Real Estate Investor Magazine South Africa December 14/ January 15 | Page 17

upfront

Seven of the ten fastest growing economies in the world are in Africa

A world of opportunities
Countries in Africa are experiencing some of the
highest economic growth rates in the world, despite the
global financial crisis. And as these countries urbanise,
economic growth increases further. In addition, there
is an undeniable rise in income across many of Africa’s
key frontier economies, allowing the formation and
strengthening of a substantial middle class.
The rise of the African urban consumer and the
growth in the African middle class will fuel longterm growth and is providing numerous opportunities
in almost every sector. This is most notable in the
property sector, as the newly urbanised populations
require homes, places to shop and entertainment
venues on par with global facilities, and the companies
serving them require offices, retail space, warehousing
and industrial premises. In addition, increasing foreign
investment by multi-national companies tapping into
new mining and resource opportunities, is increasing
the demand for warehousing space, office space and
executive accommodation.
To illustrate the vastness of the opportunities, David
Lashbrook, head of Africa investment strategies for
Momentum Global Investment Management, notes
that in the greater Johannesburg area, there are 8 million
people and 80 shopping malls - one mall per 100,000
people. In Ghana, Kenya, Nigeria, Mozambique and
Zambia, the urban populations number 120 million,
and there are 12 shopping malls - one mall per 10
million people.
Commercial rentals in some of the major cities
are also attractive for property investors - $25-30 per
square metre per month for high-end office blocks in
cities like Rwanda’s capital Kigali or Ghana’s capital
Accra, compared with below $20 in Johannesburg.
Similarly, rental rates for retail space are much higher
in many growing African cities than in Johannesburg.
Investors are focusing on commercial properties
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rather than residential, due to the current limited
supply of private housing and the lack of mortgage
markets in Africa. However, experts believe the
residential sector will eventually open up to investors,
because, as Stephen Bailey-Smith, head of Africa
research at Standard Bank in London, put it: “If you go
into any city in Africa, you can see the need for decent
housing is infinite.”
Dr. Mark A. Smith, Head of Capital Projects
Advisory - East Africa, noted in his presentation
at the recent API Summit that among the most
important African mega-trends is the incredible rate
December 14 / January 15 SA Real Estate Investor

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