Construction and real estate
With people increasingly migrating to cities, good quality real estate is needed to ensure inclusive urbanisation, fuel economic growth, and provide safe, resilient and sustainable settlements, supporting at least five of the Sustainable Development Goals.
Investment opportunities in the sector are constrained by a host of factors, including lack of large-scale developers, poor financing options, inadequate infrastructure, maturing laws and enforcement, and pressure to limit the sector’s share of emissions.
As a young portfolio for CDC we have two main objectives. One is sector development, by investing in specific sub-sectors where there is imbalance between demand and supply, in particular, industrial and logistics, low-cost housing, student housing and budget business hotels.
The second objective is market strengthening, as we know this is a fragmented sector and best practices are often missing. We are looking to provide technical expertise to support the adoption of good standards of safety, transparency and sustainability.
In terms of sector development, we have three priorities. First, to create socially inclusive sustainable communities with low-cost housing and other social infrastructure real estate such as convenience retail, education and healthcare facilities. We have a fund investment in an affordable housing platform which does this in less-developed urban locations in India.
Second is to support the growth of industrial space for production and distribution. This will encourage the foreign investment and private sector participation that is needed to expand each country’s trade and industrial activity. An example of this is our direct investment in Africa Logistics Properties, a specialised industrial real estate developer, to build warehousing parks across East Africa.
Third is to develop a business-enabling infrastructure and ecosystem that makes it possible for people to travel for trade and work, not just in the capital cities but smaller cities too. We have a direct investment in a budget hotel platform, Onomo, aimed at servicing the business traveller base in Africa, which is expanding across more challenging locations.
Our last three investment priorities cut across all of these, where the objective is to improve the institutional environment. In doing so, we aim to encourage others to adopt and implement globally accepted best practices in business conduct and to strengthen private developers’ capacity. We want to mobilise more capital and we know that our investment in a project has the potential to attract other investors. And we want to support the convergence of environmental sustainability and technology through innovative construction materials, for example, as well as by incorporating sustainability standards, such as IFC’s EDGE.