Emerging profile of the African real estate market

The African real estate market has recently been gaining more attention from the international community as Africa continues to be perceived as the global investment destination of the new millennium! The market covers 54 nations and 30.37 million square kilometres. The most active real estate markets in Africa are occupied by mainly residential real estate (RRE) and commercial real estate (CRE – office, shopping mall, industrial, etc). Indices of measuring real estate markets’ performance are the volume and number of transactions per year. South Africa remains the biggest real estate market in 2023 with industrial estate leading in terms of total value of transactions completed. These industrial buildings were mainly in Johannesburg, Cape Town, Port Elizabeth and Durban. Residential real estate came second with Cape Town, Johannesburg, Pretoria and Port Elizabeth, especially the canal front of St. Francis Bay leading in number of sales transacted. In 2023, the South African residential real estate market size was estimated to be $18.01 billion.

Seychelles, Morocco, Tunisia, South Africa, Cape Verde and Mauritius are good for tourism and hospitality real estate business. Egypt’s real estate market is bubbling and is expected to reach a value of $1.45 trillion by the last quarter of 2024. The residential real estate sector is expected to dominate the market with a projected market volume of $1.08 trillion. About 75 percent of these incomes, according to experts’ projections, will come from “new-build”. It is anticipated that the market will experience an annual growth rate (CAGR 2024-2028) of 8.91 percent, resulting in a market volume of $2.04 trillion by 2028. Globally, China is projected to generate the highest value in the real estate market, with $135.70 trillion in 2024. Egypt’s real estate market is experiencing a surge in demand as foreign investors are attracted by the country’s stable economic growth and government initiatives. The New Administrative Capital – New Cairo, Future City, Ain Sokhna, North Coast, El Gouna, New Heliopolis, and Sheikh Zayed City are areas receiving the greatest attention from foreign investors.

Egypt’s real estate sector has been undergoing significant transformations, and experts predict a promising future for the market, particularly in the Greater Cairo region. By 2025, several key trends and developments are expected to reshape the landscape of Egypt’s real estate sector, as highlighted in a recent report by Savills (property advisors). One notable prediction is the emergence of high-income, mixed-use, and retail strip developments in East Cairo. This area is poised to become a hub for real estate activities, driven by its proximity to the New Administrative Capital and Cairo International Airport. As foreign companies resume expansion plans in Egypt, East Cairo is becoming the preferred destination for their operations. As for the residential market and despite an increase in demand for residential properties in Greater Cairo, Savills predicts that the market may experience an oversupply. By 2025, it is estimated that there will be almost 7.6 million homes in Greater Cairo, compared to the current 7.1 million.

Notably, the number of Grade A (high-end luxury) homes will significantly increase, rising from nearly 70,000 to almost 170,000 in West and New Cairo. Regarding office spaces, they will experience substantial growth, with an expected increase in mixed-use square metres. The report suggests that office space in Greater Cairo will expand to over 4.5 million square metres by 2025, a significant leap from today’s 1.7 million square metres. This growth is attributed to foreign companies resuming their expansion plans in Egypt. This trend reflects changing consumer preferences and the desire for a more open and accessible retail environment. One of the most remarkable predictions is the rapid growth of serviced residences in Egypt. This sector is expected to outpace growth in other parts of the world. The demand for serviced residences is being driven by both business travellers and tourists. For rookie property investors who desire sure banker property investment, Luanda, the capital of Angola is a sure bet. Kigali, the capital of Rwanda will be good for conference centre/hotel investment.

Ghana currently boasts the best residential/office rental yield, a key factor for investors seeking income streams. A combination of factors, including economic growth, urbanisation, and tourism potential, can contribute to robust demand for rental properties, ensuring attractive returns on investment. According to Ghana Investment Promotion Council (GIPC), Ghana is recognised by many as the ideal investment destination for growing a business in Africa, since it provides a favourable environment for manufacturing and services firms in diverse sectors to thrive. Airport Hill, Accra, Tema, East Legion, Kasoa, Spintex and Kumasi remain the hot spots for investment.

Cape Verde, with its blend of African and Portuguese influences, offers a unique investment landscape in the Atlantic Ocean. This island nation has been experiencing a steady rise in tourism, attracting visitors with its year-round warm climate, rich cultural heritage, and beautiful landscapes, from sandy beaches to volcanic mountains. The real estate market in Cape Verde is characterised by its potential for growth and development. As the tourism sector expands, there is an increasing demand for vacation homes, resorts, and rental properties, offering significant opportunities for real estate investors. Additionally, the government’s investor-friendly policies, including tax incentives and streamlined investment processes, make Cape Verde an even more attractive destination for property investments.

In Nigeria, Lagos State is still the hottest spot to invest in properties followed by Abuja – FCT, and Port Harcourt in Rivers State. Residential real estate is the ‘beehive’ of real estate and Banana Island is the choice-location for luxury residential real estate, while Ibeju Lekki, Epe and Ikorodu are the abodes of non-luxury real estate. Alaro City, Beechwood Estate, Lakowe Lakes and Oko Orisan easily come to mind in the Lekki area for those who can afford the prices of properties (lands and buildings) there. Atlantic City is a serene environment and is receiving the highest number of foreign direct investment (FDI) interests right now. 

The Free Trade Zone is soaring in sales after two major investors (one is American Embassy and two is Dangote Refinery) showed interest in the area. Industrial developments are strongest in the Sagamu Interchange axis of Ogun State and will continue to be.

In FCT (Federal Capital Territory), Abuja is the most prime city for real estate followed by Kuje and Gwagwalada. Investing in industrial land in Idu Industrial Park in Abuja, Gwagwalada, Kuje and Abaji will definitely make sense because of their proximity to markets. Abuja residential and hospitality markets are cooling off and the commercial market is next to the industrial market looking at the rate of returns on investments. The bordering towns of Nasarawa State to Abuja, like Yanyan, Uke and Keffi, Niger State of Suleja are developing rapidly because of interest shown by people working in Abuja. If I had the money, I will speculate on land investment in Epe or Abaji. Lagos is doing better than Abuja because of the nearness of Lagos to port and being the commercial capital of Africa. Lagos is the sixth largest economy in Africa. Lagos is in the South West of Nigeria where they have the highest concentration of industries, bank headquarters and high potential in furniture, wood and log businesses because of the harbouring forest.

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