Urbanization fuels real estate industry across Africa

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Luxury Real Estate developer DAMAC Properties is guaranteeing an Aston Martin or Mercedes-Benz with properties sold during the Dubai Shopping Festival (DSF). (Photo: Business Wire)
Luxury Real Estate developer DAMAC Properties is guaranteeing an Aston Martin or Mercedes-Benz with properties sold during the Dubai Shopping Festival (DSF). (Photo: Business Wire)

Rapid urbanization and demographic changes will drive growth opportunities in the real estate industry across Africa over the next five years, says a report by PricewaterhouseCoopers LLP (PwC) Africa received here Thursday.

Real Estates
Real Estates

?The pace of change in the world is accelerating, with a series of transitions known as global megatrends, transforming the way in which business and society operate,? says Ilse French, PwC head.
Two publications recently released by PwC consider the drivers for real estate growth in Africa and highlight existing and emerging trends in African real estate that are shaping the ?African opportunity? for investors.
The aim of the report is to provide an assessment of the current state of the real estate industry across Africa and demonstrate how the megatrends will drive growth opportunities in key African markets.
The report also considers the real estate market in 10 selected countries in sub-Saharan Africa (SSA).
French says these country profiles provide insight into the local, regional and global influences on the real estate markets of individual countries, providing an illustration of the effects of the trends being felt at a national level.
According to him, opportunities across Africa are significant and span every sector and, in almost all markets, the demand for high-quality retail, office and industrial space continues to outstrip supply as international and local occupiers respond to new economic opportunities.
Huge shortfalls in residential property across the continent, he said, would give rise to private investment on a grand scale.
However, he said lack of local funding for infrastructure projects provided a platform for new private partnerships with the public sector while shifting demographic trends and changes in consumer behavior were likely to create a huge demand for new and different real estate by 2020 and beyond.
It also identifies eight drivers for growth in real estate demand on the continent as including Africa?s young population, industrialization, the export of natural resources and agriculture as well as infrastructural shortages.
?The influence of government policy and legislation on the decision to invest will increase, while local partnerships will become increasingly important,? it added.
When considering the drivers of growth, the report emphasized that it was also important to note specific risk factors underlying the development of Africa.
These include the impact of political instability and changing government policy; complex legal regimes; the volatility of local currencies; and the timeframe of investments and restrictions on possible exit strategies.
Despite these risks, the report says real estate investors and developers continue to see the African market as a huge opportunity.
?It would be easy to underestimate the impact of global megatrends on Africa. After all, Africa?s real estate markets have traditionally lagged behind developed and many developing economies.?
?Levels of investment in real estate in Africa are low by a global standard, while significant challenges exist in exploiting potential opportunities,? it stated.
?However, our research suggests the impact of global megatrends on Africa will be huge. This will create a diverse range of opportunities for the real estate industry in Africa, opportunities that often differ from those available in more developed markets.?
For the first time, Africa has been included in the report that provides insight into the current African real estate sector. Enditem

Source: Xinhua

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