Beyond Shopping Malls, Africa Needs Real Estate Developments

Beyond Shopping Malls, Africa Needs Real Estate Developments

African countries are being investigated by an increasingly diverse range of international real estate investors and developers, according to a report in BusinessWeek.

“The inflow of investment from China into Africa has been well publicized, but there is also growing activity involving investors from elsewhere, including the rest of Asia and the Middle East,” said Peter Welborn, head of Africa for global real estate manager and consultancy, Knight Frank. “Meanwhile, an increasingly significant flow of capital has emerged from South Africa into other African markets.”

The growth of Africa’s cities and economies will do a lot to define the global socio-economic landscape over the coming decades, according to Matthew Colbourne, an associate on the commercial research team at Knight Frank.

Major long-term trends are driving the construction of high quality real estate across the continent.

The population of Africa will quadruple to more than 4 billion by 2100, according to Knight Frank’s Africa Report 2015, BusinessWeek reports. Retail property development has been encouraged by the rise of the urban middle class.

“The most visible demonstration of this is the rise of the modern shopping center concept in cities such as Nairobi, Lagos and Accra, but there are development opportunities in all property sectors,” Colbourne said. “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.”

Africa is one of the most challenging places in which to do business, but there are plenty of  high-growth opportunities, according to Knight Frank.

Most property investment markets in Africa are small and opaque, Knight Frank said. But by 2100 nearly 40 percent of the world’s population will live in Africa — the majority in the continent’s fast-growing cities.

Nearly 1 billion of these will live in Nigeria alone. This is arguably the single most important demographic trend that will shape the world over the course of this century, according to Knight Frank.

Luanda in Angola has one of the highest monthly prime office rents in the world at $150 per square meter, driven by high demand from the oil and gas sector and low supply.

Lusaka, Dar es Salaam and Kampala’s populations are expected to double by 2025. Luanda’s population is expected to increase by more than 70 percent.

This, along with strong economic growth, is creating increased demand for all types of quality real estate, according to  BusinessWeek.