Real Estate Investor Magazine South Africa November 2014 | Page 61

INSIGHTS

BY Gaye de villiers

Sub-Saharan
Unleashing the opportunities

A

frica’s positive growth story will lead to
increased demand in a range of sectors, most
notably the real estate market. The continent’s
growth has been spurred by commodity prices such as
gas and oil, as well as a growing middle class. These
developments will bring increased opportunities in the
business, residential and retail property sectors as well
as opportunities for African professionals.
These are some of the findings of a research report
produced by RICS, titled “Unleashing Sub-Saharan
African Property Markets.” The report concentrates on
five key case study countries in the region, namely, South
Africa, Kenya, Ghana, Nigeria and Tanzania. It aims to
share insights gained in these markets and highlights
various opportunities and challenges, including how
the profession is managed and supported, regulatory
enablers and constraints and skills development for
new or aspiring professionals, presenting a snapshot of
the potential the real estate markets in Sub-Saharan
Africa has to offer.
Ghana
Rapid urbanisation, steady economic growth, and an
expanding middle class are creating opportunities
for growth in Ghana, not least of all in property
development. Ghana’s construction industry is growing
steadily, making up over 9% of GDP in 2011, with a
similar amount comprised of finance, real estate and
business services. There are also opportunities for
developers of residential accommodation as demand
for modern, high-quality dwellings in prime areas by
expatriates and skilled resident workers is robust.
Kenya
Kenya’s capital city, Nairobi, is fast entrenching itself as
a regional commercial hub. This has seen office space
stabilising due in large part to international corporates
setting up regional headquarters there. This has
increased market absorption of the oversupply of office
space in the capital city. Due to the rapidly growing
middle class, the mortgage sector is showing new
developments and increased competition. Regardless,
it still only remains accessible to a small portion of the
www.reimag.co.za

Africa’s key
property markets

population as the average interest rate on a mortgage
was 19% at 2012 year end.
Nigeria
As is the case with many Sub-Saharan African
countries, Nigeria has experienced high levels of
urbanisation, which continues to underpin the demand
for both residential and commercial space at different
levels of the market. There are strong indicators that the
Nigerian economy will continue to experience strong
growth of the middle-class, which should further
bolster demand for middle-income housing units.
South Africa
South Africa has a relatively mature property market.
Despite lower economic growth forecasts, the country
is due to remain an attractive investment opportunity,
often acting as a springboard to the rest of Africa. South
Africa’s development is hampered by a serious shortage
of skilled engineers, especially in the public sector, and
has been described as one of the worst capacity crises in
years. South Africa’s ratio of 473 engineers per million
citizens is still very low, even when compared to other
developing countries such as Chile (1,460) or Malaysia
(1,843).
Tanzania
Tanzania has recorded strong growth over the past
decade, despite a slump in 2010 off the back of
the global financial crisis. Growth has largely been
driven by the performance of the services sector, and
investments in natural gas. The construction sector,
driven by increased buildings activity, road and bridge
developments and land improvement activities, also
showed robust performance, comprising 8.8% of GDP
in 2011. Labour force skill levels are considered to be
low in Tanzania. There is, however, an increase in the
number of real estate related tertiary courses.

Download the full report in the Research section
(under the News & Knowledge tab) on www.rics.org

RESOURCES
Royal Institute of Charted Surveyors
November 2014 SA Real Estate Investor

61