Africa's real estate poised to benefit from global investments

AFRICAN STOCKS AND FINANCEOctober 13, 2023 at 12:43 PM UTC

Global sovereign investments in Africa, exemplified by the UK's $2 billion commitment to sustainable projects and the US's $200 billion allocated through the Partnership for Global Infrastructure and Investment (PGII) initiative, are poised to exert a substantial influence on the continent's real estate sector, as per insights from global real estate consultancy Knight Frank.

The 'Knight Frank Africa Horizons 2023-24' report highlights a noteworthy trend over the past decade: Gulf Cooperation Council (GCC) nations emerging as pivotal investors in African countries. The UAE leads this investment wave with a remarkable $59.4 billion, closely followed by Saudi Arabia with $25.6 billion, with additional contributions from Qatar, Kuwait, and Bahrain amounting to $16.4 billion.

Furthermore, the report unveils that Middle East sovereign wealth funds are actively preparing to inject an estimated $120 billion into Egypt in the near future. The ramifications of these efforts are expected to be far-reaching, inducing a surge in multinational corporations flocking to major urban centers like Lagos, Nairobi, Cairo, Johannesburg, and Accra, as outlined in the report.

Key Takeaways

Africa's real estate market is on the verge of unlocking substantial investment opportunities across five key sectors: data centers, manufacturing, ESG (Environmental, Social, Governance), infrastructure, and agro-processing. The data center market in Africa, which was valued at $2 billion in 2020, is projected to experience remarkable growth, reaching $5 billion by 2026, with a noteworthy compound annual growth rate (CAGR) of 15% from 2020 to 2026. This sector has garnered the attention of global tech giants, e-commerce giants, and online retailers, while institutional investors are making significant forays, exemplified by Digital Realty's substantial $3.5 billion acquisition of Terraco. Africa's potential for industrialization is becoming increasingly evident, especially given that the sector currently contributes an average of just 11% to total GDP, dropping to less than 5% in most countries. All of these point to a trend: the real estate sector is positioned to reap substantial rewards from global investments, with data centers, industrialization, ESG-driven opportunities, and agro-processing emerging as pivotal sectors in harnessing the continent's vast potential.