Mixed-use is the key to funding hotel development in Africa

&NewLine;<table class&equals;"wp-block-table"><tbody><tr><td> JLL&comma; the world’s largest professional services firm specialising in real estate&comma; has revealed that people seeking to finance a new hotel project in Africa will be much more successful if their hotel is part of a mixed-use development&comma; according to a statement from Apo Group&comma; made available to OpenLife&period;  <br> JLL’s research into global property transactions reveals that in the first half of 2019&comma; there was a 42&percnt; increase in the value of mixed-use property transactions&comma; whereas there was a decline in other sectors&comma; with Office down 4&percnt;&comma; Industrial down 6&percnt;&comma; Retail down 20&percnt;&comma; Hotel down 18&percnt; and alternatives down 40&percnt;&period;<br> Xander Nijnens&comma; Executive Vice-President&comma; JLL Sub-Saharan Africa&comma; explains that the trend is driven by lenders’ approach to risk&period; He said&colon; &OpenCurlyDoubleQuote;Diversifying risk by including alternative types of property&comma; commercial&comma; retail&comma; hotel and branded residences&comma; in one development&comma; provides comfort to financiers due to the diverse and more consistent income streams generated&period; Branded residences are also increasing in prevalence because they provide up-front cash inflows and a more predictable source of revenue than one gets from a hotel alone&period;”<br> In Africa&comma; the leading funders of hospitality construction projects are government-backed Development Finance Institutions &lpar;DFIs&rpar; like International Finance Corporation &lpar;IFC&rpar;&comma; Overseas Private Investment Corporation &lpar;OPIC&rpar;&comma; the CDC Group&comma; Proparco and the German Investment Corporation &lpar;DEG&rpar;&period; They are motivated by economic development&comma; skills development and job creation and have a lower requirement for the predictable&comma; consistent loan repayments required by a commercial bank&period; DFIs are also able to stomach more risk&period;<br> A driving factor for this trend is that hotels rent their rooms in euros and US dollars rather than in local currency which&comma; from a financing perspective&comma; reduces the risk to the lender and lowers the interest rate paid by the borrower&period;<br> The research comes a week ahead of the Africa Hotel Investment Forum &lpar;AHIF&rpar;&comma; Africa’s highest profile gathering of the hospitality and tourism industry&comma; which takes place in Addis Ababa on September 23-25&period; <&sol;td><&sol;tr><&sol;tbody><&sol;table>&NewLine;