Common Real Estate Trends in Africa?
Africa is quite a unique continent. Its people and cultures differ significantly from the rest of the world. Regarding real estate, there are some notable trends specific to Africa.
Africa is the second-largest continent in the world. It has a population of over 1 billion people. Africa’s estimated landmass is 11,690,000 square kilometres.
Many countries on the continent are emerging from decades-long civil wars and conflicts. This means that new development opportunities abound. As development and stability in Africa increase, so too is interest from investors around the world.
This blog post shares six trends to note if you’re interested in investing in African real estate.
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Africa’s urbanisation rate is one of the fastest-growing around the world. Some cities are so densely populated they are literally bursting at the seams.
More Africans are moving from rural areas into urban areas on a daily basis. There are many reasons leading to rural-urban migration.
Cities provide opportunities that they do not have back in the villages. For example; job and income-generating opportunities. Improved living conditions and decent health care, etc.
Renting is Still Only Option for Majority
Owning a home is a far fetched dream for most people in Africa. Many still live below $2 a day. This means they are incapable of affording property investments like homes and land. So this leaves the majority with renting as the only option.
There’s also a rising working and middle-income class. This demographic lives on the same salary but is unable to afford their own place. This has created a huge demand for rental properties across the continent.
Lifestyle Changes Dictating Property Types
The post-covid era has seen many people opting to work from home. As a result of this, we are now seeing the creation and conversion of office spaces in many homes.
What was once wasted space in homes, is now utilized for different purposes as people adjust their lifestyles. Many are also downsizing from bigger homes to smaller units. This is due to financial constraints caused by the recent pandemic.
There is a significant rise in urban dwellers renting out their spare rooms through Airbnb, and many other online rental apps. One now has the ability to rent a whole apartment in another city without ever having been there before.
The average guest in short stays 2 to 3 days. This means you get more space per square foot than if occupied by someone full-time. This is a growing trend especially among urban dwellers and middle-income classes in the different African countries.
Africa is expected to have an increase in its economic growth rate over the next decade. This is due to the increased adoption for good governance and efforts towards political stability in many nations on the continent, infrastructure investment, and simplifying trade and investment regulations to attract foreign business and investments.
The current low-interest rate environment in South Africa is a key factor for homeownership. The competitive home loan deals also create an ideal buying environment for the first time homebuyer.
In Ghana, the government has ensured to build a conducive social, political and economic environment. This is consistently attracting foreign investment and settlement.
Rwanda is one of the fastest-growing economies in the world today. This makes it an attractive destination for both potential home buyers and investors looking to invest their money. Rwanda’s GDP growth rate reached 9.4% in 2019 after averaging 8% growth per year over the last 2 decades. This trend is projected to bounce back this 2021-2022, from the slump in growth caused by the pandemic.
These are all indicators of a strong emerging market and attractive destination for investment. And this is sure to impact higher homeownership rates across Africa going forward.
Growing Middle Class
The growing middle-income class is driving housing demand across the continent. This class is dictating and influencing the direction of construction designs and styles. Many are opting for more modern and luxury homes with enhanced features and facilities, for an improved quality of life.
Developers are scrambling for new projects that cater specifically to this demographic. They’re building communities with all amenities including fitness centers, hospitals, schools, shopping malls. etc.
A growing trend in the real estate market is a preference for apartment blocks and multi-family developments. This is a growing trend globally and a sign of urban areas becoming too overcrowded. As such people are looking for an affordable living option.
Developers are also shifting their focus to less crowded suburban community settings. This is in preference to bustling cities and urban centres. Access to green spaces and tranquillity outside the hectic bustle common in cities and urban areas is a growing need. This shift signifies a growing global interest.
There is a need for affordable housing in Africa. African governments are making an effort towards housing affordability through new legislation. This provides much-needed relief for many people living on lower incomes and who cannot afford houses on the market today.
With the population increasing rapidly, many people are looking for housing that is affordable and safe. Countries like Rwanda have increased this need by constructing affordable housing near urban areas. The target is for homeowners within a lower income bracket.
Many international organizations have jumped to this cause. IFC a sister organization to the World Bank initiated a scheme recently. They partnered with a Chinese multinational construction company to develop affordable housing in Africa.
In conclusion, it’s crucial for investors and others alike to understand the current social, economic, political and cultural trends in Africa. These factors impact future real estate investment and development.
There has been a growing middle class with greater purchasing power. However, there are still prevailing challenges such as modern, affordable housing.
The lifestyle patterns of Africans may be changing rapidly as well which will likely impact urbanisation rates in the coming years. Understanding these dynamics can help investors and other key players make better decisions.