The Global Real Estate Commercial Markets Series – Part 2, Africa

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In our previous analysis, we have captured about the dynamics of Europe’s commercial real estate segment. As part of our series on Global Commercial Real estate in Q3, 2016; in the given section, we will capture the commercial real estate dynamics of Africa.

Today, Africa is one of the bright spots on the global economic landscape with 13 of the 20 emerging economies being in Africa. A rising economy is translating into increased demand for quality office real estate. Although a decrease in oil price has resulted into moderation of economy in Nigeria & Angola but this has not dissuaded domestic & international investors & developers to capitalize on the growing real estate in Africa.

Nigeria continues to fight with a depreciating real estate market, that has otherwise given significant results in the past. Office properties in Nigeria are believed to be heavily undervalued now. However, this is also enticing some of the funds to make forays into the Nigerian realty to capitalize on the undervalued properties.

In East Africa, Nairobi is one of the focal point of the business investment. The Kenyan capital, capitalizes on its enchanting weather, better global connectivity & its status as a gateway to East Africa.

As per the estimates by the Kenyan National Bureau of statistics, the country has clocked an impressive growth rate of 6.2% in 2nd quarter of 2016, 0.3 percentage points more than its numbers a year before. Various BFSI, business consulting, telecommunication, civil aviation, NGOs & chemical companies are scouting for office space in Nairobi.

Following Kenya, is the real estate market in Tanzania that is second largest economy in the East Africa. Tanzanian economy is expected to showcase an impressive growth of 7.2% in 2016, followed by a growth of 7.4% in 2017. Growth for office real estate is driven by multiple sectors such as BFSI, mining, oil & petroleum, telecommunication, logistics & agribusiness.

On the Western front, Ghana is leading the pack. Although the economic growth has slowed down, the economy is expected to do reasonably good in 2016 due to commencement of operations in new oil & gas fields. The investors profile in Ghana’s commercial real estate is multi-faceted with investors coming from USA, Nigeria & Western Europe. Not to forget, Russia & Middle East as well.

Investors are banking on higher returns, political stability & an impressive economic growth based on an emerging oil & gas fields

South Africa continues to be one of the most favored real estate markets in Africa & the same holds true for its commercial real estate. Acclaimed for being a parapet of institutional integrity, South African realty sector is clocking large scale investment.

In the Southern parts of Africa, Botswana is also expected to experience increased demand. Once, an economically sluggish nation, Botswana has evolved into a middle-income nation on the backdrop of a robust mining sector. Although the economy has contracted in 2015, it has averaged a growth of 5% in the last decade.

With demands stabilizing in the developed world, it is expected that economic dimensions will further increase in 2016 & 17, thereby driving demand for office real estate. In the month of August, the iconic 30 floored tower iSouth Towers has been completed. This is touted as the tallest tower in the country.