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To round out the year, we bring our focus to Africa!
According to Africa Horizons, published by Knight Frank1 "Africa is on the move. In terms of trade, global influence, wealth creation, transparency, and ease of doing business, all the indicators are trending upwards."
The real estate market across Africa is predicted to grow by 5.88% between 2023 and 2028.2
Let's dig a little deeper into what’s happening across the region, and find out what we can expect from it in the future.
Where Do the Opportunities Lie in Africa?
Agro-processing
Agro-processing involves producing goods derived from agriculture and is on the rise across Africa. Population growth and urbanization are driving more farming, crop diversification, and higher investment in the sector. Regional and global export opportunities are also expanding.
For example Ghana is shifting to processing more cocoa domestically to reduce raw material dependence, create jobs, and move up the value chain.
In Tanzania, key products include oils, canned/preserved foods, cereals, bakery, and animal feeds. Agriculture contributes 30% of Tanzania’s exports and 25% of GDP.
Agricultural expansion drives raw material demand, which enables investment in technology/equipment to increase productivity and can help boost farmer incomes. This creates new markets across the supply chain.
Infrastructure & Manufacturing
Infrastructure is pivotal for enhanced productivity and sustainable economic growth across Africa. Parts of Africa continue to face major infrastructure difficulties, especially regarding roads, rail, ports.
53% of African roads remain unpaved, isolating people from economic opportunities.3 (African Development Bank)
Closing the infrastructure gaps, especially in transport and power infrastructure, can unleash trade and growth potential.
ESG (Environmental, Social, and Governance)
A growing number of companies and investors are adopting clear ESG principles and actions. This is highlighted as an area to watch in the coming years. Climate action and initiatives are a major headline across most African countries.4
Data Centers5
Cairo, Johannesburg, Cape Town, Lagos, and Nairobi are already on the map as data center powerhouses, with more cities across Africa soon to join.
Africa’s use of coal, oil, and natural gas for power is an area that many are trying to address in order to make their use of power more sustainable.
Elections and the Impact on Real Estate
The results of African elections can significantly impact the real estate industry in those countries. Politics can directly affect foreign investment, property values, and transaction volumes.
As an example, in 2021, Zambia garnered substantial foreign interest in its real estate sector thanks to its new administration's economic policies, political stability, and strong currency that year.6
2023-2024 Elections7
Several African countries held elections in 2023, and more gearing up for pivotal votes in 2024. Political and economic change could be on the horizon.
Investors watch African elections closely due to the proportionate impact that results can have on the viability of real estate markets. Signs of instability or volatility are seen as red flags while, democratic transitions and investorfriendly policies are seen as green lights.
Real Estate Snapshots Across Africa
Some African countries have seen and are seeing major real estate investment over the last couple of years. Investments in sustainable projects are coming in from all over the world, including $200m from the U.S. and $2b from the UK for its partnerships in the Global Infrastructure Initiative.8 Additional investors include South Korea, UAE, Saudi Arabia, Turkey, and China. With investment in ESG-compliant offices, the prediction is that this will jump start additional investment from multinational corporations to enter these major cities like Lagos, Nairobi, and Cairo.9
Here’s a quick view of what’s going on in a few specific countries!
Egypt
Investors have poured billions into iconic mixed-use developments like the New Administrative Capital and New Alamein City, driving commercial and high end residential construction, and also benefiting surrounding property.
Ethiopia
Investment is focused on large-scale affordable housing projects. Ethiopia's demographic profile (population of 114.9 million, and an annual growth rate of 2.7%) translates to opportunities for housing investment and related infrastructure.
Kenya
Despite difficult economic times and a decrease in the growth rate, Kenya's still a hub for high-end office, retail, and residential developments.
1 knightfrank.com.pl/en/research/details.aspxafricahorizons-202324-10427.aspx
2 statista.com/outlook/fmo/real-estate/africa
3 afdb.org/en/knowledge/statistics
4 bloombergneweconomy.com/gateway-africa/
5 intelligentdatacentres.com/2023/12/11/navigating-africas-data-centre-boom-amidst-grid-challenges-and-environmentalopportunities/
6 knightfrank.com/research/article/2021-10-07-general-election-results-to-benefit-zambias-real-estate-market-
7 africanarguments.org/2023/11/africa-elections-all-upcoming-votes/
8 whitehouse.gov/briefing-room/statements-releases/2021/06/12/fact-sheet-president-biden-and-g7-leaders-launch-build-back-betterworld-
b3w-partnership/
9 content.knightfrank.com/research/2261/documents/en/africa-office-market-dashboard-q1-2023-10131.pdf
