Southern Africa attracted $21bn in real estate investments in 13 years

Southern Africa real estate
Cape Town, South Africa (Credit: Ranjithsiji, CC BY-SA 4.0, via Wikimedia Commons)

Southern Africa holds the lion-share of Africa’s real estate investment volumes as in the period 2010-2023, $21bn were invested by institutional investors, a new report by Estate Intel reveals.

Up to $30b worth of transactions have been undertaken in Africa over the past two decades, according to Estate Intel data with key cities in South Africa, Nigeria, Egypt, and Mauritius leading the charge. “The overall attraction is underpinned by their robust property markets, popularity as Africa’s business hubs consequently attracting investment, and specifically South Africa’s robust capital markets supporting its investments” the report titled “African Real Estate Capital Trends Report 2024” stated.

“In contrast, there are a few stand out countries that have attracted large amounts of institutional capital with a relatively smaller economy. These include Mauritius, Mozambique, and Senegal, all of whom have been very popular with the better performing hospitality and industrial sectors.”

It also noted that while Africa witnesses overall annual growth rate of transactions, the continent’s investment landscape is still very small. “A closer look at regions such as the North America, Europe, and APAC indicate a significant difference in the value and number of property transaction recorded in 2023. Precisely, the three regions recorded US $ 373b, US $ 162b and US $ 143b worth of investment volumes in the period under review, respectively, whereas Africa recorded transactions worth US $1b. Notable countries that drove investments in the continent in 2023 include South Africa through its Sam Ntuli Mall, Standard and Nedbank buildings, and Kenya through its Highway House and Yaya Centre, among other transactions.”

Even though the large African markets offer great opportunities, they consistently show higher risk, especially concerning currency, Estate Intel warned. Nigeria’s Naira has seen the highest depreciation with 2023 being the record high year at 50.1% Y.o.Y basis. The Kenyan Shilling (Kshs) and Egyptian Pound (EGP) have also noted significant drops on a Y.o.Y basis amidst USD shortages, with 2023 being Kenya’s highest fall over the last 13 years.

Looking ahead, the data-driven market intelligence platform for the African real estate market anticipates increased capital market activity through asset trades. “Whether these trades are occurring at the desired speed, cap rate, or capital value levels that owners require, is another story. The slow pace of secondary market activity over the past decade has prompted new and existing institutional investors to evolve from the standard private equity model—building, stabilising, and exiting—to an approach that involves longer holding periods, predominantly through income funds, as African REIT regimes continue to struggle.”