Africa’s projected demographic boom of 4 billion people by 2100 holds potential for a rise in the demand for African real estate, Knight Frank has revealed in their Africa Report 2015.
Driven by an expected exponential growth in the population of Sub – Saharan Africa’s largest cities, the African real estate market is poised to be a key investment area for entrepreneurs from Africa and abroad.
United Nations (UN) forecasts suggest that the populations of Lagos, Kinshasa and Luanda will all grow by more than 70% during the 2010-2025 period, while Dar es Salaam, Kampala and Lusaka are expected to double. The UN also projects that the population of Africa will almost quadruple to more than four billion by 2100, with nearly one billion of these people in Nigeria alone.
This unprecedented population boom will place the continent in a unique demographic situation where in which nearly 40% of the world’s population will live in Africa by 2100, according to the Knight Frank report. This high number of people will translate to a high demand in residential property.
“The growth of Africa’s cities is creating a need for increased volumes of good quality commercial and residential real estate of all types,” reads the report by Knight Frank
“Africa’s population boom is creating demand for residential property, ranging from mass market affordable housing to high-end luxury properties.”
The growth in the African population is coupled with the rise of the urban middle class, as well as the expansion of South African retailers such as Shoprite and Pick n Pay into the rest of Africa meaning that investment in commercial or retail property is as well encouraged as African multinational businesses continue to expand.
“Increased numbers of multinational companies are seeking offices in African cities, generating demand for high quality space, particularly in key regional hubs such as Nairobi and Lagos,” reads the report.
“The oil and energy sector is an important driver of activity in many of Africa’s most dynamic office markets. Demand from this sector, combined with an extreme lack of supply, has made Luanda in Angola one of the most expensive office markets in the world, with prime rents at US$150 per sq m per month,” states Knight Frank.
Investment in African real estate by international investors is limited, although the UK-based emerging market specialist Actis has been a trailblazer in Africa since establishing its first Sub-Saharan property fund in 2006.
It is thus opportune for emerging African entrepreneurs to invest in real estate as it is a market that will have a steady growth in demand both in commercial and residential property.
Furthermore, the demand for high quality commercial and residential real estate will only increase as the economies of Sub-Saharan Africa grow in importance on the global stage.
Notably this increase in the demand for property may be paralleled with a rise in the demand for water and electricity. African entrepreneurs are thus also encouraged to venture into businesses whose thrust is electricity and water supply as Africa continues to grow.
(Image Credit: venturesafrica)