Nigeria, Angola are top African property destinations

Many foreign investors are coming to explore opportunities within the property market in Africa, with Nigeria and Angola their preferred investment locations, a report said.

The main investment attraction for the international investors has been Africa’s startling economic and demographic growth prospects, Knight Frank stated in its report earlier released this year.

A key highlight of the Africa’s growth story has been the youthful demographics of its cities where the large populations are in the key age group of 20-35 years, TradeArabia said.

According to Knight Frank, the African population has more than doubled since 1980 to stand at over 1 billion and it is forecast to reach two billion by 2050.

It will quadruple to over four billion by 2100, with nearly one billion of these people in Nigeria alone. This is arguably the single most important demographic trend that will shape the world over the course of this century, said the expert.

As per estimates, by 2100 nearly 40 per cent of the world’s population will live in Africa, with the large majority of these being in the continent’s fast-growing cities.

Africa has averaged GDP growth of more than 5 per cent over the last decade, making it one of the world’s fastest growing regions.

Companies looking to enter Africa are targeting its growing major cities as the locations for their regional offices.

Africa’s cities are currently undersupplied for high quality real estate, creating huge opportunities for new development, said the report.

Nigeria is now the largest economy in Africa with GDP estimated at $594.3 billion, followed by South Africa ($341.2 billion).

Sub-Saharan Africa is one of the world’s most rapidly developing economic regions, and it is projected that 13 of 20 fastest-growing global economies over the next five years will be in Africa

Luanda in Angola has one of the highest prime office rents in the world at $150 per sq m per month, driven by demand from the oil and gas sector, and an extreme lack of availability.

According to Knight Frank, the growth of Africa’s cities and economies will do much to define the global socio-economic landscape over the coming decades.

These major long-term trends are driving the construction of high quality real estate across the continent. The most visible demonstration of this is the rise of the modern shopping centre concept in cities such as Nairobi, Lagos and Accra, but there are development opportunities in all property sectors, it stated.

Africa’s growth potential has led to a notable increase in activity involving overseas investors and South African funds over the last years, it added.

Diaa Noufal, the Mena Research at Knight Frank, said: “Middle Eastern interest in African investment opportunities has been noteworthy historically given that Sub-Saharan Africa is just next-door. Over the last decade, Dubai logistics and air travel have become Africa’s hub and link point for China and the rest of Asia.”

“GCC funds have been seen pouring into African key cities through a mix of private investments, governmental aids and development loans. GCC presence in Africa include infrastructure and construction, agricultural and industrial projects and more recently in real estate investments,” stated Noufal.

“Large volumes of good quality commercial and residential property are needed to support the continuing African growth story, presenting excellent opportunities for global funds looking to diversify or enter into African markets. GCC developers are aware of this fact and Africa is already on their radar,” he added.

Chinese investors’ involvement in large-scale development and infrastructure projects across Africa has been particularly eye-catching.

However, the Knight Frank report also identifies nine South African-based funds that have raised significant volumes of capital to invest in real estate projects across the Sub-Saharan region.

These investors will develop a wave of modern investable assets that will do much to improve the size and maturity of African property investment markets over the next few years.

Peter Welborn, the head of Africa, said: “We have seen rising interest in Africa from an increasingly diverse range of international investors, developers and occupiers in recent years. The inflow of investment from China into Africa has been well publicised, but there is also growing activity involving investors from elsewhere, including the rest of Asia and the Middle East.”

Meanwhile, an increasingly significant flow of capital has emerged from South Africa into other African markets, stated Welborn.

“While many African countries remain challenging places in which to do business, there are high-growth opportunities across Africa for those able to those able to navigate their way through the markets,” he added