The global market has become interested in the real estate in Africa. The growing importance of this sector can be easily deduced from the fact that the Global Real Estate Institute (GRI) held its last international conference in Nairobi, Kenya close to Northcote apartments in Nairobi. International real estate giants are now eyeing the market in Angola, Kenya, Mozambique, Nigeria, Tanzania, Ghana and South Africa.
The reasons for the boom in the real estate in Africa are as follows:
- The economy is growing at a very encouraging pace in sub Saharan Africa. In 2012, the GDP output of this region (excluding the largest economy – South Africa) expanded by 5.8%. As a result, there has been increased demand for housing and the real estate market is flourishing.
- Urbanization has followed in the footsteps of this economic growth. Africa’s urban areas are projected to grow at a rate of 5% per year. The number of people living in urban areas has increased from 80 million in 1983 to 400 million in 2014. Hence the real estate market has soared.
- The real estate market soared in South Africa after the abolition of apartheid. people bought homes in new neighborhoods and prices rose.
- Rich reserves of coal and natural gas has now been discovered in Mozambique. This is attracting the international companies and creating lots of employment opportunities. Hence there is a growing demand for housing as well as other types of real estate as the mines become operational. It has been estimated that this area will attract $50 billion in foreign investment in various sectors.
- The countries in sub Saharan Africa have some of the highest birth rates in the world. This growing population fuels the demand of the real estate market. The population of Nigeria for example is projected to increase to 150 million in 2020. It is also projected to become the largest economy in the continent. Real estate companies are investing heavily to take advantage of these figures.
- As the economy of sub Saharan Africa is expanding, a robust middle class with higher disposable income has been created. The demand for residences as well as other types of real estate like schools, hospitals and shopping malls is growing fast making real estate in Africa a very attractive proposition. For example, a 54000 sq meters shopping mall named The Grove is already being built in Namibia. The growth of the income and demands of the middle class is the reason for this.
- In addition to the international corporations, domestic finance is increasingly playing a part in the real estate in Africa. Though the domestic financial market has a weak base, infusion of external capital is gradually arousing it from coma.
- The gap between demand and supply is too huge for the government to fulfill. According to World Bank, Nigeria alone needs $350 billion to solve its demands for urban housing. The failure of the government actually opens up the market for private investment in this sector.