_What investors need to know: key takeaways from Knight Frank's new Africa Horizons report 2019
The economy
"By 2023 almost half of African households will have an annual income exceeding US$5,000."
Economic growth underpins the continent’s real estate markets – and with an acceleration in GDP expansion to 4% this year there is a real focus on emerging as well as established property sectors.
The future African Continental Free Trade Agreement, which will remove 90% of tariffs on goods moving between 49 countries, will ensure this economic expansion continues.
By 2023 almost half of African households will have an annual income exceeding US$5,000, spurring greater demand for consumer goods and services which in turn will lead to greater demand for hotels, retail and logistics property, as well as office requirements.
While inward investment continues to be a significant growth driver, Africanowned companies are increasingly dominating the continent’s markets. Over two-thirds of the 400 companies in Africa with revenues in excess of US$1 billion were founded there. Global companies wanting to take advantage of the prospects offered in Africa will need to build relationships with local partners.
Trade and investment
"Nigeria’s US$6.7 billion: Nigeria's rail contract to link Lagos to Kano."
China’s Belt and Road Initiative is prompting a rise in trade-related infrastructure. The rate of investment from China has increased by 25%, including Nigeria’s US$6.7 billion rail contract to link Lagos to Kano and Egypt’s US$3 billion contract for Cairo’s new CBD, which will include the continent’s tallest skyscraper.
Good news on the economy is prompting greater activity from regional property investors, helping to drive investment yields lower in nearly 40% of market.
Residential opportunities
"Africa's population aged 15-24 will rise by 72 million by 2028."
Many of the key opportunities opening up to investors stem from demographic trends. For example, a 21% five-year rise in student numbers, and an additional 72 million Africans aged 15-24 by 2028, are supporting rapid growth in student accommodation requirements.
The number of people living in urban centres is expected to almost treble to 1.4 billion by 2048, driving the need for more middle-income housing.
Burgeoning demand in the hospitality sector, for both business and tourism requirements, means the hotel market is a 1critical opportunity play.
So too is healthcare. In Nigeria alone the attempt to reach a bed-to-population ratio in line with the global average would require 32 million sq m of new medical facilities, representing an investment of more than US$82 billion.
Residential opportunities
"Just under 4% of the 40 million hectares with medium to high potential for agricultural production is cultivated annually in Zambia."
With a growing urban population, more people will be unable to grow their own food. The annual retail value of food and beverages consumed in sub-Saharan Africa will rise to US$1 trillion by 2030, up from around US$300 billion in 2010.
In Zambia, just under 4% of the 40 million hectares with medium to high potential for agricultural production is cultivated annually. Additional investment to bring more land forward for productive use is already bringing in new agricultural players, many of whom are from Gulf States worried about food security in their own, less fertile, countries.
Additional opportunities are being exploited in eco-tourism across east and southern Africa.