Africa Real Estate Outlook 2021
Many African countries have been attracting global investors looking for new opportunities. These unique opportunities in real estate in Africa don’t often exist elsewhere.
Africa is in the grip of a significant economic boom. China and America are fueling this boom with a surge of capital investment.
China has taken a considerable interest in African investments. It has become Africa’s biggest trading partner. The United States of America is the second-largest investor in Africa.
The face of business and entrepreneurship is changing. Throughout the continent, opportunities exist for young and old, educated and unskilled alike.
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Here is What’s Impacting the Real Estate in Africa:
1. Africa’s Population Continues to Grow.
With a population that could double by 2050, African real estate will be a huge market for investors. The demand for homes and commercial property is going to increase.
The combination of different factors makes Africa an attractive market. It has a low level of risk that often accompanies emerging markets. The Economist reports that Africa’s population will double from 1 billion to 2.4 billion people by 2050.
It will become the most populated region on earth as a result. More than Europe and Asia combined. But Africa still lags regarding economic growth.
The high population in Africa creates immense pressure on resources. Yet, the lack of housing remains a prime concern for many who live below the poverty line.
Currently, the continent reports around 330 million people living in substandard housing. This number is set to rise as the population doubles.
2. Urban Housing Crisis, an Investment Opportunity.
African cities are on the brink of an explosion in population due to rural-to-urban migration. This calls for the massive construction of affordable homes across Africa.
By 2030, 40% of the world’s population will need new housing units, according to IFC. A majority of this need is in Africa.
The current housing crisis is not a new problem. The population growth rate and other factors have sped up its severity.
The major challenge is the home prices. In many African cities, housing costs are expensive to the majority.
Thus, people continue to use low-quality settlements which lack proper infrastructure and security. These areas are hazardous and leave occupants vulnerable to crime. They also lack essential services such as electricity and clean water. There’s a lack of hygiene and sanitation, which breeds many health issues.
A key strategy by the government is to remove legal and zoning barriers to urban housing development. This will clear the way for significant investments to address the housing shortage.
Governments also need to work with the private sector if they are serious about solving the crisis.
The housing market is a massive opportunity, not only for construction companies. Even financing companies, insurance providers and more will enjoy this megatrend. Secondly, affordable housing prices can act as a catalyst for social development, which eventually leads to economic growth.
The current trend is to use less land and create higher-density housing. This requires highrises such as apartment buildings or townhouse complexes.
3. Rise in Infrastructure Development
The continent has become a hotspot for real estate investors in recent years. The ongoing pandemic hasn’t stopped that trend either. One of the reasons for this is the ongoing developments in infrastructure.
Governments across Africa are investing in infrastructure to improve conditions for their people. With an emphasis on the countries as a whole rather than a single region or city.
The residential sector is also implementing and adopting innovative and sustainable designs. This is drawing both investors and homeowners alike.
The increasing standard of living attracts foreign investment. And further expands economic growth throughout the continent. Furthermore, there are improvements in cooperation with the private sector.
Foreign investors are noticing economic growth and are investing in African real estate. The investments range from housing developments to warehouses. These are being erected on the continent due to high demand.
Many countries are currently experiencing growth in different sectors. Whether it’s residential or commercial real estate. Furthermore, new government policies on trade and investment in many nations make investing more attractive in the continent.
These factors have helped change international perspectives about investing in Africa. It has come from being a risky proposition to offering high returns with relatively less risk.
4. A Growing Middle Class. A Ready Consumer Base.
The middle class in Africa has been growing at a rapid rate over the last 40 years. In many cases, this middle class is accredited for the growth of the private sector. This growth positively influences the economic growth rates in the different countries on the continent.
African Development Bank reports that Africa’s middle class is vital in countries with a growing private sector. This is because many middle-class individuals tend to be local entrepreneurs.
In many African countries, a new middle class has emerged. This is due to increased education and a significant growth of the entrepreneur mindset, hence a continual growth of the private sector. This has led to an increase in jobs and economic growth.
This new demographic could continue growing by as much as 2.2% per year. With higher disposable income, many now look for better living standards and a luxurious lifestyle.
Targeting and tapping into this growing consumer base is a sure win for the real estate developer.
5. Improved Technology in the Real Estate Industry
Africa’s advancement in property technology is remarkable. Proptech is simply a term used to identify technological innovations in real estate. It is a crucial component for all stakeholders in the real estate industry.
There has been quite a remarkable growth and advancement in property technology on the continent. This is evidenced by the number of proptech startups on the rise in this sector.
Another technological advancement and penetration is the distribution and usage of mobile handsets in Africa. According to a recent report, mobile money in Africa accounts for 70% of the $1 trillion global value. For instance, there were 495 million subscriptions for mobile services in 2020, representing 46% of Africa’s population.
These numbers have played a part in the real estate industry. Many rental payments and services are now paid and managed on mobile handsets.
Traditional marketing and advertising lettings have been replaced by social media marketing. Developers and realtors have fully embraced this medium and utilised it fully for all marketing purposes. Listings on Facebook, Instagram and WhatsApp businesses are a norm now.
It has become crucial for the industry to adopt ICT. This allows it to stay abreast of the curve.
Africa is evolving at a rapid pace. And this shows in the economic growth, infrastructure developments and consumer base. The most significant shift is investor perceptions of Africa as a place to invest.
The continent has seen significant improvements in attracting investors. This includes new government policies, a growing middle class and increased investment opportunities.
Foreign investors are beginning to see that investing in real estate in Africa is a viable option. And with consumers coming from different income levels, brands must adapt to this new market.
How to Get Started on Your First Investment.
Getting started is easier than you think. Our general advice is to first talk to a real estate investment consultant or financial adviser. These people can give you the know-how on the benefits of investing in property.
Once you have an understanding, start your search right here on our real estate platform. We have a plentiful supply of investment opportunities in many African real estate sectors and nations.
If you want to discuss listing your property, please get in touch with our team. We are happy to answer any questions you may have.