Currently, different multinational companies are showing eagerness to invest in different sectors in Ethiopia. Being the third-largest diplomatic center, availability of potential resources, competitive labor force, government’s commitment to promoting investment, among others makes the country to be in the eyes of investors.
The Ethiopian Herald had a stay with Gateway Real Estate Africa, a property developer operating across the African continent, Chief Executive Greg Pearson. Excerpts,
Please tell us a bit about yourself and your background?
My name is Greg Pearson I started my career in the United Kingdom before moving back to challenging projects throughout Africa in 2006, as the head of business expansion for a Fortune 500 company. My professional experience stems from Real Estate Development and Construction, and I am privileged to have worked in over 40 African countries as well as across most of Europe.
They say that entrepreneurs are born, and I’ve always had a passion for identifying and acting on opportunities, and building businesses that not only deliver for shareholders but have a positive social impact as well. I am a founder member of Gateway Real Estate Africa, a property developer operating across the African continent, where I currently serve as Chief Executive.
I am also proud to be a founder member of Grit Real Estate Income Group, a real estate company operating across eight African countries and listed on the London Stock Exchange as well as the Stock Exchange of Mauritius.
Would you briefly tell us about your company’s accomplishments and experience?
Gateway Real Estate Africa is a private real estate development company registered in Mauritius. We specialize in turnkey construction of accommodation for international companies who wish to expand their operations in the African continent.
Gateway Real Estate Africa creates value for shareholders through development, rental income from tenanted developments, and through the sale of assets at the appropriate time.
Since its inception in 2018, the company has invested more than USD 430 million in real estate projects, with a future pipeline of over USD 500 million across asset classes such as data centres, corporate accommodation, healthcare, light industrial, and logistics warehouses.
Who were your local partners, how did you select them, and how can Ethiopian partners best attract FDI partners like yourself?
We always work with international and local partners on all of our projects, to ensure a solid understanding of the local environment and nuances, as well as ensure skills transfer and collaboration.
In addition, I am a strong proponent of engaging with internationally qualified diaspora and providing opportunities for them to plough back their knowledge and experience in their home countries.
For our Elevation Residences development in Ethiopia, (which we co-developed with Verdant Ventures) we worked with local professional teams including SYMBIO, Elmi Olindo & Co, Bamacon Engineering Plc, Bigar Architects, Mehrteab & Associates Office, KPMG Ethiopia, Grant Thornton Ethiopia, Davis & Shirtliff, SGS Ethiopia among others.
What we looked for in our local partners is a strong level of professionalism, track record, and expertise, as well as a very good grasp of the local landscape and socio-political nuances. Local partners with these qualities are much sought-after by international developers and investors.
What motivated you to expand business operations in Ethiopia, and why are you attracted to investing in the real estate sector?
There is a huge undersupply of high-quality developments across the continent. As Africa is increasingly seen internationally as the last growth frontier, we believe there is a fantastic opportunity to collaborate with international businesses wanting to expand their footprint in Africa and needing suitable corporate space. This includes consular level corporate accommodation such as Elevation Residences (a co-development with Verdant Ventures) in Ethiopia, data centres, shopping malls, corporate offices, or logistics warehouses. More recently we’ve embarked on developing hospitals in Mauritius as well, based on tenant demand.
What stage of construction is the building currently under, and how much is your price per unit?
Elevation Residences has recently been completed and most corporate tenants have already moved in. Since the development is aimed at corporate rentals, we negotiate leases based on the number of units rented as well as the tenure of the loan. Interested corporates and consulates are welcome to get in touch with us to discuss this in more detail.
What do you comment about the Ethiopian government’s commitment towards welcoming foreign investors? And what do you recommend for promoting foreign investment in the country?
We are very grateful for the extraordinary welcome and support we were accorded by the Ethiopian Investment Commission that is our first stop as an FDI-registered company. We are also very grateful for the strong support we have received from the Government, as well as the Addis Ababa City Administration who have assisted with permits and approvals.
For a project the size of Elevation Residences, with over USD 50 million of investment so far, we need clarity, consistency, and predictability of investment incentives, foreign exchange regulations, and related policy changes. Availability of hard currency for the purchase of import items remains a challenge and we would appreciate the support of the banking sector together with the central bank to minimize the negative effect this has on project delivery and investor confidence.
We invest based on equations, incentives, and foreign exchange regulations enacted at the time of investment, with good faith and firm belief that any regulatory change will not be applied retrospectively and adversely affect the project’s return on investment. We are therefore keen to engage with the respective stakeholders to sort out some investment hiccups we have encountered, including investment incentives, forex directives, and VAT implications so that explicitly agreed incentives and forex management agreements at the time of investment are maintained through the project life, for us to have the confidence to build more properties here in Ethiopia.
What do you think are the challenges and prospects to accomplish such a real estate project timely?
We are very proud of the fact that we completed Elevation Residences together with our development partner, Verdant Ventures on time and within budget, despite the constraints placed on our supply chain as a result of Covid-19.
This speaks to the professionalism of our local and international teams as well as the Government’s ability to allow the business to continue whilst efforts to curb the spread of the virus were ongoing.
The fact that we as a collective team completed Elevation Residences despite significant challenges helps us build a track record of trust and dependability with international tenants, that will pay dividends in years to come.
How do you assess the real estate investment in Ethiopia?
From GREA’s perspective, the fundamentals of property development are driven by the ability to secure a hard currency revenue stream, the quality of the tenants, having the right partner, and finally having comfort with a range of considerations around the country where the development would take place. All these criteria were met before GREA invested in Ethiopia.
Would you tell us about the housing affordability in Ethiopia by comparing it with other African countries?
As you know Addis is the third-largest diplomatic community in the world. As home to the African Union, UNECA, and several international organizations as well as being a center for showpiece summits and conference tourism, our research revealed that there is an acute and huge need for hotel room pipeline in general and a specialized need for high-end, secure and diplomatic-spec residencies for the diplomatic and foreign population living in Addis.
The high demand and shortage should result in higher prices compared to other capitals across Africa.
What are your plans regarding expanding your investments in Ethiopia? As an investor in the USD 50 million Elevation Residences in Addis Ababa, what were your experiences as a direct foreign investor in Ethiopia?
We have a long-term commitment to Ethiopia and are actively seeking additional development projects in the country that will further support the government’s economic reform drive.
As a pan-African real estate group, we are keen to provide turn-key projects like Elevation Residences especially where the need is greater. We just started with 112 units and we are aware the need is much higher, especially so with international companies continuing to send their ex-pat teams to Addis as the economy continues to open up.
So, yes, we would like to replicate our initial success and build more properties here in Ethiopia provided we have the continued support of the Ethiopian Government and Addis Ababa City Administration. We are a private company with a fiduciary responsibility to our shareholders and we need to ensure that the economics of each of our projects are right. We will continue to explore the market and build more properties in the years to come.
Finally, could you tell us your reflections on Ethiopia?
Ethiopia has exceptional potential from an FDI and economic powerhouse point of view. Consistency in regulation and the continuance of a business-friendly approach will be a catalyst for further economic growth.
If you have something else you would like to add, you are welcome.
Elevation Residences is a 112-unit, 7-story residential tower developed to the highest international standards with two basements, 147 parking bays, the autonomy of service systems for continuity of power and water during any unforeseen breaks in supply as well as meeting the seismic safety requirements of the United States Government for Ethiopia.
As the clientele are diplomats, particular attention is paid to comfortable living, high fire life safety systems as well as recreational facilities including a community room and lounge area, rooftop bar, children’s play area, heated swimming pool, and gymnasium.
The 15 000sqm project represents a foreign direct investment of over US$35 million and is supported by local banking institutions with a total project value of over US$55 million. At the peak of construction, over 800 Ethiopians were employed on site. Concerning sensitivity to local communities, we have been actively participating in corporate social responsibility works and have strengthened community relations since 2018. Initiatives are mainly focused on creating job opportunities for the local community, provision of on-the-job training, the refurbishment of communal infrastructure within the node, including drainage systems and road and streetlight upgrades, the beautification of surroundings, and supporting the local youth in start-up businesses.
BY TEWODROS KASSA
The Ethiopian Herald 28 October 2021
