Africa’s next top property trends

2018-08-24T12:18:21+00:00August 24th, 2018|News|

Major trends that are likely to shape Africa’s property market in the future show the sector is becoming smarter as it’s responding to infrastructure and social challenges and easing the ability to do business on the continent.

Africa’s top property trends will be discussed in detail at the 9th annual Africa Property Investment (API) Summit & Expo, to be held at the Sandton Convention Centre on Thursday 20 and Friday 21 September 2018.

Featuring 100 speakers, 300 companies and 600 delegates, the API Summit & Expo will unpack and highlight some of the key trends and challenges affecting the continent’s real estate sector.

The African real estate sector is expected to be reshaped by several trends.

The African real estate sector is expected to be reshaped by several trends. Credit: Creative Commons

Industrial property

Due to a lack of professionally managed logistics infrastructure and inefficient supply chains across sub-Saharan Africa, logistics cost as a percentage of product retail costs is still very high at 30 to 40%. According to Toby Selman, CEO for Africa Logistics Properties, there is currently almost no grade-A warehousing on the continent.

“It tends to be the ugly duckling in the property sector as most investors flock to offices and retail first. And while most investors think the highest demand comes from multinationals, it is the fast-growing regional companies that tend to be the first movers, largely because they have higher local growth rates than the international companies,” says Selman.

Affordable housing

While governments can no longer afford to ignore the housing crisis, developers are coming to understand that low-cost housing can be a significant and lucrative market. Innovative financing structures backed by global institutional investors could also allow large-scale implementation.

But a pressing issue many African countries face is the lack of durable, low-cost housing with a minimum standard of infrastructure to prevent the spread of diseases.

“The target group for low-cost housing, in general, does not have enough equity or credit history to finance the purchase of even low-cost dwelling units. Without innovative financing solutions there can be no mass supply of low-cost dwelling units,” says Eckardt MP Dauck, chairman for Zero Carbon Designs.

Student accommodation

Student accommodation is very much emerging in greater Africa, with the supply of student housing still low on the continent, South Africa is the exception. Craig McMurray, Respublica CEO, says that while there are regional and nodal hotspots across all geographies, the African continent primarily sees domestic student demand and one where the highest need is an affordable product.

“This is in contrast to the more developed markets in Europe, UK and Australia, which are primarily driven by international student demand and generally higher levels of affordability,” he says.

“We believe that the demand for tertiary education will likely be driven by increasing urbanisation, higher living standards, mobility, as well as technological advancement in educational content delivery. This will have differing implications for the industry. However, I expect the demand trend to be upwardly steep but continually constrained by affordability at state, university and student levels,” notes McMurray.

Serviced apartments

Serviced apartments in Africa represent less than 1% of all hotel rooms whereas internationally the figure is close to 9%. Currently, the highest concentration is in South Africa.

“Due to historic undersupply, serviced apartments are increasing. Africa requires a secure and affordable alternative to regular hotels for consultants to stay for the many projects in Africa as the continent, unfortunately, imports many skills internationally,” says Marc Wachsberger, managing director for The Capital.