Real estate is a subject which is very close to my heart as well as many other investors with multiple streams of income. When it comes to Africa, real estate remains a great investment opportunity and a good stream of additional revenue. Smart investors are going in now and taking advantage of the opportunities before it becomes virtually impossible. In fact, Africa is viewed as such a significant investment that over 70% of the Chinese direct foreign investment is in African cities. Other countries like India, Turkey, and Russia, are also following close behind China and increasing their investments on the continent, so do not be the only one left out in the cold.
With thousands of Africans moving to the cities on a yearly basis for better opportunities, the bottom line is that the lack of good quality and affordable housing is becoming too big for the government to handle. The growth of African cities alongside the forever growing middle to upper class is creating a demand for high-quality, safe housing, which is becoming overwhelming. Therefore, those who can, really need to assist with this crisis.
Africa as a whole has shown great signs of economic growth in recent years and real estate is no exception. Even though there are 54 countries in Africa, there are some cities that have shown exceptional growth, so here are my top five cities to invest in:
1. Lagos State, Nigeria
Lagos is the largest city in Nigeria. Nigeria has the largest economy in Africa and is Africa’s sixth fastest-growing economy (IMF projections 2015-2019). The population rate in Lagos is growing faster than any other country in Africa, so there is a constant demand for high-quality low to medium-priced residential and commercial units.
2. Accra, Ghana
Ghana is known as one of the most politically stable countries in Africa, with very few internal conflicts and having good relations with its neighbours.
Accra is the capital city of Ghana; it represents 4 million-plus of Ghana’s growing population of 27 million. Industry sources indicate that Ghana’s current residential housing demand is 150,000 units per annum, but only 50,000 units are being produced annually, which gives a shortfall of 100,000 units per annum. So there is a massive shortage of affordable residential units in Accra, not to mention commercial units.
Foreign property ownership is permitted and highly desired with more and more expatriates flooding into the city seeking employment and places to rent, so now is the time to invest.
3. Kigali, Rwanda
Kigali is the capital and largest city in Rwanda. Rwanda as a whole has a high demand for residential and commercial units for the growing business community. However, the total housing needs in Kigali alone is predicted to reach 458,265 housing units by 2022. The recent increase in local and foreign investment is a sign that there will be a growing demand for residential and commercial units. These positive steps have come some 20 years after the Rwandan Genocide, which stunted the growth of the country’s economy, however over the years, Rwanda is becoming an East African success story.
Growth in low to medium-priced housing has been propelled by the growing population, growing middle class, government investment in infrastructure and a growing number of the diaspora investing in property, so now is the time to join in.
4. Nairobi, Kenya
Nairobi is the capital city of Kenya, one of the top ten largest economies in Africa. Nairobi is in the top three fastest-growing economies in the world located on the eastern coast of Africa which lends itself as a transportation hub and gateway to the continent. Nairobi is also home to many African headquarters like Google, IBM and Coca-Cola, many rental units are needed to support a growing population. There is also a healthy tourism industry which has created a growing demand for the construction of guest houses and hotels.
Due to the terrorist attacks, demand from potential retail tenants has slowed down in the last 12 months, however, what seems risky today can be a gold rush in the future.
5. Luanda, Angola
Luanda the capital of Angola, Africa’s fifth-largest economy. Despite the recent bid to construct new properties across the capital, there is still a massive shortfall, therefore, growing demand for high quality residential and commercial units.
According to recent surveys, the office spaces brought to the market in 2014-2015 were already sold or pre-leased before the official opening.
There is a growing demand for commercial property in the Luanda port area most associated with the oil industry. Officials are therefore looking to increase warehouse space as business increases.
Even though oil prices have dropped, the oil industry is still the primary occupant of the local real estate with no signs of a decline anytime soon. The prices of office space per square meter are reportedly one of the highest in the world at $150/m2 per month.
The residential market is in its early stages, but there is a growing middle class, so residential units still offer a high return on investment.