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African real estate has unique drivers for growth 

Global megatrends will drive growth opportunities in the real estate industry across the African continent: PwC report

Global megatrends, such as rapid urbanisation and demographic changes, will drive growth opportunities in the real estate industry across the African continent over the next five years. “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, Real Estate Leader for PwC Africa (



(PwC Global Real Estate Leader, Kees Hage)


“More and more, investors around the world are seeing the growth potential of Africa, in particular its substantial demographic edge. Economic growth, improving political stability and ongoing investments in infrastructure are opening up previously inaccessible markets.” adds French.


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.


PwC’s inaugural publication entitled Real Estate: Building the future of Africa considers the impact of global megatrends on the African continent. 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 ten selected countries in sub-Saharan Africa (SSA). 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.


The report shows that the opportunities across the African continent are significant and span every sector. 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 will give rise to private investment on a grand scale.


Furthermore, a lack of local funding for infrastructure projects provides a platform for new private partnerships with the public sector. Shifting demographic trends and changes in consumer behaviour are also likely to create a huge demand for new and different real estate by 2020 and beyond.  According to the report, we will also see the entry of more specialist investors into the market.  Projected forecasts of 20% net annual returns from investing in shopping malls, office blocks or industrial complexes in countries across the continent continue to draw in new investors.


Among the findings of PwC’s report, the following eight drivers for growth were identified:


  1. Africa’s young population will drive the demand for real estate and different types of real estate. Across Africa there will be continued urbanisation, an expansion of current cities and the rise of new cities.


  1. Industrialisation will continue across Africa and will be accompanied by a rapid growth in the retail sector.


  1. The export of natural resources and agriculture will remain key sources of economic growth, but will expose certain countries to increased risk.


  1. Infrastructure shortages will create opportunities for investment.


  1. The influence of government policy and legislation on the decision to invest will increase, while local partnerships will become increasingly important.


  1. Continued advancement within pension fund, stock exchange and banking regimes will facilitate investment, and an increased range of investors will drive demand for real estate investment opportunities.


  1. Technology will impact business and building practices, as well as consumer behaviour.


  1. Sustainability will become entrenched in building design and occupier requirements, with Africa’s most ambitious countries changing city design and building practices.


When considering these drivers of growth it is also important to note that there are 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, real estate investors and developers continue to see the African market as a huge opportunity.


French says: “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.


“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 Africa – opportunities that often differ from those available in more developed markets.”


The global impact of these trends are supported by the findings of a second report, Global Emerging Trends in Real Estate® 2015, which is an annual forecast of global real estate investor sentiment published jointly by the Urban Land Institute (ULI) and PwC.


The report, based on the views of senior global property investors, identifies several ‘megatrends’ affecting markets around the world, each of which has implications for development and investment: increasing urbanisation (the majority of the world’s population now lives in urban areas); demographic and social changes (including a significant rise in the number of older and elderly people); technology advancements; the rise of economic power in emerging markets (due largely to an expanding middle class); and climate change.


PwC Global Real Estate Leader, Kees Hage, says: “There is a wall of capital targeting real estate opportunities in many markets across the globe. The search for better yields has taken some investors into development and secondary markets, moving them up the risk curve. But investors must strike a balance between the need to deploy capital and the ability to achieve good returns, at a time when there is such a difference in the economic conditions across the globe.


“Real estate investors have a wide range of issues to consider when making investment decisions. What is clear is that they may have to approach those decisions in a completely different way in the future. Capital allocations may need to be made to a wider range of asset types than ever before, ranging from retirement and student housing to data centres and self-storage.”


Also for the first time Africa is included in the report. The report provides insight into of the current African real estate sector by focusing on the key markets through a series of interviews with leading players in the industry who provide their views and outlooks on the investment climate.


Some key themes emerge from the interviews held which include:


  • The listed sector in Africa – Interviewees noted that the listed property sector in South Africa has shown excellent performance, with 26.6% total returns. The listed sector in South Africa has demonstrated huge growth and now has a market capitalisation of just over R350bn, having being boosted by an influx of capital following the introduction of REIT legislation in 2013. The listed real estate sector in South Africa is now close in value to the corresponding sectors in Singapore and Hong Kong. However, there are a limited number of REITs sufficiently liquid to attract foreign investment, while the unlisted real estate market is dominated by South African institutions.


  • Challenges of investing in Africa – Interviewees indicated that the size of available investments may not match the demands of larger institutional investors, who require substantial investments to enter the market. Investments to the value of US$20-30 million are common and provide opportunities for investors looking for high returns for this level of investment, like family offices in Europe. Interviewees also noted the significant development risk and timeframes which must be considered when investing in Africa.


  • Finance in Africa – Securing finance in South Africa is not viewed as a problem, but elsewhere in Africa interviewees indicated that this provides difficulties for investors. Across the rest of Africa, the finance market is dominated by a small number of financial institutions requiring equity investment of up to 50% to secure finance for developments. This presents opportunities for overseas debt providers to enter the market in support of regionally based developers and investors.


  • The impact of megatrends on Africa – Trends observed by interviewees include the continued impact of urbanisation, with the observation in South Africa that some small towns are being marginalised as large metropolitan areas develop. Developers are careful about the size and number of retail developments over the short term, with five-year planning horizons providing time for consumer spending habits to develop to keep pace with increasing supply.


French says: “As real estate investors around the world are faced with the challenge of finding value and returns at a time when core property is becoming overpriced in almost all markets, Africa is now of increasing interest. We believe African real estate has unique drivers for growth, as highlighted in the two reports released by PwC.”


Distributed by APO (African Press Organization) on behalf of PricewaterhouseCoopers LLP (PwC).



About PwC:


PwC ( helps organisations and individuals create the value they’re looking for. We’re a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Find out more and tell us what matters to you by visiting us at


PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please for further details.



Ilse French: Real Estate Leader for PwC Africa

Office: + 27 11 797 4094

Email: [email protected]


Jocelyn Newmarch: Account Manager: Edelman, South Africa

Office: + 27 11 504 4000

Mobile: + 27 84 462 1111

Email: [email protected]


Sanchia Temkin: Head of Media Relations, PwC

Office: + 27 11 797 4470

Email: [email protected]



PricewaterhouseCoopers LLP (PwC)


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