Institutional Capital Gains Momentum As Pension Funds Take Centre Stage At API Summit 2025

Source: Supplied. Niyi Adeleye, Standard Bank: Head of Real Estate Finance - Africa.

As the premier pan-African platform for real estate investment and innovation, the API Summit gathers industry leaders, developers, financiers, and key stakeholders from across the continent. This year, there is a particular focus on how pension funds are becoming instrumental drivers of real estate finance and providers of much-needed sustainable long-term capital.

Historically, pension funds and many domestic financiers in Africa have been cautious about real estate investments, often deterred by perceived risks, liquidity concerns, or lack of in-house expertise. However, this narrative is shifting. Institutional investors, particularly pension funds, are now increasingly recognising real estate as a valuable asset class that offers consistent income streams and capital appreciation.

Niyi Adeleye, head of Real Estate Finance for Africa Regions at Standard Bank Group, the main sponsor of the API Summit, explains the significance of this shift based on the markets where the commercial bank operates.

“In some of our key markets like Nigeria and Ghana, Standard Bank the Group has subsidiaries that are large mobilisers of capital either as pension-fund managers or as asset managers.

"These institutions have started to grow the allocations of assets under management into the real estate sector assets and entities, introducing the participation of previously absent long-term stable domestic institutional capital into the real estate asset class,” says Adeleye.

For example, it was recently reported that Nigerian pension funds increased their allocation to the real estate sector by ~418% in H1 2025 compared with the same period in 2024 albeit from a low base.

The normal investment amount translates to about ~US$51m compared to just ~US$9m for the same period in 2024. While there is scope and liquidity for this to be more, this trend is certainly a positive trajectory and an encouraging thematic.

Accordingly, this more recent influx of domestic institutional capital complements (and in some cases replaces) the international institutional investments that initially catalysed growth in certain African institutional real estate markets. “The replacement of these capital flows with domestic institutional sources supports the creation of more commercially stable and sustainable real-estate ecosystems in key markets,” Adeleye adds.

Standard Bank Group is actively supporting this transition through its subsidiaries by deploying permanent capital aimed at the development and growth of real-estate activities across Africa.

Moreover, the Group remains a leading provider of debt capital to pan-African and domestic real estate sponsors, facilitating cross-border investment flows within sub-Saharan Africa’s complex markets. Its footprint across 20 African countries makes it a key enabler for project sponsors exploring expansion beyond their home territories.

Driving regional growth

Leading the way in utilising pension fund capital to generate sustainable value in real estate is Letlole La Rona Ltd (LLR Group), Botswana’s well-known real estate investment Group. Lesego Keitsile, head of Investments at LLR Group, emphasises the strategic approach fuelling the Group’s expansion into new African markets.

“Our approach to pursuing consistent long-term returns is hinged on an ‘opportunity first approach’ which enables us to explore markets with risk-adjusted returns. Our investment strategy is well-positioned to produce steady rental income and capital appreciation over time, offering sustainable and reliable returns for stakeholders, including pension funds,” Keitsile explains.

LLR Group’s expansion into emerging African markets is not only about financial returns but also about fostering broader socio-economic benefits. “The Group’s expansion efforts generate employment opportunities during construction and ongoing property management, boosting local incomes and consumption. This stimulates broader regional economic activities, contributing to growth,” she adds.

Geographical diversification also helps mitigate risks, enhancing portfolio resilience, which ultimately safeguards pensioner returns against market volatility — a critical consideration for any pension fund aiming to meet its future liabilities reliably.

Pension funds signal maturing ecosystem

The entry of pension funds into Africa’s real estate sector signals a maturing investment ecosystem. Real estate projects underpinned by such capital sources tend to offer more stability, improved governance, and longer investment horizons.

Thomas Reilly, chief executive officer of Lango Real Estate Ltd, which recently initiated a process to raise a targeted $300m of equity ahead of its planned London Stock Exchange listing, underscores some of the key considerations for institutional investors.

“Securing significant amounts of capital ($50-100m or more) from investors, including those from the savings industry, is in our experience limited to investees with suitable scale.

"It would be unlikely for an investor to inject large amounts of equity into an entity that results in a disproportionately large share in the entity, such as a majority or even a significant minority. Therefore, scale becomes a critical factor in enabling larger capital flows,” Reilly explains.

Beyond scale, pension funds target investments within stringent risk frameworks. To mitigate risk, Reilly says diversification (across property sectors and geographic locations) has proven to be fundamental.

“History has shown markets often go into a period of duress at different times due to differing factors; this approach ensures a risk-mitigated strategy where eggs are not kept in one basket.

"Further key risk-mitigation strategies include ensuring a strong partnership with debt-funding providers to manage liquidity – this is particularly important in times of cyclical stress. A strong shareholder base is ultimately the fundamental underpinning of risk mitigation, and stability and strength in this regard remain key,” he adds.

For pension funds investing in real estate, maximising investment returns remains core to any investment decision.

“Ensuring leasing strategies are maximised and tenant performance is maximised remains as important as it has always been. Success in this regard validates a sound strategic acquisition strategy, ensuring that assets are strategically structured and located to retain demand despite the unavoidability of tenant turnover and market cyclicality.

"Lastly one can’t ignore the correlation between sound tenant performance and a proactive hands-on approach from management,” says Reilly.

API Summit convergence

The 2025 API Summit promises to gather Africa’s most influential real estate stakeholders — from institutional investors and pension funds to developers, financiers, policymakers, and innovators. Under the theme “Growth through Adventure,” this year’s summit underscores the growing strategic importance of domestic capital markets, with pension funds playing a leading role.

Keynote speakers include leaders from Standard Bank Group, Letlole La Rona, Lango, and prominent pension funds such as National Pension Scheme Authority (Napsa), Public Investment Corporation (PIC ), The National Pension Commission (Pencom), International Development Finance Corporation USA (DFC), Industrial Development Corporation of SA (IDC), Britam, Mofi Real Estate Investment Fund, IFC, Pension Alliance Limited and the Development Bank of Southern Africa (DBSA) plus institutional investors.

Cross-border real estate sponsors, proptech innovators, government agencies, and regulators will also participate in shaping policies and investment conditions that foster pension-fund engagement, benefiting investors and end-users alike by supporting infrastructure development, urbanisation, and job creation.