Due to growing demand, many key African cities have severe shortages of high quality office and residential space built to the specifications expected by international companies, according to a report in BusinessDayOnline.

Scarcity of supply has led to extremely high rents in some cities, particularly where there is strong demand for office space by international oil and gas companies, according to Knight Frank’s Africa Report 2013. Knight Frank is a U.K-based global commercial and residential real estate consultancy.

“Property investors and developers looking for emerging market opportunities are increasing external investment in Africa, particularly as the growth markets of the last decade such as Asia-Pacific and Central and Eastern Europe mature and the level of returns they offer begins to diminish,” said Peter Welborn, head of Knight Frank Africa.

Prime office rents in Luanda, Angola and Lagos, Nigeria are among the highest in the world, the report said. In Luanda, recent construction has eased some pressure on the market and rents have become more affordable over the last 12 months but, even so, at $150-per-square-meter per month, prime rents remain well above leading global office markets such as London, New York and Hong Kong.

Oil and banking companies are established sources of demand for office space in Africa, but African economies are diversifying and non-traditional industries are emerging. For example, Africa’s technology boom is generating new sources of office-market demand. The continent is now home to growing technology clusters such as Silicon Savannah in Nairobi and Silicon Lagoon in Lagos.

In the residential market, the need for more good-quality housing is evident in a number of ambitious new suburbs under construction or planned by private property developers on the outskirts of large cities.

Examples include the Eko Atlantic scheme on Victoria Island in Lagos, Tatu City in Nairobi and La Cité du Fleuve in Kinshasa, Democratic Republic of the Congo. All in their early stages, they may herald a wave of new large-scale urban developments across Africa, the report said. Demand from offshore buyers for high-quality housing continues to increase in Morocco, Kenya and South Africa.

Knight Frank researcher Matthew Colbourne said, “As overseas companies seek to expand into Africa’s growing markets, and as African-based companies grow themselves, there is a need for investment in the construction of high-quality office buildings, which are currently in short supply in many African cities.”

“Many African countries remain challenging places in which to do business,” Welborn said, “but for those able to steer their way through African property markets, there is the promise of high returns and significant growth potential.”