African cities for foreign property investors
New satellite cities and vast modern compounds across Africa signal are being hailed the perfect playground for foreign property investors.
Property Investors for Zambia
‘Property in Zambia has become an attractive option as it is one of the 20 least densely populated countries in the world, and is poised to take on opportunities to develop its periurban areas,’ says Pam Golding’s Zaloumis. ‘During the past decade, significant investments in key sectors and the overall infrastructure of Zambia have led to solid economic growth and a budding property market.’
According to the African Development Bank’s economic outlook on Zambia, despite high youth unemployment and slow progress in poverty reduction, the Zambian economy remains favourable and is underpinned by robust growth and single-digit inflation. In 2012, the bank had projected the economy to grow by 6,9%, but instead, it grew by 7,3% and matched this again in 2013, although was slightly down to 6,5% by January 2014. Inflation, too, has remained in the single-digit realm, at 8,5%. Another optimistic indicator is provided by the Bank of Zambia’s (BoZ) governor, Dr Michael Gondwe, when he argued that Zambia’s economic prospects for the second half of 2013 had remained favourable and were being driven by continued investments in mining, manufacturing, tourism, communication and infrastructure. Accordingly, the domestic credit, which included foreign currency loans, construction finance and mortgage loans, had risen by 32,6% in only six months.
According to Zaloumis, the country is expected to continue its high level of growth and development, making a home or farm in Zambia an ideal investment decision. ‘Its two primary business hubs are the capital city, Lusaka, and the Copperbelt Province, which is the centre of Zambia’s mining industry. Over the past five years, these business centres have experienced unprecedented growth in terms of the interest in houses for sale in Zambia and the property market on a whole,’ she says.
Uganda a Property Investor’s Paradise
Uganda is an African success story. After the madness of the Idi Amin and Milton Obote years, in 1986, President Yoweri Kaguta Museveni was elected and led the country to economic liberalisation and development, with almost two decades of unbroken growth. Uganda is perhaps Africa’s friendliest country, and the hospitality of the locals often amazes visitors. Kampala’s expatriate areas remain uncrowded, peaceful and pleasant despite the rapid expansion of the city.
The two decades of unbroken growth has led to an increase in the number of expatriates, says Judy Rugasira Kyanda, managing director of Knight Frank in Uganda: ‘The development of new residential areas within the outskirts of Kampala has increased the housing supply. The luxury-housing sales market is dominated by investor-landlords intending to let to foreigners.’
According to Rugasira Kyanda, the expatriate market can be broadly divided into two: the old areas and the new. ‘The old areas have been established expatriate housing areas for more than a decade. These areas are within the city centre. They are generally more expensive,’ she explains. ‘The new areas are on the outskirts of the city. They usually have better views, and are less expensive.’
‘The development of new residential areas within the outskirts of Kampala has increased the housing supply. The luxury-housing sales market is dominated by investor-landlords intending to let to foreigners’
The 1996 Constitution grants land ownership rights solely to citizens of Uganda. Foreign nationals and corporations may, however, obtain leases for 49 or 99 years.
Foreign Property Investment in Nigeria
After declaring independence from Britain in 1960, Nigeria plunged into a series of civil wars and then military rule after 1966. The oil boom in the 1970s gave the government a chance to go on a spending spree, which included the overly expensive transfer of the capital from Lagos to Abuja. When the world recession kicked in the 1980s, oil prices plunged, pulling down Nigeria. This led to a cycle of massive debt, soaring inflation, large-scale unemployment and massive corruption. The country’s real GDP per capita is still below its 1970 level. Last year’s real GDP growth was 3,9%, low compared to 16% inflation rate and 2,3% population growth rate. Seventy-seven percent of the population lives below the poverty line. Despite this, there’s a housing boom, even though there have been high levels of construction during the past few years in Lagos and Abuja, and the supply of expatriate housing has greatly increased.
‘Mobile phone companies are investing, creating temporary demand. Nigeria’s natural-gas potential is being opened up, bringing in foreign experts. Increasingly, wealthy overseas Nigerians are repatriating money to buy in Lagos,’ says Knight Frank’s Welborn,who also explains that most foreign companies in Nigeria, like Shell, sub-let housing from Nigerian-owned management companies, mostly on Victoria Island and Ikoyi, although Chevron has built its own estate in Victoria, near Lekki, with hundreds of houses just like in US suburbia. ‘Foreigners almost always live in apartments or gated estates because of serious security and electric-power issues,’ he adds.
The profitability of housing is drawing many developers into a construction boom. In Goodluck Jonathan City in Abuja, Pam Golding has been exclusively mandated to market a huge new residential housing estate, with the first phase comprising 100 000 units.
Nigeria allows any company or non-resident to buy land rights for a maximum of 99 years for the purpose of their activity, as long as the purchase is declared to the government beforehand.
Foreigners Property Investors give Kenya a Thumbs Up
‘The economic recovery that started in Kenya in 2003 translated into a recovery of property prices but, by the end of 2011, a rapid increase in interest rates from 16% to 25% led to a slowdown in residential development, which was in danger of overheating at the time,’ says Ben Woodhams, managing director of Knight Frank’s Kenyan operation. Woodhams explains that the result of the interest-rate increase was a drop in sales volumes, particularly in the mid-market, although house sales at the very top end of the market remained largely unaffected. ‘Rental values, however, continued to climb, partly as a result of a shift away from the mortgage market, resulting in improving yields,’ he says.
Foreigners generally prefer the residential area within an arc covering the southwest up to the northeast of Nairobi, the capital city. Because of security concerns and breakdowns in the provision of the basic utilities, there is increased demand for accommodation within secure compounds with their own water supply and back-up generator.
According to Woodhams, the Nairobi sales market can be divided into two: ‘The first one is the owner-occupier buyers that dominate the 10 to 20 million Kenyan shillings (around R1,4 million to R2,8 million) market, where most of the transactions occur. The second one is the property investors and speculators, mostly wealthy individuals and institutions, a market that operates above the KES20 million range.’
Importantly, though, Kenya is at the forefront of Africa’s technology boom and its ambitions to establish itself as a global centre for the tech sector are encapsulated by Konza Technology City, a US$10 billion project marketed by the Kenyan government’s ICT Board, which is planned for construction over the next 20 years on a 2 000-hectare site, 60 kilometres southeast of Nairobi. The project is directly modelled on California’s Silicon Valley and is designed to include a technology park, university campus, science park and central business district, alongside residences for some 185 000 people. Tatu City, meanwhile, will span some 1 035 hectares of land 15 kilometres from Nairobi and is being designed to create a new decentralised urban centre to the north of the bustling Kenyan capital. Construction work began in 2012 and the whole project is projected to be completed in 10 phases by 2022. The mixed-use satellite city is expected to be home to 77 000 residents.
Going Investment Crazy for Tanzania
Tanzania’s residential market remains highly diversified,’ says Ahaad Meskiri, managing director for Knight Frank Tanzania. According to Meskiri, the highest rents are commanded by beach-facing properties in Oyster Bay and the Msasani Peninsula in Dar es Salaam and on the Lake Victoria shores of Capri Point in Mwanza. ‘The majority of the housing stock in the prime residential areas of Tanzania comprises older government houses that are now in the process of being redeveloped to good quality modern single and multi-occupied houses. Increased development is being witnessed outside the traditional prime residential areas in order to meet rising demand.’
Meskiri admits that the expatriate market in Dar es Salaam is relatively small and dominated by employees of donor agencies and other multilateral institutions. ‘The supply of good quality housing is extremely limited; expansion or contraction of an embassy or donor institution directly influences demand and pricing in the short run,’ he says.
Noncitizens may only acquire land (leasehold) for investment purposes subject to the approval of the Tanzania Investment Centre (TIC) for the mainland or the Zanzibar Investment Promotion Authority (ZIPA) for Zanzibar. All land in Tanzania is owned by the state, and can only be leased to individuals for five to 99 years.
Namibia Ripe for Foreign Investment
‘Namibia’s unspoiled natural beauty and well-developed infrastructure combined with political stability and economic growth offer a unique investment opportunity to the real-estate investor,’ says Leon Jooste of Pam Golding Namibia.
The Namibian real-estate market is evolving into a more mature, modern landscape where the provision of innovative new solutions to the more sophisticated and discerning client is catered for in most instances. One of the new trends confirming this is the development of lifestyle estates in the residential market. Farms for sale in Namibia are extremely popular, as 46% of the country’s total surface area is suitable for livestock; the livestock sub-sector is the single-largest contributor to the GDP for agriculture. Namibia is also experiencing a high level of retail construction activity, with new shopping centres being developed and existing malls undergoing expansion.
There is also strong demand for high-end apartments in central locations, which is reflected in recent residential developments such as the 82-unit Trift Towers and 77 On Independence, which includes 232 apartments and is due to be completed in 2013.
Text: Jocelyn Warrington