1. .
INVEST IN AFRICAN REAL ESTATE MARKET TODAY FOR ITS PRICES ARE NOW LOW BUT WILLINVEST IN AFRICAN REAL ESTATE MARKET TODAY FOR ITS PRICES ARE NOW LOW BUT WILL
INCREASE IN EACH OF THE COMING YEARSINCREASE IN EACH OF THE COMING YEARS
Wondering what next big step to take? The continent
of the future, Africa is expanding right now, and
here’s the opportunity to expand with it. While the
International Monetary Fund (IMF) has warned that
in 2015 the global economy could remain trapped on a
new “mediocre” growth path, Sub-Saharan Africa is
set to make a vibrant growth.
Africa is the world youngest continent and is expected to
have the biggest labour force in the world by 2040. By
2100 it is estimated that nearly 40% of the world’s
population will live in Africa, with the large majority of
this being in the continent’s fast growing cities. Until that
time its biggest profits are yet to earn in the next 10 to 30
years. Sub-Saharan Africa is one of the world’s most
rapidly developing economic region, and it is projected
that 13 of 20 fastest-growing global economies over the
next five years will be in Africa.
OUTLOOK OF AFRICAN
REAL ESTATE MARKET
A recent report from the Housing Data Centre which
collates information from the real estate and housing
sector in Ghana, believe that house prices are likely to go
up by at least 50 percent in 2015 alone and the Ministry of
Water Resources, Works and Housing believes the
housing deficit in Ghana stands at around 1.7 million
units. At the end of 2013, it was also reported that the
average retail rent in Accra had risen by around 50 percent
to between $60 to $65 per square meter since 2012. Ghana
offers the best Real Estate investment opportunity in West
Africa, according to a survey of global property experts,
52% of whom believe. Ghana will offer the strongest
financial returns in the region over the next 3 years
according to a Clifton Homes study. Nigeria, West
Africa’s most populous country, was named as the next
most attractive market.
Expert believe Nigerian investments will continue to
produce good returns, however the residential property
market, especially the high end, has matured. On the other
hand, Ghana is experiencing what Nigeria has already
gone through and investors do not need to be convinced of
the potential in the market, they know exactly what is
coming and are investing while they can still acquire
prestigious assets at reasonable principe.
Nigerian is now the largest economy in Africa with GPD
estimated at $594.3bn, followed by South Africa
($341.2bn). Rapid population growth, steadily increasing
urbanization and rising incomes-particularly among the
middle class-have fuelled expansion in Nigeria’s real
estate sector over the past decade, and are expected to
continue to drive growth in the industry. While most
segments have seen increased investment in recent years,
the country remains undersupplied in virtually every area,
particularly affordable housing, high-quality retail space
and grade-A office space. Activity in Nigeria’s
construction industry is expected to continue to rise for the
foreseeable future, despite softening demand in a handful
of segments due to exogenous factors. The supply and
demand differential in the power generation and housing
segments alone is expected to result in trillions of naira
worth of federal and state-led investment through 2020.

2. Website: www.isgprojectfinancing.com
percent in rand value and 950 percent in volume in just five
years, while house prices in the area overall have shown a
healthy nominal return on investment of 16 percent a year
over the same period. At the same time, the capital return
on investment for sectional title units is a staggering 17
percent to 21 percent. A comprehensive survey of all
suburbs in the City Bowl and CBD compiled by Lew
Geffen Sotheby’s International Realty shows that since the
beginning of 2008 a total of 5978 houses and apartments
have been sold in the area with a combined value of
R12.375 billion. And in the three years since the start of
2012 the sale of 2720 houses and apartments in the City
Bowl and CBD were sold to the value of R6175bn. Africa’s
young population as well as continued urbanization will
drive the demand for real estate even further on the
continent. This is according to consulting firm PwC, titled
Real Estate: Building the Future of Africa. “Africa
represents 15% of the world’s population but only 3% of
the global GPD (income)”, said Ilse French, the real estate
leader at PwC, on the growth potential of the continent.
By 2035, Africa’s labour force will be larger than China’s
67% of Africa chief executives see urbanization and
demographic shifts having a major impact in next five
years. Africa’s middle class is currently 15 million and by
2030 it will be more than 40 million. By 2025, Lagos in
Nigeria will be the 12th largest city in the world in terms of
population. Africa’s buying power will be $1.4trn in 2020.
Real estate developments have also taken off in emerging
towns across Kenya. Shopping malls, for instance, are
opening up in previously agricultural towns. In these fast-
growing urban centres, new opportunities are emerging
from coffee shops to private schools. The country’s
booming property market is said to be responding to
demand that has been created by the expanding middle
class. Recently, players in the industry held the 20th
Kenya
Homes Expo in Nairobi. The expo garnered local and
international exhibitors drawn from various sectors of the
real estate industry. As one of Africa’s best-performing
markets for investors, in the past 14 years Kenya’s property
prices have increased three-fold, including a 9.6% year-on-
year leap from 2011 to 2012, according to HassConsult, a
local property development and services firm. Investment
returns are in excess of 28%, figures from the Kenya
Property Developers Association show. The sector is
dominated by Nairobi, which delivers two-thirds of
Kenya’s $47bn economic output. Prices across residential
real estate have more than tripled since 2000, according ton
the HassConsult Property Index. Average prices across
Nairobi have all more than doubled over the past decade,
rising 20% from $224,000 to $278,000 between 2009 and
2013. High-end properties have tripled their value since
2002, earning Nairobi the top African city position in the
2013 Knight Frank Prime Global Cities Index. Prices
peaked at approximately KSh53m ($604,200) in the second
quarter of 2013, according to HassConsult, clustered in
Nairobi’s west and higher-end suburbs, such as Gigiri, Hill
View Estate, Karen, Kitisuru, Kyuna Estate, Muthaiga,
Nyari, Rosslyn and Spring Valley. During the country’s
rebasing-replacing of the old base year used for compiling
the constant price estimated to a new and more recent base
year, Kenya’s GPD increased to 55.2 billion US dollars in
2013 from 44.1 billion US dollars, a 25.3 percent jump.
The real estate sector contributed 5.9 percent accounting
for some change in the level of the country’s GDP.
South Africa is now the second largest economy in Africa
($341.2bn). Johannesburg is the financial and economic
centre of South Africa. Gross rental yields, i.e., the gross
rental return on a property if fully rented out, on
Johannesburg apartments are good ranging from 5.82% to
8.45%. Demand for houses in Cape Town’s City Bowl
has resulted in the luxury end of the market growing 1444
MIKE TUINSTRA – MARKET
RESEARCHER ISG