Wondering where to invest in Africa property market?No worries, i have got you covered. Based on data collected, the following countries are the best places to invest in real estate in Africa:
Out of 54 African nations, most countries’ real estate sector is experiencing tremendous growth right now, from residential to commercial real estate. If you ask me what make a country the best place for real estate investing in Africa? Without a blink, not the least of which include: political stability, economic resilience, population growth, and perhaps infrastructural development. These countries that I will be discussing in a bit have emerged as ideal destination for real estate investment in Africa due to the inflow of foreign investors and the growing demand across different asset classes. Of course each country have its own set of merits and demerits, making it imperative to thoroughly evaluate options before settling on the optimal choice.
Are you international estate investor looking for opportunities in real estate sectors in Africa? You have come to the right place. The western real estate markets is either saturated or overpriced that you could hardly make the numbers work. In African countries, real estate offer you the opportunity to tap in for high return on investment if you have done your market research well and with the right investment strategy.
Without much I do, I invite you to explore my intake on these countries and welcome the opportunity to discuss my findings with you in more detail in this post. Let's dive in!
1.Cape Town, South Africa
Cape Town consistently maintains its reputation as one of Africa's premier real estate investment destination. Its stunning beaches and favorable climate make it especially appealing to retirees and foreign property buyers.
In 2021, there were 268,000 residential transfers valued at US$ 18.2billion. Also, there were 6.9million home sales in South Africa in 2021 worth US$ 416billion. Additionally, Cape Town is expected to be an outperformer in the property market due to the overall perception of the province as having a well-functioning local government and an attractive lifestyle. The province remains a magnet for skilled and affluent immigrants, often with high purchasing power and disposable incomes.
In Cape Town the residential rentals yield returns average 9.5%, retail is 8.3%, industrial is 8% and 8.75% for office space . Whereas in Johannesburg, rental yield returns for residential is 9.5%, retail is 8.5%, industrial 8.25% and 9.5% for office space annually. The city's allure as a prime tourist destination further enhances its real estate market potential.
Rental rates for apartments in Cape Town range from about USD 15 to USD 17 per square meter, translating to approximately USD 1,700 for a 120-square-meter apartment and USD 4,650 for a 300-square-meter apartment. Please keep in mind this price quotes could vary on the location and property type. The current home price growth is at 6.25%, and projections indicate an impending surge to a range of 7.25% to 7.75% by the first quarter of 2023.
2.Accra, Ghana
Have not heard of Ghana? No worries, let me give a snapshot of it. With a total land area of 238,537 sq.km Ghana was the first sub-Saharan nation to gain independence from colonial rule in 1957. Ghana is credited as being one of the most stable democracies in Africa, having successfully conducted 8 national elections and recorded no incidence of a coup d'état since 1992. Ghana is currently experiencing a real estate boom. Real estate is one of the fast growing sectors in the country according Ghana Investment Promotion Centre (GIPC). Why should you invest in Ghana? Known for its investment friendly, political stability and peaceful, favourable climate, rapid population, increase in urbanization and housing deficit, emerges as the second-strongest African contender for real estate investment.
Additionally, household spending is expected to increase from US$55bn in 2021 to USD81billion in 2025 according to Fitch report. Over the past five years, the Ghana has demonstrated a capital growth projection of 32.7%. Accra, the capital, presents high rental yields across all asset classes.
There are about 144,105m2 Grade A office supply with average rent around US$25 – US$28 /m2/month. The residential market is currently facing 2million housing deficit. About 400,000 units are required annually to reduce the housing deficit. According to State Housing Company, less than 50% is currently delivered annually which is far below the expected units. The average rent in Accra hovering from US$2,200 – US$3,000 /m2/month. And average yield for residential ranges from 10% to 13.5% annually.
Looking at the figures above, Accra's rental market is remarkably robust, with 37.5% of households engaging in renting, a significant contribution to the city's GDP compared to the national average of 22%. The city's growing population augments the demand for housing and commercial spaces, simultaneously posing challenges and of course opportunities for real estate investors which is why you are reading this post, isn't it?
The retail market is about 138,000m2 + supply. About 60,000m2 + is under development. Rents for retail space ranges from US$20 – US$40 /m2/month and average yield ranges from 8%-12%, Ghanaian growing taste is increasing. Accra mall for instance attracts approximately 7 million customers per year.
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3.Port Louis, Mauritius
Heavily tourism reliant economy and relatively small population, Mauritius is traditionally the focus of commerce. Port Louis has experienced a steady influx of companies to business parks developed over the last 10 to 15 years. The city consistently garners attention as a top destination for rental property investment. The city's dynamic economy fuels rapid employment market expansion, attracting a diverse populace.
Despite its status as a small island nation, Mauritius has developed a thriving real estate market, particularly after recent legislative changes allowing affluent foreigners to invest in residential and commercial properties. Property prices range between US$700 and US$850 per square foot, with a 100-square-meter property costing around $85,000 and a 500-square-meter property priced at approximately US$350,000 depending on the location, the amenities and property size.
Mauritius has become a sought-after hub for real estate investments, appealing to both local and international buyers. The low tax environment, stable government attract international demand for homes in Mauritius, particularly among South African and French speaking citizens. Smart city office rents averages at c. US$ 20 psm. The prime retail rents is also at c. US$ 30 psm. Monthly warehousing lease rates are around c. US$ 7psm. The Residential capital and rental values have experienced growth. The yield returns for residential is 4%, retail is 8%, industrial 10% and 8.75% for office space.
4.Nairobi, Kenya
Nairobi remains the strategic capital of East Africa and the first-place international investors list as one of the preferred entry point into Africa’s real estate market due to its well-established infrastructure and rapid population growth. Serving as a key transportation hub, the city enjoys global accessibility.
Diverse investment opportunities encompass residential and commercial properties, as well as land and property development. The city's growing population and housing demand create an attractive environment for real estate investors. Notably, residential properties offer rental yields ranging from moderate to excellent, with apartments yielding approximately 5.88%. The office space average yield is hovering around 8.5%, the retail market yield is about 8% and industrial ranged 8.5%.
Nairobi's various suburbs have witnessed modest increases in housing prices. Kenya’s real estate has seen a 3.5% increase in prime residential prices. For instance the Nyari Estate, a secure upscale community in close proximity to diplomatic buildings, witnessed a notable 12.4% increase in house prices over the past five years. Additionally, there is about 37,000 homes that were completed between 2017 and 2021 by the government, about 73% average of office occupancy rate and about 21green - rated buildings.
5.Abidjan, Côte D’ivoire/ Ivory Coast
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Since 2020 the country has been enjoying political stability following the government election. Abidjan’s real estate market is one of the hottest markets in Africa and should be on the list of investors looking to invest in Africa. Abidjan continues to experience growth in most real estate sectors, with a clear focus on higher quality stock by property developers.
The high quality office space market has expanded beyond the boundaries of the traditional Plateau CBD area and a number of new developments have been completed in Cocody and Riviera over the past few years and the demand continues to increase exponentially. There is also mixed-use developments coming up, featuring retail, in Marcory-Zone 4 which is expected to be delivered by 2024, adding c.6,000 sqm of retail (and 15,000 sqm of offices) to the stock of the city of Abidjan.
Why invest in Ivory Coast or Côte D’ivoire commercial real estate market? The demand for high-quality Grade A office space is high. A continues increasing of stock levels and a widespread review of occupational strategies have, to an extent, contained rental growth. Office rents have increased by 20% in the last two years and 25% for industrial spaces. Like any other major city in Africa, there is high urbanization rate in and about 52% of the population lives in the cities which triggers the demand for housing.
The government have struggles in its effort to provide housing and has been able to provide about 20,000 housing for the growing population which is inadequate. About 90% of the population is under 65years which create an opportunity for investors to provide housing for the young population. To curb the housing problem the government has shifted its focus on state owned housing companies such as Société de Gestion Financière de l’Habitat, Groupement Foncier de Côte d’Ivoire, and Société Ivorienne de Construction et de Gestion Immobilière (SICOGI) which has been providing housing to working with the private sector real estate developers both locals and foreigners.
Just like other African countries like Ghana, Nigerian, Egypt, Kenya, Zambia, Uganda just to name a few currently facing housing deficit, Côte D’ivoire is not an exception. There is currently 600,000 units housing deficit in Côte D’ivoire. Abidjan has 200,000 shortage of decent housing for the rapid growing city population. The annual yields for office is 9%, a no surprise 12% yield for the industrial, a 6% for residential and 8% for retail market.
6.Luanda, Angola
Luanda, the capital city of Angola is Africa’s 5th largest economy. The growing demand of Angola’s real estate both residential and commercial units in Luanda have not been met despite government efforts to construct new properties across the capital. The prices of office space per square meter are reportedly one of the highest in the world at a jaw dropping $150/m2 per month. Therefore, if you decide to invest in Luanda, Angola guarantees you a high ROI. One of the reasons for high rent in residential and commercial is as a result of influx of foreign oil companies which could pay top dollar for rentals compare to local businesses. Also, the cost of building materials is a contributing factor because they are imported which increase construction cost and invariably influences pricing.
Why should you invest in Angola real estate? Luanda, Angola, which distinguishes itself through its stable government, thriving economy, growing demand for housing and robust development, you are sure of safe and good return on investment. Boasting an impressive level of development among African nations, Angola presents a range of high-quality properties suited to various investment preferences.
Luanda emerges as a prime destination for real estate investment within Angola, benefitting from a current population of 34.5 million, set to grow by more than 6 million by 2030. This surge in potential buyers underscores the substantial real estate investment opportunities in the country.
The affordability of real estate in Angola, coupled with a growing demand for housing, positions Angola as an alluring investment prospect. The government's supportive stance toward real estate development further bolsters Angola's appeal to real estate investors like you looking to do business in this Southern Africa country or any other African country.
7.Kigali, Rwanda
A 20 years after the Rwandan genocide, Rwanda has bounced back and is becoming an East African country most African countries want to emulate its resilience and success story. Rwanda’s real estate industry in its capital, Kigali is experiencing tremendous growth. Rwanda had made significant economic and social progress consistently for two decades, with per capita income almost tripling to US$ 2,000. Why invest in Rwanda real estate? There have been massive investment in infrastructure, foreign direct investment, diaspora investing in properties, rapid population growth and increase in demand for housing. Obviously the demand for low to medium-priced housing has increased.
The rental yield for office space is 9% annually. The hospitality sector in particular has seen a massive boom in the wake of rising economic activity, with more than 10,000 hotel keys being added in the last 20 years and attracting global brands such as Radisson Blu, Marriott, and Radisson are all jostling for space in the rapidly developing hotel market in Kigali.
With regards to the residential sector, government initiatives to transition informal settlements with affordable housing developments for the population are gathering pace, with about 150,000 new homes being delivered each year into the affordable segment of the market.
8.Abuja, Nigeria
The African giant with a population of 218million, and forcast to reach 411million by 2050 according to the United Nations, is definitely a preferred destination to invest in real estate. Nigeria is not only the largest economy in Africa, but is also one of the fastest growing economies on the continent. With it’s fast growing population there is a constant demand for both high-quality low to medium-priced residential and commercial units.
Experts forecast over 100 apartments to be completed along the 3km Bourdillon Road in Ikoyi in the next two to four years. There has been 20 green-rated building. The yield for residential units in Abuja is 7%, the office yield is 8%. The industrial is 9% and that is also true for the retail market. However in Lagos, office rental yield is 8.2% and the retail yield is 9%. The residential yield is 8% and industrial 9%.
9.Cairo, Egypt
Egypt is one of the fastest growing Arab nations with a population hovering around 103million people and a 2% growth rate annually President Abdel Fattah el-Sisi made a comment that “the development national projects would have been better if we had not had these increasing population rates.” In other words, the country’s high population growth rate hinders the country’s development.
Why should you invest in Egypt's real estate market? It is estimated that about 3.2% of residents live in non-durable housing which is prone to collapse. Government have taken measures and is in favour of redeveloping urban slums and incorporating them into integrated communities with intense development activity and urban regeneration. The plan is to expand the boundaries of areas of Cairo by 100%. Rapid population growth required increase in supply of housing to meet demand. However, Egypt have falling short to meet the demand for housing.
As a result of the government’s initiatives, Egypt’s residential market is set to experiencing sweeping changes as high-rise developments in new cities in proximity to Cairo draw younger tenants and first-time buyers out of traditional residential hotspots into more contemporary housing units that meet international standards. The rental demand in Cairo remains strong for affordable and well-located three-bedroom villas as well as 2 - and 3-bedroom apartments.
As I mentioned earlier, Egypt is also facing a 3million housing deficit like other African countries and to solve the problem about 500,000 units are required to be delivered each year for the next 5years to keep up with the population growth, according to Egypt's Ministry for Housing, Utilities & Urban Communities.
The low-income housing unit prices range from £400,000 to £450,000. Fully finished homes can cost up to £1.7 million (US$90,416. Rental yield is around 4.5% annually compare to Ghana’s 10% to 13.5% annually. For commercial, the monthly office rents in the new administrative capital average US$ 30 psm with annual yield up to 8%. The average monthly rents in existing industrial cities stand at c.US$ 3.5 psm with annual yield at 6% and 8% yield for retail spaces.
10.Gaborone, Botswana
With a population under 3million, Botswana is desirable destination for investors looking for high return on investments in Africa. The World Economic Outlook update forecast 2.9% growth of GDP in 2023.
The demand for real estate in Gaborone is very high. However, the demand for relatively affordable housing outpaces the supply. There is a new trend of asset classes – that encourage the development of townhouses and apartments buildings for the growing population.
Between 2020/2021, about 1073 houses were delivered under the Self-Help Housing Agency (SHHA) scheme according to Botswana Housing Corporation (BHC) annual report. At the end of the financial year, 486 SHHA houses were at different stages of construction and are all expected to be delivered in the next financial year. The report also stated, about 731 additional houses will be started under this scheme across different constituencies in the 2021/22 financial year.
The research report called An Assessment of Public-Private Partnerships in Land Servicing and Housing Delivery in 2017 states that Botswana has been able to involve private sector firms in land servicing and delivery of projects without explicit contracts. It has instead split delivery processes into phases whereby the government undertakes initial stages and transfers land to private sector firms to complete the process including erection of houses for sale and or rent.
On residential side, the average transacted residential prices are up 11% bring rental yield up to 5.3% annually. The completion of Fields Shopping Complex has added 26,000 sqm to the total retail supply in Gaborone with rental yield about 8.25%. The industrial and office space yield is also on the high as 8.5% respectively.
And there you have it. Were you able to find some gold nugget in this post? Have i added some value to you in any way? If you find the post helpful, press the share button. Be great.
