According to Knight Frank’s newly released Africa Report 2013, demand for high quality commercial and residential property continues to grow across Africa on the back of the continent’s sustained strong economic growth and rising wealth.
Retail:
The increasing wealth and sophistication of African consumers is leading to rising demand for modern retail formats and western-style shopping centres. Countries such as Zambia, Ghana, Kenya and Nigeria have seen a wave of retail construction activity in recent years which has delivered the first generation of modern shopping malls to many major cities. The construction of further, and larger, shopping centres can be expected, as developers seek to meet the demand for high quality retail space from increased numbers of international retailers entering Sub-Saharan markets and major South African chains pursuing expansion plans elsewhere in the continent.
Office:
Many key African cities have severe shortages of high quality space built to the specifications expected by international companies. This scarcity of supply has led to extremely high rents in some cities, particularly where there is strong demand for office space from international occupiers from the oil and gas sector. Indeed, prime office rents in Luanda and Lagos are amongst the highest in the world. In Luanda, recent construction completions have eased some of the pressure on the market and rents have become more affordable over the last twelve months but, even so, at US$150 per sq m per month, prime rents remain well above the levels seen in leading global office markets such as London, New York and Hong Kong.*
Oil companies and the banking sector are established sources of demand for office space in Africa, but it is also noteworthy that African economies are diversifying and non-traditional sectors are emerging. Africa’s technology boom is generating new sources of office market demand and the continent is now home to a number of growing technology clusters.
Residential:
The need for greater volumes of good quality housing is reflected in a number of ambitious new suburbs that are either under construction or planned by private property developers on the outskirts of existing large cities. The demand from offshore buyers for high quality residential accommodation has continued to increase in countries including Morocco, Kenya and South Africa.
*The comparison was made between premium office rents in Luanda and overall Grade-A office rents in Hong Kong.