Domestic Capital Anchors Property Investment Across Africa

By Soko Directory Team / April 10, 2019




Office yields remained largely stable in most African markets over the past two years, anchored by patient domestic capital as local investors assume a longer-term perspective, a new analysis by Knight Frank shows.

The analysis, published in a new Knight Frank report dubbed Africa Horizons, shows that of the 35 office markets covered, yield remained stable in 16 locations in the two years to 2018 and rose in six, while 13 markets recorded declines.

Africa Horizons provides a unique guide to real estate investment opportunities on the continent, examining developments in agriculture, hospitality, healthcare, occupier services (office), capital markets, residential and logistics property sectors.

“By taking a longer-term perspective, and in some cases a lower return profile, local investors have remained more active than headline figures suggest. This explains how yields in most major markets have remained stable in the face of weaker reported transactions,” the report states.

Just under US$2 billion worth of deals in Africa were publicized in 2018, predominantly involving assets in South Africa. Contrary to the global trend, Africa’s recorded transaction activity peaked in 2016 and has since eased.

Notably, private capital remains an important driver of investment activity in much of Africa, although ultimately somewhat opaque.

According to the report, healthy economic prospects suggest that Africa will remain a compelling investment destination for those targeting key centers. In addition to the office markets in these locations, the report notes, rising wealth will favor sectors exposed to consumer logistics, and selectively, retail.

“We envisage rising investor demand for those African locations that can demonstrate something of a counter-cyclical nature, combined with rising domestic wealth,” the Africa Horizons report concludes.

In 2018, Africa recorded more than 700 separate inward investment projects, half of which originated from corporations domiciled in the US, UK, France, China, and Germany.

The investment destinations were broad although South Africa, Morocco, Kenya, Nigeria, and Ethiopia accounted for over half of the projects, according to the report.

In Nairobi, yields in 2018 stood at 8% for office, 8.5% for logistics property, and 9% for retail. A-grade warehousing around the capital currently commands monthly rents in the upward of US$6 per square meter, almost double that of the predominant stock of older units that lack modern features such as cross-docking and intermodal facilities.

Ben Woodhams, Knight Frank Kenya Managing Director, said: “Yields in each of the market segments align to their risk profiles, with retail being much riskier in Nairobi currently hence the proportionately higher yield.”

According to the Africa Horizons report, top residential investment opportunities across the continent include student accommodation (with Zambia, South Africa, and Kenya being education hotspots), retirement homes, and middle-income housing as demographics change.

In Kenya’s logistics sector, formal retailers have emerged as a major driver of growth owing to their increasing need for large centralized warehouses as they gain critical mass countrywide.



About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system.Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

View other posts by Soko Directory Team


More Articles From This Author








Other Related Articles










SOKO DIRECTORY & FINANCIAL GUIDE

ARCHIVES

2019
  • January 2019 (256)
  • February 2019 (216)
  • March 2019 (285)
  • April 2019 (254)
  • May 2019 (272)
  • June 2019 (252)
  • July 2019 (340)
  • August 2019 (151)
  • 2018
  • January 2018 (291)
  • February 2018 (219)
  • March 2018 (278)
  • April 2018 (225)
  • May 2018 (238)
  • June 2018 (178)
  • July 2018 (257)
  • August 2018 (249)
  • September 2018 (256)
  • October 2018 (287)
  • November 2018 (284)
  • December 2018 (187)
  • 2017
  • January 2017 (183)
  • February 2017 (195)
  • March 2017 (207)
  • April 2017 (104)
  • May 2017 (169)
  • June 2017 (205)
  • July 2017 (190)
  • August 2017 (195)
  • September 2017 (186)
  • October 2017 (235)
  • November 2017 (253)
  • December 2017 (266)
  • 2016
  • January 2016 (165)
  • February 2016 (165)
  • March 2016 (190)
  • April 2016 (143)
  • May 2016 (246)
  • June 2016 (183)
  • July 2016 (271)
  • August 2016 (249)
  • September 2016 (234)
  • October 2016 (191)
  • November 2016 (243)
  • December 2016 (153)
  • 2015
  • January 2015 (1)
  • February 2015 (4)
  • March 2015 (166)
  • April 2015 (109)
  • May 2015 (117)
  • June 2015 (121)
  • July 2015 (150)
  • August 2015 (157)
  • September 2015 (189)
  • October 2015 (170)
  • November 2015 (174)
  • December 2015 (208)
  • 2014
  • March 2014 (2)
  • 2013
  • March 2013 (10)
  • June 2013 (1)
  • 2012
  • March 2012 (7)
  • April 2012 (15)
  • May 2012 (1)
  • July 2012 (1)
  • August 2012 (4)
  • October 2012 (2)
  • November 2012 (2)
  • December 2012 (1)
  • 2011
    2010
    2009
    2008
    2007
    2006
    2005
    2004
    2003
    2002
    2001
    2000
    1999
    1998
    1997
    1996
    1995
    1994
    1993
    1992
    1991
    1990
    1989
    1988
    1987
    1986
    1985
    1984
    1983
    1982
    1981
    1980
    1979
    1978
    1977
    1976
    1975
    1974
    1973
    1972
    1971
    1970
    1969
    1968
    1967
    1966
    1965
    1964
    1963
    1962
    1961
    1960
    1959
    1958
    1957
    1956
    1955
    1954
    1953
    1952
    1951
    1950