Key property investor-developers such as U.K.-based Actis and Johannesburg-based RMB Westport are responsible for developing many sub-Saharan Africa malls and office complexes, but few of their projects until now have included logistics activity.

That is changing.

Actis is a partner in its first major African logistics project — York Commercial Park, a modern development in Lusaka, Zambia, according to Knight Frank’s Logistics Africa 2016 report.

The warehousing and logistics sector grew by 24 percent over the past 10 years in Africa, and there are opportunities for investment, according to residential and commercial property consultant Knight Frank.

Online retail is still small by global standards in much of Africa, but it’s growing fast thanks to increased penetration of smart phones. There’s rising demand for high quality warehouse space by manufacturers seeking to expand their African operations, Knight Frank reported.

In South Africa, the most sophisticated retail market in sub-Saharan Africa, online sales are expected to reach just 1 percent of the total retail market in 2016 — a threshold passed more than 10 years ago in many developed markets.

But Frost & Sullivan forecasts that e-commerce in Africa will be worth US$50 billion in 2018, up from US$8 billion in 2013.

Knight Frank singled out landlocked Zambia as one of the most promising logistics locations in sub-Saharan Africa, thanks to its geographical position at the intersection of Southern, Eastern and Central Africa.

Zambia relies on road and rail connections with other countries, and its transport infrastructure is relatively good compared to some of its neighbors, according to the report. Lusaka is undergoing major road improvements including construction of an Inner Ring Road. The first phase was completed in 2014.

Other investors seeking to expand their sub-Saharan portfolios have been active recently, including Mara Delta – a fund created when Delta Africa and Mara Diversified Property Holdings merged. Mara Delta has acquired the Bolloré/Plexus warehousing complex in Pemba, Mozambique.

Middle Eastern developers have also targeted the sector including Kuwait-based Agility, which has ambitious plans to create a network of logistics hubs across Africa. Dubai’s DP World has been granted a concession to develop and operate a new logistics center in Kigali, Rwanda, Knight Frank reports.

South Africa has numerous modern logistics parks and new developments in the works. Logistics property developers there want to transfer their expertise to projects in the rest of Africa, and this may result in a wave of new development across the rest of the continent.

Moving goods in Africa costs an estimated two-to-three times more than in developed countries. Transport costs can represent as much as 75 percent of the retail price of goods. The poor quality of road and rail networks forces logistics
companies such as DHL Express to transport the majority of its cargo by air.

Pioneers of online African retail include websites such as Nigeria’s market leaders Jumia and Konga; South Africa’s Zando and Takealot; and Kenya’s Rupu and Mamamikes. All of them were established in the last six years.

Jumia and Konga both operate central distribution warehouses in Lagos, Knight Frank reported. Jumia has an 8,000-square-meter facility (86,000 square feet) and Konga has a warehouse of 11,000 square meters (118,000 square feet). Jumia also has 18 delivery hubs in other major Nigerian cities and has also expanded into 10 other African markets.

In western countries by comparison, retailers like Amazon make operate huge e-fulfilment centers (warehouses) that can be more than 100,000 square meters (over 1 million square feet.)

If the rise of e-commerce in Africa continues following the path taken by western markets, there will be demand for an increasingly sophisticated range of logistics properties, Knight Frank predicted.

These could include drone ports.

Some firms are exploring the use of drone deliveries to get away from traffic nightmares.

At least 1,000 people have applied to the Kenya Civil Aviation Authority to operate unmanned aerial vehicles for film shooting, relief services and other commercial purposes, Business Daily reported. Approvals have been delayed because regulations haven’t caught up with demand for commercializing drones.

U.S. online retail giant Amazon said in July it will test its Amazon Prime Air service for delivering packages to customers using drones after U.S. Civil Aviation Authority approval.