Real estate remains a booming opportunity for Africa-focused investors for good reasons. The growth of cities creates a demand for increased volumes of high-quality commercial and residential real estate. Also, the rise of the urban middle class drives retail property development, particularly as modern shopping malls spread across the continent.
A growing number of multinational companies are searching for office space in the newly emerging cities. The rise of regional tech hubs and an expanding oil and gas sector creates job opportunity with no place to house the employees. A survey by Venture Africa lists Nigeria among the topmost countries in the continent that offer the greatest investment opportunities in real estate.
Nigeria is Africa’s largest economy with Lagos and Abuja as its major cities. You get mix reviews from developers in Lagos and Abuja on the effects of recent construction. Capital has been poured extensively into both cities. Yet the prices in both markets are consistently at two of the most expensive. Lagos office space rents for $85 per square metre per month while the Abuja office space, despite being in a market nearly 1/4 the size of Lagos, still rents for $72 per square per month.
As Africa’s sixth fastest growing economy (according to IMF projections 2015-2019), Nigeria is likely the most attractive market for retail property. Private equity funds have been active in this space in Nigeria for several years but prices remain high.
It is home to the 3rdand 4thexpensive market for retail space at $80 per square metre and $72 per square metre per month in Lagos and Abuja respectively. An executive house with 4 bedrooms goes for $8,000 and $8,500 per month in Lagos and Abuja, while in Angola, the same property costs about $25,000.
Angola is Africa’s fifth largest economy with Luanda and Huambo as its major cities. Despite the recent construction of new properties across the both cities, primarily Luanda, the country suffers from a lack of good quality office and residential space. Surveys reveals that the majority of the near 300,000 square meters of office space brought to the market during 2014 – 2015 was already pre-leased or sold before officially opening.
Prices for office space, accordingly, are the highest in Africa at $150 per square metre per month in Luanda (the 2ndhighest in Africa is comparatively $65 per square metre less). The retail market, although in its infancy, also provides a high return on investment with prices at $120 per square metre per month and a rapidly expanding middle class in Luanda.
Egypt is Africa’s third largest economy with Cairo, Alexandria and Giza as its major cities. Egypt is not Africa’s fastest growing economy – not even breaking the top 20 in Africa for the next five years. But its retail market is booming and looks to stay so in the near future. The drop in the retail sector during the Arab Spring hurt the growing sector back in 2013 through 2014.
Cairo retail space is renting for $100 per square metre per month. Office space rents for $35 per square metre per month in Cairo, making it one of top 15 expensive cities.