Thursday, 19 May 2016

Here are Africa’s Real Estate Hotspots

Here are Africa’s Real Estate HotspotsReal estate is a blossoming industry in most African states with massive construction activity in cities and emerging urban areas. A growing population, increased income levels and economic growth has created more demand for residential and commercial property. Institutional investors, both local and international, are also pumping millions of dollars into retail property.

Nigeria is striking, since; it is West Africa’s largest consumer market, with a growing middle class. Experts have projected that it will surpass South Africa as the continent’s largest economy very soon. The Eko Atlantic development in Lagos gives a hint of the scale of development taking place, with land reclamation work under way to create a development of over 10sq km. Moving on to the Eastern region, Nairobi, the capital city of Kenya has become a pivotal point for eastern Africa, and Kenya continues to establish itself as an economic hub for the region. The city itself is also developing as a centre of excellence in technology - ‘Silicon Savannah’ - and the recent development of oilfields is encouraging investment and growth across Kenya.

Although, Kenya’s real estate industry has boomed in recent years, yet stakeholders argue that industrial property has often been overlooked as an investment opportunity. But this is progressively changing. New industrial developments are developing just outside Nairobi’s city centre, targeting manufacturers and logistics operators. “There is a dire shortage of warehouse facilities,” says Ben Woodhams, Managing Director for Global Real Estate Consultancy, Knight Frank.

One of these is Tatu Industrial Park, situated inside the 2,500-acre, mixeduse satellite city project of Tatu City. The park, 20km north-east of Nairobi, has fascinated a number of companies, including personal hygiene products manufacturer Kim-Fay, which last year began constructing a plant that would serve as its corporate headquarters. Coffee company Dormans Coffee Group has also already started work on its US$7m head office, processing and warehousing facility with a capacity of more than 15,000 tonnes of coffee per year. Other companies set to build manufacturing and warehousing facilities at Tatu Industrial Park include Unilever and the local distributor for Heineken beer, Maxam Ltd.

Tatu City is being developed by Africa-focused urban developer Rendeavour. Originally, much of the focus was on its residential component, given that it is expected to house 70,000 people and could ease congestion in the city. Further down the east coast, Tanzania and Mozambique are also focus markets for developers and financiers, with the recent world-class discoveries of offshore gas in their jurisdictions, complemented by the favourable risk profiles of Maputo and Dar es Salaam compared with their regional counterparts, making them the subject of intense interest and investment over the past two years.

Other countries are also attracting interest. Angola is currently the third largest economy in sub-Saharan Africa and presents a wealth of opportunities with its growing middle class. Moreover, Luanda houses some of the world’s most expensive commercial real estate due to severe supply-demand imbalances, and which present a clear market for new development. In terms of sectors, Africa is undergoing growth in manufacturing, technology and telecoms, finance and business services, as well as sustained investment in its natural resources sector - both in terms of exploration and exploitation of reserves but also in processing to seize greater downstream value. International companies investing in these sectors expect international-grade office space from where to run their businesses. The continent is severely undersupplied with high-quality commercial property, predominantly with the continuing rise in demand.

The Mamdouh family frequently takes trips around Greater Cairo in search of residential property to buy. In recent years, they have snapped up two apartments and they are now building a villa. “I have not seen a property in Egypt that declined in price in at least 26 years,” said 65-year-old Kawthar Mamdouh.The Mamdouhs, like many other Egyptian families, believe that property is their safest investment option and their interest has helped fuel a miniboom in the country of more than 90 million with housing prices progressively rising in recent years. Egypt’s prosperous real-estate market stands in contrast with the North African country’s battered economy, which has been struggling since an uprising ousted long-serving President Hosni Mubarak in 2011. For millions of Egyptians, the domestic housing market has also become the favorite destination to park their hard-earned savings. They argue real estate offers greater returns and is normally a safer investment. Read more.....


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