How Africa’s Real Estate Market Dynamics are Shifting Gears

In recent history, Africa’s economic travails and political turmoil ranked it as one of the least conducive destinations for international investments. However, in recent times, the continent has enjoyed a good streak of regional stability and economic growth. As such, the continent is fast becoming a hotbed for expatriates and foreign investors.
Although the performance and prospects of real estate investments in Africa have been dwarfed by those of many other regions in the world, the continent is gradually squaring up to other regions of the world in terms of real estate developments. Most of the challenges of real estate investments in Africa stemming from inhibiting regulatory environments and the risks of political unrest are now ABATING steadily. This, together with other key matrices is incredibly enhancing the prospects of real estate investments in the region.

The Key Factors Revamping the Appeal of Short- and Medium-Term Real Estate Investments in Africa

Pivotal population growth

Currently, Africa’s population comes in at over 1 billion and is anticipated to wax to 2.4 billion over the next 40 years. With the continent’s current shortfall in housing, it’ll take nearly ten folds of the available housing infrastructure to prevent a housing crisis in the future. To this end, the demand for housing across the continent is expanding monumentally.

Unprecedented Urban Migration Rates

Most of the fastest-growing urban areas in the world are located in Africa. An unprecedented number of people are currently flocking to large cities across the continent in search of employment and business opportunities. According to the UN, the populations of Lagos, Kinshasa, and Luanda will expand by over 70% between 2010 and 2025, and those of Dar es Salaam, Kampala and Lusaka will double in size within the same period. Already, these cities are already experiencing significant shortages and perpetual price upticks in housing.

The bludgeoning Middle Class

The retail industry is currently experiencing a windfall of patronage from a surging middle class and a growing influx of expats in major cities across the continent. But the retail industry isn’t the only industry benefiting from these impressive trends. The housing markets are also receiving dividends. The rising spending power of consumers is also creating strong demands in housing niches that have been heretofore unproductive.

Lack of Adequate Funds for Housing in Public Budgets

As governments are incapable of shouldering the accommodation needs of its teeming population, private developers and investors are increasingly becoming the saving grace for that sector of the economy. For instance, the World Bank projects that over 16 million new houses costing a stunning 350 billion dollars to erect are needed to solve the current housing shortages in Nigeria. Clearly, this figure is far-fetched for the government’s capacities. This is leaving the floor wide open for private investors to seize upon.

How to Seize on the Glimmering Opportunities of Real Estate Investments in Africa

Forecasts by global organizations of the return on investments in African real estate investments show more than 20% net annual returns. Despite the alluring prospects, real estate investment in Africa still requires due diligence and prudence. The property needs to be well-located and well-planned to tap into the local demand.