Africa’s property markets are advancing from basic residential and commercial needs into a more diversified market portfolio. With improved ability to do business, better infrastructure and transformation of societies by the information age, changes are happening at a greater pace and new trends are emerging that are expected to change the real estate sector.
New opportunities are coming up and investors are taking note. This year’s Africa Property Summit slated for September 20th– 21st in South Africa will gather together leaders to discuss these issues. However, below is a brief highlight of some of the key issues:
1. Industrial Property
Logistics needs have increased all over the continent with the expansion of industrial activity and the spread of commercial activity in most African cities. However, these changes have been met by challenges due to lack of professionally managed supply chains on the continent and inefficient supply chains. As a result, the cost of logistics in Sub-Saharan Africa as a percent of product cost is still very high at 30-40 per cent.
Experts say there is no grade A warehouses in the continent since most investors flock towards retail and commercial property. Yet the continued growth of e-commerce, third-party logistics companies, distributors, retailers and local industries has raised the demand for modern industrial property.
2. Affordable Housing
Most African countries have a housing crisis. Due to lack of adequate planning and funding, there has been a build up of under supply in most countries which has so far overwhelmed both the governments and private developers. As a result, citizens in most countries have to do with the inadequate housing available.
However, governments are giving more attention to the issue in collaboration with the private sector and institutional investors. More incentives are being formulated and more initiatives are set to be executed towards the achievement of affordable housing.
This has opened to investors a new front, especially those with the ability to leverage new technologies that can enable them construct houses at prices affordable to the low-income target market.
3. Student Housing
The popularity and relevance of higher education has grown on the continent leading to the creation of more institutions of higher learning to satisfy demand. Growing student populations has increased the demand for student accommodation yet a majority of Africa’s population still consists of the young most of whom are yet to get higher education.
In contrast to developed countries like the UK and Australia where the demand for student accommodation is fueled by international students, in Africa the demand is domestic and the growth, organic. This is a space to watch for any investor with an eye on such opportunities.
4. Serviced Apartments
In Africa, serviced apartments represent less than 1% of all hotel type accommodation with the highest concentration is in South Africa while internationally the figure is close to 9% . Serviced apartments can be a secure and affordable alternative to hotel rooms but due to low information about the segment, most capital is elusive.
While there is no shortage of alternative accommodation on the continent, serviced apartments would offer and entirely new experience hence the untapped potential.
Africa’s real estate, in comparison to global markets, is still at a nascent stage and a lot of value is yet to be created. These trends show just how much is yet to be done.