Africa is the world’s second-largest and second-most populous continent with 30.2 million km2 or 20.4% of the total global land area. And with the massive construction activities in most African cities and urban areas emerging and growing rapidly, the Real estate sector is fast becoming a thriving industry in most African states. A growing population, increased levels of income and economic growth has created more demand for residential and commercial property. Institutional investors, both local and international, are also pumping millions of dollars into retail property.
This Real Estate boom is the by-product of the increase in the number of urban middle classes which drives retail property development, particularly as modern shopping malls spread across the continent.
It is also observed that a growing number of multinational companies are search for office space in the newly emerging cities. The rise of regional tech hubs and an expanding oil and gas sector creates job opportunity with no place to house the employees.
For the purpose of this article, we would be considering Africa’s Real Estate sector in three various sub-sectors which are; Residential real estate (undeveloped land, houses, condominiums, and town-homes), Commercial real estate (office buildings, warehouses, and retail store buildings) and Industrial real estate (factories, mines, and farms).
RESIDENTIAL REAL ESTATE
Africa’s population boom, seen by some as a burdening factor on Africa’s cities is rather an investment opportunity to a real estate investor, property developer, construction companies etc. The need for mass market affordable housing, high-end properties and all in-between is a result of the diversity in the multiplying populations.
The largest cities of Sub-Saharan Africa are growing at a rapid pace; Luanda’s population was forecasted to increase by more than 70% between 2010-2025 while Dar es Salaam, Kampala and Lusaka are expected to double. This analysis allied to strong economic growth, is creating increased demand for excellent quality residential real estate of all types that can cater for the various income levels.
COMMERCIAL REAL ESTATE
The commercial sub-sector of the real estate industry provides terrific opportunity for returns as Africa’s economic boom is sustained. The retail sector has witness a huge increase in activity because of the rise in urban middle class. The expansion of South African retailers such as Shoprite and Pick n Pay into the rest of Africa as equally contributed to the growth of the retail sector. Modern shopping malls are a relatively new concept in much of Africa, but a wave of new malls has been developed in key cities such as Accra and Nairobi.
As companies flood the African market, office space is lacking, such that prime office space rents as high as $85 per square meter in Nigeria, according to local renters. The Nigerian commercial floor space is still low–currently estimated at 700, 000 m2, compared to South Africa’s total commercial floor space of 23, 000, 000 m2. This figure is reflected across other countries in the continent giving rise to high demands for office space for the emerging urban economies.
INDUSTRIAL REAL ESTATE
This sector of Real Estate includes all land and buildings either utilized or suited for industrial activities such as: Production, Manufacturing, Assembly, Warehousing, Research, Light Storage, Distribution etc.
The booming price of commodities (oil, cotton, metals, minerals, and others) that Sub-Saharan Africa mostly exports fuelled a large part of the past decade’s growth. However, investment remains low in Africa—less than 15 percent of gross domestic product, compared with 25 percent in Asia—and more than 80 percent of workers are stranded in low productivity jobs.
Sub-Saharan Africa is advantaged in the abundance of natural resources that supply raw materials such as skins for the footwear industry, hard and soft timber for the furniture industry, land for the agribusiness industry etc.
Is there room for Sub-Saharan Africa in the global market today? Yes, if Africa can exploit its opportunities soon. Real Estate Unite envisions reforms that can unlock the potential of domestic resources like leather, bamboo, rubber, cotton, cocoa etc. to make a growing range of light manufactures competitive in the domestic market and, eventually, in global markets for labour-intensive products.
“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.”
Come the 17th and 18th of October 2017, Top players within the Real Estate sector will converge at Landmark Event Centre, Victoria Island Lagos, to discuss effective ways to effectively harness these opportunities and grow the continent. Exhibitors, Sponsors, delegates, advertisers and attendees get unlimited opportunity to network, discuss and learn from the wells of experiences that would be at the event. To register as an exhibitor, sponsor or delegate, CLICK HERE .
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