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Real Estate in Africa


Note: This report is an extract from the book "Grow Rich in the New Africa".

Table of content: Part 1: Real Estate as an Asset Class Part 5: New City Developments
  Part 2: The Investment Case for Real Estate Part 6: Yield of Real Estate Investments
  Part 3: Commercial Property Part 7: Legal Ownership of Real Estate
  Part 4: Residential Property Part 8: Conclusion

Conclusion

Being one of the major asset classes for the creation and preservation of wealth, Real estate in Africa offers a host of opportunities. This is especially true if the current favorable situations and bright outlooks of many African markets are compared with the negative developments in the Western world.

While the world financial system is running into problems that can neither be mastered nor hidden by politicians and bankers any longer, hard assets are sought after by smart investors.

African property markets have a competitive advantage for various reasons. Population growth and urbanization will lead to increasing demand for residential housing for the next 20 years. Prices will be driven by widening gaps between demand and supply. Rising prices for purchase and rent can be awaited, although mortgage financing is very limited in the frontier markets.

In the commercial and industrial property sector, the attractiveness of the markets is closely related to the economic activity and the city or region. The big economic upswing of most parts of Africa in the years to come will most likely support further price advances, although some markets are no longer cheap. For example, Luanda is one of the most expensive cities of the world, and investors should not buy property at the current exaggerated price levels.

Despite avoiding certain cities and areas that have become too hot in recent years, long-term investors should think about positioning themselves right now. Africa offers a good environment for rising property prices, making real estate an attractive economic sector and preferred asset class for institutional and individual investors.