5 Countries Topping The African Real Estate Boom

Although overall economic growth slowed in 2015 and 2016, Africa is still a booming space for real estate.

African consumers are ready to pay, but they are cost conscious. Affordable housing may be the theme of 2017 for the larger real estate sector.

The economic downturn did little to affect three economic realities that underscore the African property boom.

First, African population growth is not slowing down. It’s expected to skyrocket to around 2.5 billion in 2050, outpacing Asian growth by more than 40 percent.

Secondly, Africans are moving to cities. Urbanization is the African story with more than 50 African cities having a population greater than 1 million. That number will likely reach 65 by 2030.

Third, housing is a major challenge for governments to address. Private investment is seen as a solution for those governments with tight budgets and a limited staff. Developers, private investors, and ordinary people can play a collaborative role in addressing the construction gap in the real estate sector and make a good return while doing so.

These are our favorites countries for the sector:

Cape Verde

Cape Verde is a small under-the-radar country with a thriving tourism industry. The growth in the number of tourists visiting the serene islands is driving a surge in property development. The signature development of this boom is the construction of a hotel on the island of Santa Maria, jointly backed the Bucan Construções e Imobiliária group and Cabo Verde Management Group. It will be managed by Spanish hotel chain Barceló Hotels & Resorts. The hotel will have 1,150 rooms and will be built in two phases, the first beginning in April 2017. Total expected cost is $131 million over a 24-month construction period.

However the biggest returns and opportunities exist in rental properties, from beachfront getaways to hidden villas. Most rental properties are in resorts with buy-to-let consumers in mind. The country also protects against over-development by restricting properties to low-height and low-density standards, prioritizing the character of the island and ensuring the value of properties. Sophisticated management schemes, even for sizable hotel projects, expand the upside potential and limit the post-construction management for investors and developers.

Cote d’Ivoire

Cote d’Ivoire is back as the business headquarters of French West and Central Africa. With Nigeria’s faltering economy worrying international investors, it is arguably becoming the headquarters of larger West Africa. The country is enjoying strong growth and focusing on infrastructure projects, investment and job growth, and a strengthened business environment.

Many firms are building their bases in Abidjan, business capital of Cote d’Ivoire, spending lavishly in some cases on office buildings and housing for their employees. The African Development Bank is a perfect example. Originally based in Abidjan, the bank moved headquarters to Tunis in 2003 due to the Ivorian civil war, before returning to Abidjan in 2014. AfDB’s move shows how the influx of employees from one organization can squeeze the market, as one developer describes it, because international organizations and investment companies never arrive with just one or two people but rather with tens and sometimes hundreds.

Abidjan, with about 4.7 million people, accounts for about 20 percent of the country’s population. Only Lagos (about 14.6 million people) has a larger population in West Africa, albeit around four times the size of Abidjan.

Abidjan renters are willing to pay higher rental prices, according to local investors. The presence of West Africa’s largest port also adds a unique dynamic where short-term business visitors for port and other trade-related activity require rental properties that are readily available. Storage and warehouses are also moneymakers in this space (albeit generally tied to logistics players more than real estate developers). If the growth stays constant in the country, the business community will prop up market prices. But growth is not always guaranteed. An Army protest against wages recently threatened stability for a few weeks but the country peacefully restored order and returned to its economic push forward.


Property investment in this West African economy is an almost guaranteed moneymaker. Huge office buildings line the Accra skyline as businesses have gradually abandoned the lorry parks (truck parking) and houses for downtown grandeur. But, as these downtown offices become crowded and prices rise, property developers argue that the next boom is in the land and construction on the edge of Accra both for commercial and residential use.

A quick drive from downtown Accra along Independence Avenue, developers can do a virtual presentation tour of the plush neighborhood of Tetteh Quarshie with new developments and accompanying billboards along the route.

If the outskirt investments feel too risky, the business district in Accra is still a double digit return opportunity. The Octagon Business Center, Kempinski Hotel and other new properties represent continued confidence of many investors in hotels and office buildings. Their presence also increase the need for residential properties in the central part of city. An office park by Mobus Property Development in the Airport Residential Area will require similar nearby residential construction. Accra is constantly voted as one of Africa’s most livable cities. That can only help valuations.


The country is still experiencing strong economic growth with 6 percent expected in 2017. Land purchase is easier in Nairobi than Lagos or Luanda. Interest rate caps benefit borrowers while demand for residential and commercial properties remain high. But the concern in Kenya may lie with developers’ lack of interest in building affordable housing, which is the biggest gap in the market. The reluctance to focus on such properties in this space is partly tied to relatively high interest rates (despite the caps) for borrowers in the construction process. Million-dollar houses price out locals, who are most anxious to buy at the moment at a reasonable price.

Angola and Nigeria tie for No. 5

These two economies have suffered in the oil price collapse but there’s still a demand for affordable housing. The upper-end construction boom is on hold for the moment — maybe for a long while if $100-a-barrel oil does not return.

That said, the larger masses of these populations are looking for affordable housing. Vital Capital’s Kora Housing project in Angola is a good example of what can garner returns in economic downturns.

By: Kurt Davis Jr. is an investment banker focusing on the natural resources and energy sectors, with private equity experience in emerging economies. He earned a law degree in tax and commercial law at the University of Virginia’s School of Law and a master’s of business administration in finance, entrepreneurship and operations from the University of Chicago. He can be reached at [email protected]



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