Knight Frank, a leading global property consultancy, said in its 2015 report that Africa’s rapid population increase coupled by a strong economic growth across several countries on the continent was building a formidable middle class that could prove too attractive for global real estate investors to ignore over the coming decade.
According to the report, Africa’s population is estimated to reach four billion people by the start of the next century, ” with nearly one billion of these people in Nigeria alone”. With sub-Sahara Africa being the world’s fastest growing region in the world, the report estimates that 13 out of 20 fastest growing economies over the next five year will be from the region.
“Large volumes of good quality commercial and residential property are needed to support the continuing African growth story, presenting excellent opportunities for global funds looking to diversify or enter into African markets,” the report said.
Some of the fastest growing cities on the continent according to Knight Frank include Lagos in Nigeria, Luanda in Angola and Dar es Salaam in Tanzania.
The report said that already nine South African based property funds have been diversifying their investment into the rest of the continent over the last two year. Other global fund are likely to join this investments, which will deepen the real estate market on the continent.
“These investors will develop a wave of modern investable assets that will do much to improve the size and maturity of African property investment markets over the next few years,” it added.
Chinese investments in Africa were pointed out as one of the “eye-catching” development on the continent.
The Asian giant has been actively developing infrastructure in several African countries as it seek to improve relation on the continent in exchange of securing raw commodities for its burgeoning industrial sector.
“The inflow of investment from China into Africa has been well publicized, but there is also growing activity involving investors from elsewhere, including the rest of Asia and the Middle East,” said Tony Galetti, Joint CEO and Co-Founder of Galetti Knight Frank.
“Meanwhile, an increasingly significant flow of capital has emerged from South Africa into other African markets.
“The South African property market has become highly competitive, and it has become increasingly difficult to achieve consistent growth due to a lack of high quality investment grade stock. As a result, property funds and institutional property owners such as Atterbury, Stanlib and Resilient are targeting the rest of the African continent for growth opportunities.”