African property: Rise of foreign investment
Across Africa, property developers are touting gleaming skyscrapers towering over bright avenues as the snapshot of our continent’s urban life.
African Property Market Looking Good
Thanks to the civil unrest and strife that seem its constant plight, investors have traditionally shied away from buying property on the Mother Continent. But the winds of change are sweeping with gale-force intensity over Africa as the demand for high quality commercial and residential property gathers momentum on the back of the continent’s sustained economic growth and rising wealth.
‘Africa’s impressive economic progress is generating a growing need for the construction of good quality property in major cities across the continent,’ says Matthew Colbourne, Head of International Research at Knight Frank. ‘The rising wealth of Africa’s middle class is leading to demand for increasingly sophisticated retail formats and better quality residential property.’
Peter Welborn, Knight Frank’s Head of Africa, concurs: ‘Property investors and developers looking for emerging market opportunities are increasing external investment in Africa, particularly as the growth markets of the last decade such as Asia-Pacific and Central and Eastern Europe mature and the level of returns they offer begins to diminish.’
Indeed, many pundits claim that Africa is in the midst of a period of dynamic economic expansion, having averaged GDP growth of more than 5% per annum over the last decade. This strong growth is expected to continue and is creating wealthier populations, particularly in the largest and most rapidly growing urban centres. Africa’s ‘megacities’ such as Lagos, Nairobi, Lusaka and Dar es Salaam are increasingly becoming the drivers of its economic growth and, as a result, are attracting growing interest from occupiers, developers and investors.
Benefits of African Property Investment
‘One of the biggest reasons to invest in African property is the outstanding value that you get for your money,’ confirms Inutu Zaloumis, managing director of Pam Golding Properties in Zambia. ‘As the cost of living is extremely low, foreign dollars go a long way. In fact, it is very easy to live like royalty in Africa given the current rates of exchange for the currencies of most first-world countries.’
Another very big draw for investors is the relatively inexpensive yet high quality of labour and materials that can be purchased for the development of housing and resorts. There is also a huge number of world-class facilities and related support industries that cater exclusively to the needs and wants of the business executive as well as the wealthy traveller. In the residential sector, the need for greater volumes of good quality housing is reflected in a number of ambitious new suburbs that are either under construction or planned by private property developers on the outskirts of existing large cities. Examples include the Eko Atlantic scheme on Victoria Island in Lagos and Tatu City in Nairobi. While all of these projects remain at very early stages, they may herald a wave of new large-scale urban developments across Africa.
Property Agents Seeing African Opportunity
Pam Golding’s recent mandate to market a huge housing unit in Nigeria as well as a residential golf estate in Uganda is indicative of the company’s desire to get a springboard into Africa. Says Andrew Golding, CE of the property group, ‘Strategically, Africa presents us with considerable growth opportunities, and our key for success is to enter into partnerships with local operators who have the required knowledge in terms of not only the property market but also the legal requirements of transacting in these countries. We also see opportunities for further expansion in countries where we have existing offices, such as Namibia, Zambia, Kenya, Botswana and Zimbabwe.’
‘Many African countries remain challenging places in which to do business,’ admits Welborn, ‘but for those able to steer their way through African property markets, there is the promise of high returns and significant growth potential.’
Text: Jocelyn Warrington