Over the past 20 years, Africa’s real estate has become an increasing part of investment portfolios which begs the question as to prospects for the next 5-10 years. Although the market has shown to be unpredictable, it can be agreed that there are attractive opportunities waiting to be harnessed in the African real estate sector. Favourable economic and demographic characteristics in certain countries and the trend towards urbanization, supports good long-term fundamentals, but there is a clear need for selectivity and rigorous due diligence.
Though the continent’s infrastructure currently lags well behind that of the rest of the world with some 30% in a dilapidated condition, there is widespread recognition of the vast business opportunities on the continent due to the growing consumer market as well as opportunities for infrastructure investment and development. Researchers predict that in 2030, Lagos, Cairo and Kinshasa will each have to cater for over 20 million people, while Luanda, Dar es Salaam and Johannesburg will have crossed the 10 million mark. By 2035, it is estimated that close to 30 million people could live in Lagos alone, turning Nigeria’s commercial hub into the largest megacity on the continent.
FACTORS THAT FAVORS EMERGENCE OF SSA FUTURE CITIES
1. Urbanization: The real estate sector will play a major role in developing and maintaining urban future as the current infrastructures strain under the pressures of the rapid population growth rate. Africa is urbanizing more rapidly than any other continent, with its city-based population expanding by 3.5% per year. Some cities are growing considerably faster (such as Abuja at 9% and Luanda at 6% a year). The continent is also home to four of the world’s megacities – Cairo, Lagos, Kinshasa and Johannesburg – each providing huge population catchments.
2. Continued Economic growth: Economic growth in sub-Saharan Africa has matched or exceeded 5% for nine out of the last 10 years, and is expected to continue to exceed 5% per year over the next five years as the internal market expands. The stability of economic activity within the continent is shifting southwards into sub-Saharan Africa, home to some of the world’s fastest-growing economies, such as Ethiopia, Ghana, Nigeria and Angola.
3. Increasing Middle Classes: When the growth of any economy is sustained, the rebound effect culminates into an expanding urban middle class with growing discretionary income. Africa’s middle classes have been estimated at around 350 million people, although a more conservative estimate suggests that the total is closer to 150 million. The continent has its highest concentrations of middle-class populations are in South African cities (Johannesburg, Cape Town and Durban) and in North Africa’s main urban areas – Cairo, Alexandria, Casablanca, Rabat, Algiers and Tunis. But the most rapid growth in the middle-class population is occurring in sub-Saharan Africa in cities such as Lagos, Abuja, Luanda, Accra and Nairobi.
4. Infrastructural Investments: Challenges of infrastructure in terms of transport, utilities and telecommunications etc., remains one of the biggest challenges for the African continent, but investment and funding are steadily increasing. China, particularly, has become a major source of funding that includes hydropower projects in Nigeria, roads and railways in DR Congo, Mozambique, Tanzania, Kenya and Angola, and communications in Ethiopia.With many city infrastructures straining under the weight of rapid urbanization, there are several ambitious plans for new satellite “cities” on the edge of Africa’s major cities, including Konza Techno City outside of Nairobi and Eko Atlantic on Victoria Island in Lagos.
5. A growing Commercial Real Estate Market: Sub-Saharan Africa’s commercial real estate sector is in its early phase of development as the industry starts to respond to rapid urbanization and strong demand from businesses and consumers for a modern real estate infrastructure. However, the continent remains severely under-supplied with high-quality commercial space, pointing to feasible opportunities.
It is expected that over the next 20 years, Africa’s urban populations currently experiencing rapid increase would begin to thrust new demand for infrastructure, housing and other physical structures, and amenities. To meet this new demand, city leaders and planners, property developers, construction companies, retail brands, real estate professionals and investors among others need adaptable strategies.
It is in the light of this that you are invited to participate in a highly specialized strategy session with key players within Africa’s property industry, at this year’s Real Estate Unite summit, scheduled to hold on the 17th and 18th of October 2017 at Landmark Event Centre, Victoria Island, Lagos.
For an opportunity to network, learn, showcase and discuss on how to properly plug into the opportunities lurking around SSA real estate sector, CLICK HERE to register as an exhibitor, sponsor or delegate.
For more enquiries contact us on: +234 8099991503, +234 8099991603, +234 8099991803 OR firstname.lastname@example.org, www.realestateunite.com