first time Africa is included in the report. The report provides insight into of the current African real estate sector by focusing on the key markets through a series of interviews with leading players in the industry who provide their views and outlooks on the investment climate.

 

Some key themes emerge from the interviews held which include:

 

  • The listed sector in Africa – Interviewees noted that the listed property sector in South Africa has shown excellent performance, with 26.6% total returns. The listed sector in South Africa has demonstrated huge growth and now has a market capitalisation of just over R350bn, having being boosted by an influx of capital following the introduction of REIT legislation in 2013. The listed real estate sector in South Africa is now close in value to the corresponding sectors in Singapore and Hong Kong. However, there are a limited number of REITs sufficiently liquid to attract foreign investment, while the unlisted real estate market is dominated by South African institutions.

 

  • Challenges of investing in Africa – Interviewees indicated that the size of available investments may not match the demands of larger institutional investors, who require substantial investments to enter the market. Investments to the value of US$20-30 million are common and provide opportunities for investors looking for high returns for this level of investment, like family offices in Europe. Interviewees also noted the significant development risk and timeframes which must be considered when investing in Africa.

 

  • Finance in Africa – Securing finance in South Africa is not viewed as a problem, but elsewhere in Africa interviewees indicated that this provides difficulties for investors. Across the rest of Africa, the finance market is dominated by a small number of financial institutions requiring equity investment of up to 50% to secure finance for developments. This presents opportunities for overseas debt providers to enter the market in support of regionally based developers and investors.

 

  • The impact of megatrends on Africa – Trends observed by interviewees include the continued impact of urbanisation, with the observation in South Africa that some small towns are being marginalised as large metropolitan areas develop. Developers are careful about the size and number of retail developments over the short term, with five-year planning horizons providing time for consumer spending habits to develop to keep pace with increasing supply.

 

French says: “As real estate investors around the world are faced with the challenge of finding value and returns at a time when core property is becoming overpriced in almost all markets, Africa is now of increasing interest. We believe African real estate has unique drivers for growth, as highlighted in the two reports released by PwC.”

 

Distributed by APO (African Press Organization) on behalf of PricewaterhouseCoopers LLP (PwC).

 

 

About PwC:

 

PwC (http://www.pwc.com) helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at www.pwc.com

 

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please seewww.pwc.com/structure for further details.

 

Contacts:

Ilse French: Real Estate Leader for PwC Africa

Office: + 27 11 797 4094

Email: ilse.french@za.pwc.com

OR

Jocelyn Newmarch: Account Manager: Edelman, South Africa

Office: + 27 11 504 4000

Mobile: + 27 84 462 1111

Email: Jocelyn.Newmarch@edelman.com

OR

Sanchia Temkin: Head of Media Relations, PwC

Office: + 27 11 797 4470

Email: sanchia.temkin@za.pwc.com

 

SOURCE 

PricewaterhouseCoopers LLP (PwC)

 

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GOOGLE HOME HUB SAYS NO TO SMART-HOME CAMERAS IN YOUR BEDROOM

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The new Google Home Hub sports a 7-inch touchscreen, a fabric-encased full-range speaker, a light sensor and two far-field microphones. But even more interesting is a hardware feature it doesn’t have.

The $149 device has no camera, so you can’t use it for video calls or taking photos.

While that omission at first blush may not seem like a big deal, it raises a handful of thorny questions about how many cameras and microphones people want to have in their connected homes and how much they trust giant tech companies to protect their data and privacy in their most intimate spaces.

The Home Hub, which Google introduced at its Made By Google product launch event Tuesday in Manhattan, is a mashup of a smart speaker and a tablet that’s often called a smart display. It uses the voice-powered Google Assistant to let you play YouTube videos, check your home security camera feeds and control connected smart-home devices like lights.

The device will go up against a growing list of competing smart displays, including the Amazon’s Alexa-powered Echo Show and Echo Spot, the new Facebook Portal, and the Google Assistant-powered JBL Link View and Lenovo Smart Display. All five of those devices include cameras for video chats.

The Hub comes out at time when tech companies are facing greater scrutiny for how they manage users’ data and how much of that information they keep. Just this week, Google shut down its unpopular Google+ social network after the company was forced to disclose a bug that put users’ data at risk. Earlier this year, Facebook sustained a torrent of criticism after the data of millions of people landed in the hands of consultancy Cambridge Analytica, which exploited the information for targeted election ads.

Simultaneously, many of these same companies are asking consumers to add more and more cameras, mics and sensors to control their homes.

So far, smart-home customers haven’t raised persistent concerns about these devices tracking them, instead focusing more on the convenience they can offer. But that dynamic has the potential to quickly change if there’s ever a major breach related to the audio, video and shopping data these electronics can track.

When the Hub comes out on Oct. 22, consumers will get to decide whether they want to make the Hub a bigger success than its many rival camera-toting smart displays. Whether they side more with the privacy of having no camera or the convenience of video features may signal what direction smart home technology will go in the future.

“It’s kind of less is more,” said GlobalData analyst Avi Greengart, who attended the Google event. “They’re omitting a piece of hardware that costs money and does raise some privacy implications.”

Google’s view on going camera-free

While Amazon in particular has pushed full-force into offering smart speakers with cameras, including those marketed for the bedroom, Google took a decidedly different approach with the Hub.

“For us, in general, it’s not about one product or another, just the word camera — hey, put a camera in your bedroom,” Mark Spates, Google’s product lead for smart speakers, said at Tuesday’s event. “It’s a comfort thing. For us, we wanted to make sure that you could use this anywhere in the home.”

Google wanted to give customers that option after finding that people put the Google Home Mini — its most popular smart speaker — in hallways, washrooms, bedrooms and everywhere else in their homes, he said. Looking to build on the Mini’s success and avoid limiting where the Hub can go, he said, Google opted to leave out a camera.

Diya Jolly, Google’s vice president of product management, added that the company saw an opportunity to offer a different kind of smart display, after several competing devices already offered a camera. She said Google was willing to explore adding a camera to a later version, but “we wanted to see how consumers reacted and how they liked” the new Hub.

“We wanted to give users a choice of not having a camera,” she said. “There are many other devices out there that have a camera, but none that doesn’t have a camera.”

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A marketing picture from Amazon of the Echo Spot as a bedroom nightstand clock.Amazon

In stark contrast with the Hub, competing smart displays are heavily promoting their video capabilities. The new Facebook Portal was created especially for Facebook Messenger video calls, and Amazon’s Echo Show and Spot have been marketed for their video call functions. Amazon even included a “drop in” feature that lets people connect automatically with a Show or Spot if they’ve been approved to do so by the device’s owner.

Amazon also created another product called the Echo Look that’s marketed for your bedroom or closet. It uses a camera to take pictures of your outfit choices to give you AI-powered fashion advice. The Spot, too, is marketed as a replacement for your bedroom nightstand clock.

Privacy in focus

In a nod to privacy concerns, Facebook, JBL and Lenovo offer physical privacy shutters for their smart displays’ cameras. Amazon doesn’t, instead offering a button to disable the mic and camera on the Show and Spot.

“Customers have made millions of video calls this year alone, and they tell us that they love the ability to drop in from room to room within their homes or take a photo on our devices, which is why we believe the camera is important,” an Amazon spokeswoman said.

“We also built these devices with privacy in mind from the beginning,” she added, mentioning that when you press the microphone/camera off button, it cuts off power to both pieces of hardware. Also, a red light on the device is used to reinforce the fact that the mic and camera are off. “We will continue to learn from our customers and adapt our products to best meet their needs.”

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Say hi to the Facebook Portal.James Martin/CNET

Following Facebook’s privacy blunders, the company took pains to emphasize the Portal’s privacy features, including the ability to turn off the mic and camera with one tap and the use of a passcode to unlock the screen.

Both Amazon and Facebook said they don’t record, store or listen to your calls through Facebook’s Portal or Amazon’s Alexa-powered devices.

JBL and Lenovo didn’t respond to requests for comment for this story.

By leaving out a camera Google avoids the privacy concerns raised by Amazon’s rival products and prevents a potentially messy video breach from ever happening. Amazon faced criticism for the Look, with one writer for Forbes suggesting its camera may someday be able to identify skin cancer or depression. Amazon strongly denied these claims.

“Amazon is trying something completely different,” Greengart said. “I don’t think it hurts Google to omit it, and for people that do want a camera, there are those options from Amazon and Google’s partners.”

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MICROSOFT HAS KILLED MINECRAFT FOR APPLE TV

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Microsoft is no longer supporting the Apple TV version of Minecraft. The app has has been pulled from the App Store, and an in-game message notes that it won’t receive any further updates, though it’ll continue to be playable. Refunds will be issued for any purchases made up to 90 days before the announcement comes into effect. And it actually went into effect on September 24th, so it’s even more of an indictment of the state of Apple TV gaming that no-one really seemed to notice until this week.

Minecraft is one of the biggest games in history and has managed to find an audience on virtually every console, phone, and computer out there — including the iPhone, from which the Apple TV version was derived. But the Apple TV has been hampered as a games platform ever since Apple bungled the launch by unexpectedly requiring developers to support the Siri Remote. The company backtracked the following year, but the damage was done.

Apple hasn’t entirely given up on Apple TV gaming. Last year’s iPhone keynote saw Sky, the next game from Journey and Flower studio Thatgamecompany, shown off for the first time on the Apple TV 4K. But even that game is yet to see release, and it’s clear that Apple’s focus is elsewhere.

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UBER’S NEXT CONQUEST: YOUR DATA

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After replacing Travis Kalanick in August 2017, Uber CEO Dara Khosrowshahi is shifting the company’s focus. Though the company has always sought to become a world-class transportation platform, it has recently begun to describe itself as “Amazon for transportation” — an ambition which indicates the company is making a monopolistic data play.

Amazon has always been an inspiration for Uber’s leadership, but the form of that inspiration has shifted over the course of the company’s growth. Kalanick wanted to emulate Amazon’s strategy of pursuing market share and growth at the expense of profits — or, more accurately, with massive losses before using scale to reduce the marginal cost of expansion to turn a profit. Unfortunately for Kalanick, that strategy didn’t translate to Uber’s ride-hailing business.

Scale economies work for companies like Google, Facebook, and Amazon because the digital nature of their operations allows growth at little marginal cost in many aspects of their businesses. This is why many of these digital companies have so few employees compared to traditional auto companies. However, as transportation expert Hubert Horan explained: “Drivers, vehicles and fuel account for 85% of urban car service costs,” making scale economies very difficult for Uber’s ride-hailing service to achieve even as it outsources the ownership and maintenance of vehicles to its drivers.

Uber’s leadership is inspired by Amazon’s platform and the power and dominance that has come with it.

Uber’s margin improvements have typically come from cutting driver pay, not scale economies, and Kalanick’s plan to reach profitability relied on further reducing the share of revenue going to drivers. In the last few years that Kalanick served as CEO, the company became focused not just on developing autonomous vehicles, but on winning the self-driving race. We now know that autonomous vehicles will not be able to replace drivers nearly to the degree Kalanick had hoped, nor on the accelerated timeline he was relying on. This necessitates a new plan for the company’s future.

We don’t know whether Kalanick was in the process of formulating a new strategy, but over the past few months Khosrowshahi’s vision has become increasingly clear. He wants to make Uber into the “Amazon for transportation.” This time, instead of taking the wrong lessons from Amazon on scale economies, Uber’s leadership is inspired by Amazon’s platform and the power and dominance that has come with it.

From Ride-Hailing to Transportation Platform

Though Uber’s ride-hailing service has always been the center of its business, Khosrowshahi’s plan shifts the focus to its app — or, rather, its platform. He’s no longer just talking about the ride-hailing business, but about existing food delivery and freight services along with it, new scooters and bike offerings from Lime, car rentals from Getaround, public transit ticketing through Masabi, and the prospect of flying cars. Basically, the more services available, the more people the platform can serve.

Uber’s approach to autonomous vehicles has also shifted. Rather than trying to win the race to develop self-driving tech, Khosrowshahi has said his ultimate goal is to have “access” to the technology. He opened the door for Google’s Waymo and GM’s Cruise to offer their autonomous vehicle services on Uber’s platform, and Ford AV CEO Sherif Marakby recently told the Vergecast that they’d be open to offering their autonomous service on the platform as well.

Khosrowshahi predicts the traditional ride-hailing service to be only 50 percent of its future business, as scooters and bikes cannibalize the short trips currently made in vehicles. It’s hard to imagine Kalanick making a similar statement, but that doesn’t mean Khosrowshahi’s ultimate goal is any less inspired by monopolistic ideals.

Uber Wants to Control Urban Transportation Data

Uber is a private company with plans to go public in 2019. It has yet to turn a profit. Khosrowshahi has encouraged investors to commit for the long haul, as his plans to diversifying the company’s transportation options will not deliver short-term profits. At the same time, his value proposition to investors has changed: Now, they have access to Amazon-like power exerted on urban transportation networks.

In his book on these new digital monopolies, Platform Capitalism, Nick Srnicek identifies the importance of network effects in increasing a platform’s value. For platforms, data is raw material that can “be extracted, refined, and used in a variety of ways. The more data one has, the more uses one can make of them.”

Uber will not only use data on its own services, but data from every third-party service offered through its platform.

Uber already has a large, global user base (and dataset). The expansion of transportation options on its platform — both its own and those of other companies — adds value for existing users while attracting new ones interested in getting around by anything other than a car. New modes of transport and a growing user base will produce more data, showing the company where more people are going and how additional transport modes are used. Uber will not only use data on its own services, but data from every third-party service offered through its platform. All of this data feeds a flywheel that will improve Uber’s service exponentially over time.

In a recent interview with TechCrunch, Khosrowshahi was asked why he was allowing other services onto Uber’s platform. He likened it to Amazon offering branded products while letting other businesses sell their products through the Amazon marketplace. He left out how Amazon uses its sales data to see which third-party products are selling well and make cheaper versions of its own, undercutting the original product and leaving its seller with no means of challenging Amazon. Will Uber eventually do the same to Lime’s scooters or Getaround’s car rentals? It’s not impossible to imagine.

Cities Need to Act Now

City governments around the globe have struggled to effectively regulate ride-hailing apps, but there’s been some recent progress. In August, New York City passed new regulations limiting the number of ride-hailing vehicles, at least for a 12-month period as it further studies the issue. It will also ensure that drivers are paid the minimum wage of $15 per hour with a bit extra to cover vehicle costs.

Another regulatory bright spot: bikes and scooters. Having learned their lesson from letting ride-hailing companies evade regulation, city governments were quick to develop policies for new micromobility services. Mayors make it known that they, not tech companies, had ultimate authority over what happened on city streets.

As Uber sets out to capture a significant chunk of urban transportation data with its new Amazon-inspired platform model, city governments need to make clear that data from activities occurring on the street is not proprietary information. This data belongs to the people as represented by their government. Uber should not have a better idea of how different transportation data modes are operating than governments themselves.

Under Khosrowshahi’s leadership, Uber’s tone has undoubtedly changed — probably for the better. Bikes and scooters will likely capture a significant portion of the ride-hailing service’s current users. However, Uber’s push to become the world’s dominant transportation platform is cause for concern. City officials must establish their right to transportation data. At the very least, they should build publicly owned alternatives that serve the interests of residents — not multinational companies.

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