Africa's property markets continuing to develop - report

© HONGQI ZHANG – 123RF.com

Highlights from the report include:

• Africa’s strongest economies over the last two years have included commodity-importing East African countries Tanzania, Ethiopia, Kenya and Rwanda, while the West African economies of Côte d’Ivoire and Senegal have also emerged as star performers. 
• A growing volume of capital is targeted at sub-Saharan Africa real estate investment and development, with a series of new investment vehicles being launched in recent years. South African funds are increasingly prominent as they seek to diversify away from their domestic market.
• Rapid population growth and urbanisation are key drivers of property market activity across sub-Saharan Africa. Its population is growing at a faster rate than that of any other global region and its demographic profile is both young and increasingly urbanised, creating opportunities for real estate development to support this growth.
• The retail property sector continues to be a major focus for development activity, causing the shopping mall concept to take root in an increasingly wide range of sub-Saharan cities with Nairobi remaining an important hotspot for development.
• Francophone West Africa has emerged a new focus for international retailers and developers, having previously lagged other parts of the continent. Increased retailer interest in this part of Africa has been highlighted by the French hypermarket Carrefour’s entry into Abidjan, Côte d’Ivoire. Carrefour also made its debut in the Kenyan market in 2016. 
• Mobile telecommunications have already had a transformative socio-economic impact in Africa by allowing large sections of the population to skip landlines and move straight to wireless technology. This market is only set to grow, which is set to have a huge effect on the growth of online retailing.
• Off the back of this increased demand the region’s key cities are currently undersupplied for modern warehousing space. Several major logistics and industrial parks are in the pipeline as part of wider urban developments such as Rendeavour’s Tatu City near Nairobi and Roma Park in Lusaka.

Peter Welborn, chairman of Knight Frank Africa, said: “Real estate demand stemming from oil companies and the associated service supply sector has eased in all the African oil-driven markets. Conversely, in the retail sector, the demand across Africa, from the growing middle classes has continued to create a marked increase in activity particularly in the Francophone countries. This increase in tenant demand has encouraged new schemes to be proposed; Abidjan (Côte d’Ivoire) providing a really good example as such a capital city where the proposed schemes are supported by offshore investors.”

“With the increasing demand for the best commercial and residential accommodation coming from the growing Africa middle classes, there has been an increasing need for developers to raise the quality of the specification in all the new developments,” said Welborn.

He reiterated that, “The challenge for both property developers and investor, is to ensure that the impact and timing of planned infrastructure projects on the growth of their capital city, is fully understood. The timing and the use mix being a key component to ensure real success.”