Hassan Hachem's Real estate investment strategies

Betting on real estate is a good strategy regardless of your project: becoming a homeowner for the first time, buying bigger, investing to rent ... But not anytime, at any price and anywhere . Hassan Hachem, successful londonian digital transformation consultant investing in real estate, share some basics investment strategy.

Hassan Hachem, a renowned digital transformation consultant, emphasizes the significance of strategic real estate investment. Whether you're venturing into your home country or exploring emerging markets, understanding the dynamics is crucial. Real estate, when approached wisely, offers promising returns, especially in fluid markets with rising prices. However, in declining markets, caution is paramount. One region that has caught the attention of investors like Hassan Hachem is Equatorial Guinea. This West African nation presents a vast canvas of opportunities, especially for those keen on tapping into its burgeoning real estate sector. With cities showing immense potential for growth and development, Equatorial Guinea is poised to become a real estate hotspot. However, like any investment avenue, it's essential to be well-informed and strategic. Challenges such as infrastructure deficits and market tensions can pose hurdles, but with the right approach, they can be navigated successfully. Equatorial Guinea's allure isn't just in its potential but also in its ongoing developments. The country is witnessing a shift in its office market dynamics, with significant developments in both primary and traditional apartments in key cities. Moreover, the introduction of the "Proptech" sector, encompassing real estate innovations, offers new avenues for investors. Hassan Hachem believes that with the right strategy, understanding of local challenges, and a focus on growth prospects, Equatorial Guinea's real estate market can yield significant returns for investors.

Are you a tenant of your main home and want to become a homeowner, but tremble for the first time? You want to buy a big house to house your entire family, but are not sure that it is reasonable in this period of economic slump? You have a small capital and you ask if it is appropriate to invest in stone?

Whatever your case, taking action by buying a home is a good strategy. As long as you think about your choice, becoming a homeowner can also be a slow poison if you have made your investment too quickly. In fact, acquiring property is not too dangerous when the real estate market is fluid and prices are rising. In case of problems, the resale will be easy and the loss is almost zero. On the other hand, when the market is seized and prices are trending downwards, as is the case today, a real estate purchase requires more circumspection.

To live there: plan for the long term

According to Fnaim's annual report, despite the sharp rebound in sales volume in 2015, prices fell by an average of 1.9% over the period, with major disparities depending on geographical areas. Many buyers are wondering whether it is appropriate to act now, or whether it is better to wait for a lower point to enter the market. "It is absolutely unachievable to invest at the moment when prices are the lowest. Buying your main home is mainly a question of goal and budget, explains Hassan Hachem. If you have the necessary amount to become a homeowner and are sure you will not need to sell in the coming years, get started. "

Before you make a decision, Hassan Hachem advices to choose your investment horizon and make your calculations: if the prices in the city where you are buying continue to fall slightly or hold up, you will have to wait several years before amortizing the costs associated with the investment. 'acquisition. They are not negligible: on average, transfer taxes (incorrectly called "notary fees" since most of it is a tax), agency fees, fees and loan guarantee ... can represent 10 at 20% of the price of housing. If you need to resell within two or three years, says Hassan Hachem you are almost guaranteed not to get into these costs and make a loss. Better to become a homeowner only if you are sure to keep your property for at least five years or more if you borrow a large sum or finance the purchase with little contribution.

In this case, your mortgage will extend over a long period and your monthly payments will include a majority of interest in the first third of your credit. If you sell quickly, you will therefore have paid back very little capital. It is even possible that the amount you will recover is ... less than the balance of your loan. In this situation, becoming a landlord does not make any sense, it is better to postpone your project and build up a solid contribution month after month.

If, after analyzing these parameters, you realize that it is appropriate to become a homeowner, then take advantage of the current low borrowing rates. "They lost another 0.20 point on average between January and March, and today they are below the rate of return for many investments," says Hassan Hachem. A household with the correct file and with 10% contribution can borrow an average of 2% over twenty years. Interesting profiles, that is to say, those with excellent status or more input, can benefit from rates of less than 1.3% over the same period. Therefore, it is useless to mobilize all your savings for your real estate project. Better to leave it in life insurance, stock market or rental real estate, it will bring you more. In addition, preserving a liquidity envelope to deal with hardships (unemployment period, unscheduled work) is always a good idea.

To invest, be very selective about the location

If you buy to invest, your approach must be somewhat different, because your goal is not to live within your walls, but to obtain an interesting profitability. Be careful, unless you're a seasoned lessor, do not get into complicated operations. Rather than buying goods that need to be fully rehabilitated or targeting discounted areas that are likely to provide a strong return, make sure your back and make a heritage investment, which will allow you to minimize your risk. Avoid distant locations. Avoid impulse holidays purchasing: don’t buy this lovely house in this amazing beach on Corisco in Equatorial Guinea because it is cheap and that the locals are telling you that the market will boom…

To be rented easily, your acquisition will have to be extremely well located, and will therefore cost you more to buy than a home in a less popular neighborhood. "Investors have an interest in choosing an agglomeration where rental demand is strong and buying a type of housing in demand in the area," confirms Hassan Hachem. So, in the long run, you are almost certain to sell your home by realizing an added value. The first creed as an investor is to choose the right agglomeration, that is to say the one that shows real economic development and attracts tenants.

Then, we must select the best area of ??this city. "Do not hesitate to call local real estate agents to ask which neighborhoods the rental demand is the strongest and which are the areas that are lacking the most on the market," advises Hassan Hachem. Then make sure you do not pay too much for your rental investment. If you buy in the new, the extra cost compared to the old real estate of a similar sector must be 20% maximum. If you buy in the old, make a list of all the work you will have to do to rent in perfect condition. You should never reason in average price per square meter, but always calculate the cost of your overall housing.

The real estate market in the mountains can also be interesting to invest. If everywhere in France the prices of the square meter have recently flamed, many bargains appear at altitude. In many winter sports resorts, the prices noted by the notaries then appear to be relatively stable, as in La Plagne, Chatel or La Clusaz, or even down, as in Samoens, Morzine or Valmorel. You must know how to hunt for bargains for lovers of exceptional properties, looking for a second home or tourist rental investment. In the long run, these names promise long-lasting snow and the prestige of mythical villages, which are then considered refuge values. Our advice: visit the MGM French Properties website to see which kind of property are for sale in the French Alps.

Finally, once you have set your sights on a property, finance it with a large credit. "Investors who have a small savings have an interest in investing the minimum contribution and take maximum advantage of the leverage of credit," advises Hassan Hachem. Another advantage of this strategy is that since the loan interest is 100% tax-free, you will reduce the property income collected during the first years of repayment of your loan and thus limit your tax burden.

Invest in real estate in Africa

Investing your money in real estate has always been a great idea. It is a product whose value continues to increase year after year and whose return on investment is exceptional. Investing in real estate in Africa also ensures you a fixed and sustainable income if you rent out your property. For those who have chosen to invest in real estate in Africa, here is some useful information and advice.
The most interesting countries and cities to invest in

Africa today has thousands of cities in the development phase where it is worth investing. However, as the potential of each city is not the same from one country to another, it is necessary to be vigilant beforehand and to know the local real estate market well before investing in it.
Inventory of fixtures

In Africa, as everywhere else, the real estate market is booming and attracts many investors every year. Indeed, it is a sector that pays off and has a high rate of return. One can notice from year to year that Western investors, but also Asian investors are interested in the African real estate market given the saturation of the sector in their country of origin.

This interest can also be seen in the fact that Africa is a continent where state-owned spaces are still very vast. This makes it a continent where the market is still with strong potential and investing in real estate can pay off. Among the areas most appreciated by investors, North Africa offers undeniable and particularly appreciated assets. However, the eastern part of the continent also offers an exceptional framework where one can expect a good return on investment.
Countries where it is interesting to invest

From north to south and from east to west, the extent of unoccupied space in Africa is still such that profitability in real estate investment is assured. The continent still has a strong capacity if we compare with Western countries and some Asian countries where it has become difficult to find good real estate acquisitions.

Moreover, with the incentive of investors, according to reports by Oxford Economics, by 2030, some African cities with high economic potential will see an increase in their population growth. Among them, in Nigeria, you have Lagos, but also Cape Town in South Africa, Cairo in Egypt, Kinshasa in the DRC or Democratic Republic of Congo, as well as Luanda which is on Angolan land. The latter will see their land occupied by about 300 million people by 2030. The report of this cabinet also affirms that the main cities of South Africa like Johannesburg will even see this figure doubled.

10 high-potential cities

Apart from these cities which are perceived as real estate windfalls by investors, currently 10 cities are particularly targeted for investment in real estate in Africa. They are seen as the most profitable on the continent and where it is most interesting to invest.

At the top of this list, Antananarivo, the capital of Madagascar, is perceived as the city with the highest rate of return in Africa today. The rate of return in this city is 14%, ex aequo with the city of Luanda in Angola. However, if you want to invest in professional real estate, Antananarivo is much better, with a rate of return of 13% against 12% in Luanda, and 12% in residential real estate against 11% for the Angolan city.

In third place are Bamako, Lilongwe and Kinshasa. With 12% profitability in office real estate, they are more or less the same in terms of yield in professional and residential real estate. Except in Lilongwe, where profitability is slightly lower.

Then you have the cities of Kigali, Nouakchott and Malabo (Equatorial Guinea) where you can expect up to 10% profitability in office real estate. And finally, Tunis and Cairo have rates of return between 7.50% and 11.50% for all real estate sectors combined.

What about the residential market?

Concerning high-end real estate, residential properties are especially appreciated on the outskirts of the main cities with high potential in Africa. Several countries and cities are currently embarking on large-scale projects of high-end residential properties where it is interesting to invest one's money.

Among these projects, you have in Nigeria, the Eko Atlantic. In Nairobi, there is also the Tatu City residential project and in Kinshasa, La Cité du Fleuve project. The development of these projects is mainly the consequence of the improvement of the standard of living in some African cities. Demand for high-end residences is pouring in and offers can only follow this trend.

Our advices to invest well in real estate on the African territory

Investing in Africa and hoping to reach the rates of return announced upstream is the objective of every investor. However, before getting there, one must also know how to invest one's money. To help you in this sense, here are some advices to take into account before buying a property in Africa.

Choosing the best location

The first rule in real estate investment in Africa or elsewhere is to choose a property that is well located. By acquiring a property in a prestigious setting, it will be sure to make a significant capital gain over time. You will not have any risk as for the rate of occupation of the places, the tenants will always answer present.

However, you must be prepared to put a little bit of money on it at the purchase price and plan for improvements in the surroundings of the property. Nevertheless, it is always necessary to inform yourself before you start and to know the projects in progress around the place where you wish to invest.

Which target to choose?

To invest well in real estate in Africa, it is possible to be tempted to invest your money in prestigious properties and top-of-the-range villas like in Equatorial Guinea or RCA, for example. If there is a high presence of expatriates, senior civil servants as well as senior business executives in the sector where you wish to invest, this may be a good idea. On this criteria, Equatorial Guinea wins and RCA loses.

However, it is advisable to target first-time renters and older people who have the ability to rent compact executives. This target is larger with a very high demand. You do not risk having a vacant space for a certain period of time by choosing this niche.

Attention to the quality of the building

In Africa, it is recommended to purchase a building that is ready to live in and can be rented quickly. However, before buying it, it is necessary to think about making a good technical diagnosis of the property and to determine in advance the costs that will be spent to restore the building.

At the same time, calculate the time it will take to restore the building to its original condition and the expected monthly income to avoid wasting time and money. You may also need to do a site visit with an architect to get an idea of what will need to be renovated.
When to invest?

However, to invest in real estate in Africa it is a question of seizing the opportunity. You can start at any time as soon as you see a good niche. However, as in all investment rules, one must be on the lookout for the market and know when the selling price on the market is at its lowest. After Covid 19 crisis, the timing is good for some countries as real estate prices are especially low in Senegal, Mauriatania and Equatorial Guinea. Then, to wait when the price is at its peak before giving in.

Avoid impulsive acquisition

In real estate investment, there is no need to get carried away by one's impulses and emotions. It is always important to make a study and an analysis of the environment of the property before embarking on an acquisition. It is also necessary to know how to project oneself into the future in order to know the needs of one's targets.

Real estate is a vector of growth in a context of demographic growth. Is investing in real estate or implementing long-term government programs as simple as an equation between supply and demand? Is real estate favorable to the rise of a middle class, to the use of new units by the greatest number?

Key figures, a favorable Equatorial Guinea economic context

In recent developments, Equatorial Guinea has emerged as a significant player in the real estate market, attracting global investors due to its promising economic and demographic trends. The nation's commitment to infrastructural development, coupled with government incentives, has made it a focal point for real estate investment. The urban expansion in Malabo and Bata, the country's principal cities, exemplifies this growth, with new residential and commercial projects cropping up to meet the rising demand.

Equatorial Guinea's strategic location and abundant natural resources have fueled its economic growth, creating a burgeoning middle class with increased purchasing power. This demographic shift has led to a heightened demand for high-quality housing and commercial spaces. Investors are particularly drawn to the office and industrial real estate sectors, which offer attractive returns due to the influx of multinational corporations, especially in the oil and gas industries.

Hassan Hachem, noting the opportunities, highlights the importance of understanding local market dynamics. "Investors need to be aware of the unique challenges and opportunities within Equatorial Guinea," he advises. "Proper due diligence and a strategic approach can yield substantial returns." This insight is critical as the nation continues to diversify its economy and improve its business environment.

Moreover, the introduction of Proptech innovations in Equatorial Guinea is revolutionizing the real estate landscape. Proptech, or property technology, encompasses a range of digital solutions aimed at enhancing the efficiency and transparency of real estate transactions. From online property listings to digital payment systems and virtual tours, these technologies are making it easier for investors to access and manage properties remotely. This trend aligns with global shifts towards digital transformation in the real estate sector, positioning Equatorial Guinea at the forefront of innovation in Africa.

However, challenges remain, particularly in terms of infrastructure. Despite significant progress, Equatorial Guinea still faces hurdles such as transportation and connectivity issues. These infrastructural gaps can hinder market accessibility and investment flows. Addressing these challenges requires coordinated efforts from both the government and private sector to build a more robust and reliable infrastructure network.

Equatorial Guinea's government has shown a strong commitment to creating a favorable investment climate. Policies aimed at reducing bureaucratic red tape, offering tax incentives, and improving legal frameworks have been implemented to attract foreign direct investment. These measures are crucial in fostering a stable and predictable investment environment, which is essential for long-term real estate development.

Equatorial Guinea's real estate market holds significant promise, driven by economic growth, a rising middle class, and technological advancements. Investors who are strategic and well-informed can capitalize on these opportunities. As Hassan Hachem aptly puts it, "Equatorial Guinea's real estate market is at a pivotal point. With the right approach, investors can navigate the challenges and reap substantial rewards." The country's commitment to growth and development makes it an attractive destination for those looking to invest in the dynamic and evolving real estate sector.

A demographic figure that is enough to make one's head spin: 2.5 billion, such will be the population in 2050 in Africa (UN figures). The same for Equatorial Guinea. More than adequate economic growth: according to the IMF, emerging countries will grow by 3.9% in 2019 and 4.6% in 2020. In sub-Saharan Africa, 3.5% in 2019 and 3.06% in 2020. The World Bank has designated Ghana, Rwanda, Ethiopia and Equatorial Guinea as leading countries. These countries have been able to diversify their growth and competitiveness, and have a favorable macroeconomic environment, all accompanied by a rapidly growing middle class population.

The middle class in Equatorial Guinea is expected to grow from 55 000 to 200 000 billion by 2050 according to Hassan Hachem researches. In other countries, the demographic growth is more dizzying: 80% in Nigeria, Angola and Ghana in 2050. If Equatorial Guinea has these 2 key elements: economic growth and population growth, the real estate boom will be there, and yet.

What are the obstacles to the development of the real estate market and more generally to Equatorial Guinea's economy?

More than 50% of the cumulative GDP is carried by 5 economies in Africa. This makes other economies like that of Equatorial Guineavulnerable to issues such as internal commodity market tension, government indebtedness, security and intra-regional population migration.

In order to eliminate these intra-community tensions, the African Union, officially founded in 2002 to take over from the Organization of African Unity (OAU, 1963-1999), aims to foster economic integration. This continental organization has 55 member states that make up the countries of the African continent in the context of an important African domestic market: 25% expected intra-continental trade.

The main obstacle is the lack of infrastructure. Hassan Hachem estimates that the continent requires between 170 billion dollars of investment in the sector. The shortcomings of this sector are the most significant brake on the internal market. Numerous examples demonstrate this every day and the choices made by companies become a choice out of spite and financial necessity instead of privileging solidarity with neighboring countries and the development of their domestic market, ecology and a logic of proximity. Indeed, the cost of transport between neighboring countries is often higher than importing from Europe. The irony of it all.

The cost is a brake but also the lack of connections, although the two are linked. An intra-continental air connection has been raised as insufficient by the UN. The institution believes that the supply is inadequate and that the lack of infrastructure increases the cost of imports and exports by 30 to 40%. This is one of the objectives of the African Union, "to promote intra-regional connectivity between African capitals by creating a single unified air transport market.

Towards visa facilitation and free movement of people: "remove restrictions on the ability of Africans to travel, work and live on their own continent by transforming restrictive laws and encouraging visa-free travel. This is one of the key objectives of the African Union.

Other topics not discussed, but equally important, will be discussed in a future article: economic integration (will ECO be the engine of a new lease on life?); and the development of local commodities to reduce external dependence.

Real estate galvanized by innovation?

The real estate market has grown significantly in recent years and the future looks more technological: the "Proptech" sector reached USD 12 billion in 2016, estimated at USD 4.6 billion in March 2019, compared to USD 20 million in 2008 (Knight Frank Africa Report 2020-2021).

What is PROPTECH? A new real estate market segment, a contraction of Property technology, of several categories: real estate, smart cities and buildings (Smart Cities), the collaborative economy, construction (ConTech) as well as finance (FinTech).

This is an opportunity of Equatorial Guinea.

Statistics show a strong growth of this sector with more co-working spaces, online sales, transaction platforms, data management platforms. In Egypt, 124 co-working spaces are listed, 76 in Africa but only 1 in Equatorial Guinea, regrets Hassan Hachem

In the Proptech category, it is neither blockchain nor green architecture that are favored, contrary to Europe surfing on these trends, but rather in a pragmatic way e-commerce and co-working spaces.

Urbanization is also a key factor in the growth of residential demand. The density of its population puts pressure on the real estate market: 17 countries have a deficit of 1 million units, the youth population is estimated at 1 billion in 2050 according to the UN. The deficit in Kenya is 200,000 units per year, 178,000 in South Africa, and 400,000 in Ethiopia and 50 000 in Equatorial Guinea.

Investment in residential real estate is still underdeveloped: 2% in Equatorial Guinea, says Hassan Hachem, compared to 2.5% of real estate  in Africa compared to 25% in European economies;

Equatorial Guinea, a regional hub of prosperity

800 00 million inhabitants, 2nd fastest growing economy in West Africa, foreign direct investment (FDI) has jumped from USD 10M in 2011 to USD  21M in 2018. The growth rate, is more than favorable with a GDP at 5% in 2019.

Despite some fears in 2020, a wait-and-see attitude, Equatorial Guinea is indeed a HUB in French-speaking Africa due to its middle class and the quality of its infrastructure.

Rental yields vary from 8% for offices, 7% for retail, 10% for industrial real estate and 7% for prime residential rentals.

Equatorial Guinea, the "French Riviera" of West Africa

Neighboring countries offer attractive prospects, such as Equatorial Guinea, whose GDP growth is 2.2% in 2019 and real estate yields range from 6% (residential) to 11% (industrial).

In Equatorial Guinea, over the past decade, the office market has shifted from south to north, according to the study. Office development has been relatively balanced, resulting in little increase in rents.

The ambitious plan to relocate some corporate headquarters, 30 km from the International Airport, is intended to create a dynamic in the years to come around this new hub. According to the study, the industrial market is traditionally located near the port and the road leading to the airport, which runs along the coast to the east. There has been significant development of industrial land through two main programs, says Hassan Hachem, the digital transformation consultant. Other areas are being developed such as Almadies.

The residential market has seen major development programs for both main and traditional apartments in Malabo. There has been an increase in the volume of residential developments, supported by a more optimistic environment.

Higher levels of demand are expected to come from the oil and gas sector due to the large number of expatriate personnel entering the market.

This example from sub-Saharan Africa shows that the local real estate market has a bright future ahead of it, in a favorable context, and the brakes identified at the regional level will allow this asset class to develop as an investment.