Africa offers tremendous investment opportunities

With the global property market still being brought down by the United States, investors are increasingly desperate to find ways to escape financially.

An interesting way of putting it might be that when the United States sneezes, the rest of the world has to wipe its eyes.

That certainly seems to be the situation currently, as larger sell offs of equity by different companies are now starting to include emerging and developing markets in addition to equity holdings in developed western countries. This is all painfully pointing out the fact to most investors that there does not seem to be any place in the world to hide from the impending recession that promises to strike the United States sometime soon.

There seems to be no way to avoid the ultimate finality of the situation. Or is there?

The continent of Africa, even though it is very much in a state of development, appears to be rife with opportunities for people that want to invest. Indeed, while most of the property investors took one look at the political instability in Kenya (previously thought one of the most stable countries on the continent) and blanched, giving up on the prospect of hedging their financial losses through the African continent, it appears as if other investors didn't even bat their eyelids at the situation.

Ayo Salami is the manager of a real estate equity fund and he quite correctly pointed out that democracy is not important in property investment, just property rights. According to the Globe and Mail, Salami says that the best way to rate the viability of a particular property market is not to take a look at the political system in that country, but rather the justice system. If the rule of law is present and specifically is able to enforce a contract, then theoretically Salami feels it should not matter what the political system in that country is.

Many analysts believe that this is true, citing that as long as the judiciary branch of governments like the one in Kenya is able to remain independent of the political system, then the property market will not be unduly influenced by those events.

Taking this logic and transposing it to the entire African continent shows a picture of a number of countries with reasonably healthy economies and property markets and it also shows that single-digit inflation is the norm in an African country.

So, while the risks are certainly there, the rewards of being able to gain a point of hedging against what many property holders in the United States and other countries feel to be impending disaster is something that is causing a lot of property owners to take a look at African property markets that they never would have looked at before.