AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank

Page created by Leon Lucas
 
CONTINUE READING
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
RESEARCH

AFRICA
REPORT
2017/18

REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                                                                                                                                        RESEARCH

    CONTENTS
                                            AFRICA: STILL RISING?
    03   Africa: still rising?
                                            The rise of Africa’s economies has been interrupted by recent external shocks,
    08   Capital markets review
                                            but there remain grounds for optimism over the longer-term outlook.
    10   Sector focus: retail
    12   Sector focus: logistics            After decades of disappointing
                                                                                                                                    FIGURE 1
                                            performance, African economic growth
    14   Algeria                                                                                                                    African GDP in current US$
                                            began to accelerate around the turn of
                                            the century. The continent averaged
    15   Angola
                                            GDP growth of more than 5% per annum                                                                                 2,000
                                                                                                                                                                                       Sub-Saharan Africa                                       North Africa
    16   Botswana                           between 2000 and 2014, primarily driven
                                            by fast-growing Sub-Saharan economies.
    17   Cameroon                           During this period, the term “Africa Rising”,
                                                                                                                                                                 1,500

                                                                                                                                    GDP (Current US$ billions)
    18   Chad                               popularised by publications such as The
                                                                                                                                                                 1,000
                                            Economist, became shorthand for this
    19   Côte d’Ivoire                      rapid economic growth and the increased
                                            optimism about Africa’s future prospects.                                                                             500
    20   Democratic Republic of the Congo
                                            However, economic growth has since
    21   Egypt
                                            moderated, due primarily to the exposure
                                                                                                                                                                    0

                                                                                                                                                                         1980
                                                                                                                                                                                1981
                                                                                                                                                                                       1982
                                                                                                                                                                                              1983
                                                                                                                                                                                                     1984
                                                                                                                                                                                                            1985
                                                                                                                                                                                                                   1986
                                                                                                                                                                                                                          1987
                                                                                                                                                                                                                                 1988
                                                                                                                                                                                                                                        1989
                                                                                                                                                                                                                                               1990
                                                                                                                                                                                                                                                      1991
                                                                                                                                                                                                                                                             1992
                                                                                                                                                                                                                                                                    1993
                                                                                                                                                                                                                                                                           1994
                                                                                                                                                                                                                                                                                  1995
                                                                                                                                                                                                                                                                                         1996
                                                                                                                                                                                                                                                                                                1997
                                                                                                                                                                                                                                                                                                       1998
                                                                                                                                                                                                                                                                                                              1999
                                                                                                                                                                                                                                                                                                                     2000
                                                                                                                                                                                                                                                                                                                            2001
                                                                                                                                                                                                                                                                                                                                   2002
                                                                                                                                                                                                                                                                                                                                          2003
                                                                                                                                                                                                                                                                                                                                                 2004
                                                                                                                                                                                                                                                                                                                                                        2005
                                                                                                                                                                                                                                                                                                                                                               2006
                                                                                                                                                                                                                                                                                                                                                                          2007
                                                                                                                                                                                                                                                                                                                                                                                 2008
                                                                                                                                                                                                                                                                                                                                                                                        2009
                                                                                                                                                                                                                                                                                                                                                                                               2010
                                                                                                                                                                                                                                                                                                                                                                                                      2011
                                                                                                                                                                                                                                                                                                                                                                                                             2012
                                                                                                                                                                                                                                                                                                                                                                                                                    2013
                                                                                                                                                                                                                                                                                                                                                                                                                            2014
                                                                                                                                                                                                                                                                                                                                                                                                                                      2015
    22   Equatorial Guinea                  of African countries to external factors
                                            including falling commodity prices and
    23   Ethiopia                           slower growth in China. The International                                               Source: World Bank/Knight Frank calculations
                                            Monetary Fund (IMF) estimates that
    24   Gabon                                                                                                                      and commodity-exporting countries                                                                                                                              Nigeria entered recession in 2016,
                                            African GDP growth slowed to 3.4% in
                                                                                                                                    since 2015. The major oil exporters, in                                                                                                                        while the IMF expected Angola to
    25   Ghana                              2015, easing further to 2.1% in 2016.
                                                                                                                                    particular, have been impacted by low                                                                                                                          record zero growth for the year. Smaller
                                            Growth for the Sub-Saharan region was
    26   Kenya                              estimated at just 1.5% in 2016. Against                                                 oil prices, but more resilient growth rates                                                                                                                    oil-driven economies, such as Equatorial
                                            this backdrop, the question “is Africa still                                            have been seen in oil-importing countries.                                                                                                                     Guinea and Gabon, have also been
    27   Madagascar
                                            rising?” has moved to the forefront of                                                                                                                                                                                                                 severely impacted by the decline in
                                                                                                                                    Within Sub-Saharan Africa, the drop in
    28   Malawi                             economic debate.                                                                                                                                                                                                                                       commodity prices.
                                                                                                                                    GDP growth can be largely attributed to
    29   Mali                                                                                                                       the region’s three biggest economies;                                                                                                                          Although South Africa is a net oil
                                            A multi-speed Africa                                                                    Nigeria, South Africa and Angola. As                                                                                                                           importer, its growth has been subdued
    30   Mauritania                         The headline GDP figures disguise                                                       Africa’s two largest oil exporters, Nigeria                                                                                                                    by weakness in the mining and
    31   Mauritius                          the increasingly multi-speed nature of                                                  and Angola have both seen oil revenues                                                                                                                         manufacturing sectors and the effect
                                            African economies. In broad terms, there                                                badly hit by lower prices, and this has                                                                                                                        of a severe drought on agricultural
    32   Morocco                            has been a divergence between the                                                       additionally put strain on government                                                                                                                          production. The country only narrowly
                                            growth rates of commodity-importing                                                     spending, debt levels and currencies.                                                                                                                          avoided entering recession in 2016.
    33   Mozambique

    34   Namibia
                                            FIGURE 2                                                                                FIGURE 3
    35   Nigeria                            Sub-Saharan Africa GDP growth                                                           Sub-Saharan Africa GDP growth rates
                                            rates by decade
    36   Rwanda
                                                                              6                                                                10%
                                                                                                                  5.64
    37

                                                                                                                                                                                                                                                                                                                                                               ESTIMATE

                                                                                                                                                                                                                                                                                                                                                                                                                           FORECAST
         Senegal
                                                                                                                                                         8%
                                                                              5
    38   South Africa
                                            Compound annual growth rate (%)

                                                                                                                          4.06                           6%

    39   Tanzania                                                             4   3.79
                                                                                          3.33                                                           4%

    40   Tunisia                                                              3
                                                                                                                                                         2%

    41   Uganda                                                               2                           1.70
                                                                                                                                                         0%

    42   Zambia                                                               1
                                                                                                  1.01
                                                                                                                                                 -2%

    43   Zimbabwe
                                                                                                                                                                         2010                          2011                             2012                           2013                            2014                           2015                                 2016                              2017

                                                                              0
                                                                                                                                                                                 Oil-exporting countries                                 Oil-importing countries (excluding South Africa)                                                        South Africa
    44   Africa commercial occupier guide                                         1960s   1970s   1980s   1990s   2000s   2010s
                                                                                                                          to date

    47   Knight Frank in Africa                       Source: World Bank/Knight Frank calculations                                  Source: International Monetary Fund

                                                                                                                                                                                                                                                             10%
2                                                                                                                                                                                                                                                                                                                                                                                                                                            3

                                                                                                                                                                                                                                                                                                                                                                TIMATE

                                                                                                                                                                                                                                                                                                                                                                                  RECAST
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                                 RESEARCH

                                                                                                                                                                                                                                                                                    AFRICA GDP GROWTH
In contrast, a group of commodity-            food and agriculture processing,                                                                                        populations with limited access to
importing East African countries,             business process outsourcing, financial                                                                                 formal banking. East Africa, in particular,

                                                                                                                                                                                                                                                                                    RATES, 2016
including Tanzania, Ethiopia, Kenya and       services and construction. There is                                                                                     is a hotbed for innovation in this
Rwanda, have all maintained GDP growth        also significant growth potential for                                                                                   sector and, according to Global Findex
rates well in excess of 5%, benefiting        manufacturing industry in Africa, as this                                                                               data, Kenya leads the world, with
from low oil prices and growth in private     sector consistently underperforms in                                                                                    58% of the population having mobile
consumption and investment. The West          comparison with other emerging markets.
                                                                                                                                                                      money accounts.
African economies of Côte d’Ivoire and
                                              Technological change will be at the heart
Senegal have also emerged as two of the                                                                                                                               African mobile phone markets have
                                              of the future growth and diversification                                                                                                                                                                                                                                                                        TUNISIA
continent’s strongest performers aided                                                                                                                                now entered a second phase of growth,
                                              of African economies. Mobile
by improved political stability, economic                                                                                                                             as consumers shift from basic feature
                                              telecommunications have already had a                                                                                                                                                                                                                                MOROCCO
reforms and infrastructure investment.                                                                                                                                phones to smartphones. By 2020, it is
                                              transformative socio-economic impact
                                              in Africa by allowing large sections of the                                                                             expected that smartphone connections
In a reversal of the general pattern of
                                                                                                                                                                      will be the majority in Africa. The adoption                                                                                                                     ALGERIA                     LIBYA
recent years, the North Africa region saw     population to skip landlines and move                                                                                                                                                                                                                                                                                                           EGYPT
higher GDP growth than Sub-Saharan            straight to wireless technology. This has                                                                               of more sophisticated mobile technology
                                                                                                                                                                                                                                                                                     WESTERN
Africa in 2016. However, growth within        led to African consumers embracing                                                                                      will have a large role in shaping consumer                                                                     SAHARA
the region has been uneven and Libya          mobile banking and payment services,                                                                                    behaviour, and it will drive the growth of
and Algeria have both been impacted by        improving the financial inclusion of                                                                                    sectors such as online retailing.
lower oil prices.
                                                                                                                                                                                                                                                                                                     MAURITANIA               MALI                                                             SUDAN                        ERITREA
                                                                                                                                                                                                                                                                                  CABO
                                              FIGURE 4                                                                                                                                                                                                                            VERDE                                                              NIGER                                                                       DJIBOUTI
Economic diversification                      Africa’s largest oil-exporting countries
and technological change                                                                                                                                                                                                                                                                    SENEGAL                                                                        CHAD
                                                                                                                                                                                                                                                                             THE GAMBIA                                      BURKINA
The current struggles of Africa’s oil-                                          100                                                                                                                                         100                                                                                               FASO                                                                                                    SOMALIA
                                                                                                                                                                                                                                                                                   GUINEA                                                                                                                           ETHIOPIA
producing countries emphasise the                                                    90                                                                                                                                     90                                                     BISSAU            GUINEA                                      NIGERIA
need for the continent’s economies to                                                                                                                                                                                                                                                                                         GHANA                                                                 SOUTH
                                                                                     80                                                                                                                                     80                                                                                                                                                                      SUDAN
                                              Value of oil exports (US$ billion)

                                                                                                                                                                                                                                          Oil’s share of total exports (%)
diversify so that they are not dependent                                                                                                                                                                                                                                                  SIERRA                   CÔTE                                                 CENTRAL AFRICAN
                                                                                     70                                                                                                                                     70
on commodities, or any other single                                                                                                                                                                                                                                                       LEONE                   D’IVOIRE                                                 REPUBLIC
                                                                                     60                                                                                                                                     60                                                                                                         BENIN        CAMEROON
source of economic output. Expediting                                                                                                                                                                                                                                                              LIBERIA                        TOGO                                                                  UGANDA
                                                                                     50                                                                                                                                     50
the ongoing process of economic                                                                                                                                                                                                                                                                                                   EQUATORIAL GUINEA                                                                 KENYA
                                                                                     40                                                                                                                                     40
diversification is an absolute priority for
                                                                                     30                                                                                                                                     30                                                                                                         SÃO TOMÉ &          GABON
many African governments.                                                                                                                                                                                                                                                                                                               PRINCIPE                                      DEMOCRATIC                                  RWANDA
                                                                                     20                                                                                                                                     20                                                                                                                                                         REPUBLIC                                BURUNDI
Potential sources of growth and                                                                                                                                                                                                                                                                                                                                                      OF THE CONGO
                                                                                     10                                                                                                                                     10                                                                                                                                                                                                                    SEYCHELLES
diversification for African economies
                                                                                     0                                                                                                                                      0                                                                                                                                                                                  TANZANIA
include sectors such as retailing,                                                            NIGERIA       ANGOLA        ALGERIA         LIBYA       EGYPT       EQUATORIAL REPUBLIC       GABON    SOUTH   CAMEROON                                                                                                                               REPUBLIC OF
                                                                                                                                                                    GUINEA    OF THE                 SUDAN                                                                                                                                           THE CONGO
                                                                                                                                                                              CONGO
                                                                                                  Value of oil exports (US$ billion)       Oil’s share of total exports (%)                                                                                                                                                                                                                                                       COMOROS

                                              Source: Observatory of Economic Complexity (2014)/Knight Frank calculations                                                                                                                                                                                                                                               ANGOLA
                                              Data includes crude and refined oil                                                                                                                                                                                                                                                                                                                                               MALAWI
                                                                                                                                                                                                                                                                                                                                                                                             ZAMBIA

                                              FIGURE 5
                                              Africa mobile technology growth forecasts
                                                                                                                                                                                                                                                                                                                                                                                                    ZIMBABWE         MOZAMBIQUE                      MAURITIUS

                                                                                     800                                                                                                                                80
                                                                                                                                                                                                                                                                                                                                                                           NAMIBIA                                                              MADAGASCAR
                                                                                                                                                                                                                                                                                                                                                                                        BOTSWANA
                                                                                     700                                                                                                                                70

                                                                                                                                                                                                                                                                                    KEY
                                                                                                                                                                                                                                 Smartphone connections (% of total)
                                              Unique mobile subscribers (millions)

                                                                                     600                                                                                                                                60                                                                                                                                                                                         SWAZILAND
                                                                                     500                                                                                                                                50
                                                                                                                                                                                                                                                                                    GDP growth estimates, 2016
                                                                                                                                                                                                                                                                                                                                                                                                               LESOTHO
                                                                                     400                                                                                                                                40
                                                                                                                                                                                                                                                                                            ABOVE 6.0%                                                                               SOUTH AFRICA
                                                                                     300                                                                                                                                30                                                                  4.1-6.0%
                                                                                     200                                                                                                                                20                                                                  2.1-4.0%

                                                                                     100
                                                                                                                                                                                                                                                                                            0.1-2.0%
                                                                                                                                                                                                                        10
                                                                                                                                                                                                                                                                                            0% or lower
                                                                                          0                                                                                                                             0
                                                                                                2010          2011        2012         2013       2014         2015           2016   2017     2018    2019    2020                                                                          NO DATA AVAILABLE
                                                                                                        Unique mobile subscribers (millions)      Smartphone connections (% of total)
                                                                                                                                                                                                                                                                                            MAJOR NET OIL EXPORTING COUNTRIES
    Dar es Salaam
                                              Source: GSMA Intelligence                                                                                                                                                                                                             Source: International Monetary Fund

4                                                                                                                                                                                                                                                                                                                                                                                                                                                     5
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                                   RESEARCH

 Population growth
 and urbanisation
                                                                                                                FIGURE 6
                                                                                                                Global population forecasts                                                                                                                                                                         AFRICA POPULATION DENSITY
 While economic growth has faltered in
 parts of Africa, demographic trends remain                                                                                         6
                                                                                                                                                  Africa          Asia               Europe            Latin America and the Caribbean                                  North America               Oceania         AND CITY GROWTH
 favourable to the continent’s longer term
                                                                                                                                    5
 development. The population of Africa is                                                                                                                                                                                                                                                                            3.5m                                   3.2m                  3.6m                   4.8m                    18.8m          5.1m
 rising at a faster rate than that of any other
                                                                                                                                    4                                                                                                                                                                               CASABLANCA                                IBADAN                 KANO               ALEXANDRIA                 CAIRO        KHARTOUM

                                                                                                            Population (billions)
 global region and its demographic profile is
 both young and increasingly urbanised.                                                                                             3                                                                                                                                                                                1.2%                                   3.1%                  3.0%                   1.8%                    1.8%           2.8%
 Africa’s population has more than doubled                                                                                          2
 over the last 30 years to over one billion, and
 the United Nations (UN) forecasts that it will                                                                                     1
 surpass four billion by 2100, which would be
                                                                                                                                    0
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  3.2m
 around 40% of the global population. With
                                                                                                                                          2000

                                                                                                                                                                                                                                                                                                                                                                                                                                                              ADDIS ABABA
                                                                                                                                                 2005

                                                                                                                                                        2010

                                                                                                                                                               2015

                                                                                                                                                                       2020

                                                                                                                                                                              2025

                                                                                                                                                                                       2030

                                                                                                                                                                                               2035

                                                                                                                                                                                                      2040

                                                                                                                                                                                                                          2045

                                                                                                                                                                                                                                     2050

                                                                                                                                                                                                                                            2055

                                                                                                                                                                                                                                                   2060

                                                                                                                                                                                                                                                          2065

                                                                                                                                                                                                                                                                 2070

                                                                                                                                                                                                                                                                        2075

                                                                                                                                                                                                                                                                               2080

                                                                                                                                                                                                                                                                                      2085

                                                                                                                                                                                                                                                                                             2090

                                                                                                                                                                                                                                                                                                     2095

                                                                                                                                                                                                                                                                                                            2100
 other global regions likely to be characterised
 by slower population growth and ageing                                                                                                                                                                                                                                                                                                                                                                                                                        3.1%
 trends over the coming decades, Africa
                                                                                                                Source: United Nations Population Division                                                                                                                                                         3.5m
 will be home to an increasingly significant                                                                                                                                                                                                                                                                        DAKAR
                                                                                                              Cities Institute suggest that Lagos, Kinshasa                                                                             environment also appears increasingly
 portion of the global workforce. McKinsey
 projects that, by 2034, Africa’s working-age
                                                                                                              and Dar es Salaam will be the three most                                                                                  fractured. Recent patterns of growth                                       3.8%                                                                                                                                           1.9m
                                                                                                              populous cities in the world at the end of                                                                                have highlighted the diverse nature
 population will be 1.1 billion, overtaking both                                                                                                                                                                                                                                                                                                                                                                                                                  KAMPALA
                                                                                                              the century. The heavily urbanised stretch                                                                                of Africa’s economies, and significant
 China and India.
                                                                                                              of coast running from Lagos through to                                                                                    variations in growth rates will persist,                                                                                                                                                                               4.2%
 Rural-to-urban migration is intensifying                                                                     the Ivorian capital Abidjan, covering the                                                                                 especially if oil prices fail to recover
 population growth rates within many                                                                          best part of 1,000 km, may provide the                                                                                    to levels that are more sustainable for
 major cities in Africa. Currently, the urban                                                                 foundation for a future global megalopolis.                                                                               Africa’s oil-exporting countries.
 population of Africa is increasing by more
                                                                                                              Rapid population growth will create                                                                                       The outlook for 2017 and beyond is
                                                                                                                                                                                                                                                                                                                                                                                                                                                                  3.9m
 than 15 million people each year and the UN
                                                                                                              challenges for city authorities and put strain                                                                            coloured by wider global concerns.                                         4.9m                                                                                                                                           NAIROBI
 forecasts that Africa’s overall urbanisation
 rate will increase from its current level of
                                                                                                              on urban infrastructures. It will also create
                                                                                                              opportunities for property development as
                                                                                                                                                                                                                                        Much attention will be paid to the effects                                 ABIDJAN
                                                                                                                                                                                                                                                                                                                                                                                                                                                               4.0%
                                                                                                                                                                                                                                        of the Trump presidency on Africa and
 around 40% to over 50% by 2040.
                                                                                                              huge investment will be needed in the built                                                                               whether, among other concerns, it
                                                                                                                                                                                                                                                                                                                   3.4%
 The fastest growing cities of Africa are nearly                                                              environment of African cities if they are to                                                                              threatens the future of the US African
 all within the Sub-Saharan region, outside                                                                   cope with the pressures of population growth.                                                                             Growth and Opportunity Act (AGOA)
 South Africa. Cities such as Kampala,                                                                                                                                                                                                  trade agreement. However, it is possible                                                          2.3m                            2.4m                                                                                    5.1m
 Lusaka and Nairobi are currently growing at                                                                  A complex but                                                                                                             that OPEC deals limiting oil production                                                             ACCRA                           ABUJA                                                                            DAR ES SALAAM
 rates in excess of 4% per annum and, over                                                                                                                                                                                              will work to the benefit of African oil
 the coming decades, an increasing number                                                                     positive outlook                                                                                                          exporters and spur a better-than-
                                                                                                                                                                                                                                                                                                                                         2.0%                             5.5%                                                                                    5.5%
 of Sub-Saharan cities will join the ranks of                                                                 A more complex and challenging                                                                                            expected bounce in these economies.
 the world’s megacities with populations over                                                                 economic outlook has emerged for Africa,
                                                                                                                                                                                                                                        Economic growth for Sub-Saharan
 10 million. Projections made by the Global                                                                   at a time when the global geopolitical
                                                                                                                                                                                                                                        Africa is generally expected to show a                                                           13.1m                            11.6m
                                                                                                                                                                                                                                        moderate recovery in 2017 and the IMF                                                               LAGOS                         KINSHASA
  FIGURE 7
  Africa urbanisation forecasts
                                                                                                                                                                                                                                        forecasts that regional GDP growth will
                                                                                                                                                                                                                                        be back above 4% by 2019. Over the
                                                                                                                                                                                                                                                                                                                                         4.2%                             4.0%
                                                                                                                                                                                                                                        longer term, many of the factors that
                              1,400                                                                                                                                                                    70                               supported economic growth in the early
                              1,200                                                                                                                                                                    60
                                                                                                                                                                                                                                        part of the century will remain in Africa’s
                                                                                                                                                                                                                                                                                                                    People per sq km
                                                                                                                                                                                                                                                                                                                                                                          5.5m
                                                                                                                                                                                                                                        favour and its growing, young urban
                                                                                                                                                                                                                                                                                                                                                                           LUANDA
                              1,000
                                                                                                                                                                                                                                        population could prove to be Africa’s
Urban population (millions)

                                                                                                                                                                                                       50
                                                                                                                                                                                                             Urbanisation rate (%)

                               800                                                                                                                                                                     40                               greatest asset in an ageing world.
                                                                                                                                                                                                                                                                                                                    1,000
                                                                                                                                                                                                                                                                                                                                                                          4.3%
                               600                                                                                                                                                                     30                               Recent events have underlined how
                                                                                                                                                                                                                                        important it is for investors targeting
                               400                                                                                                                                                                     20
                                                                                                                                                                                                                                                                                                                                                                                                       3.7m                        9.4m                    2.2m
                                                                                                                                                                                                                                        Africa to gain a detailed understanding                                     KEY                                                                               CAPE TOWN                  JOHANNESBURG               LUSAKA
                               200                                                                                                                                                                     10                               of individual markets and to time their
                                                                                                                                                                                                                                        market entry correctly. Africa continues to
                                 0
                                      2000          2005         2010      2015       2020           2025                               2030        2035        2040          2045            2050
                                                                                                                                                                                                       0
                                                                                                                                                                                                                                        offer great opportunities to investors able
                                                                                                                                                                                                                                                                                                                            Population (urban agglomerations, 2015)                                    1.1%                        2.0%                    4.7%
                                             Urban population (millions)     Urbanisation rate (%)                                                                                                                                                                                                                          Annual growth rates (2015-2020 projections)
                                                                                                                                                                                                                                        to navigate the markets astutely and for
      Source: United Nations Population Division                                                                                                                                                                                        those with long-term investment horizons.                                   Source: Socioeconomic Data and Applications Center (SEDAC)/United Nations Population Division/Knight Frank

          6                                                                                                                                                                                                                                                                                                                                                                                                                                                              7
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                                 RESEARCH

CAPITAL MARKETS REVIEW
                                                                                                                                                A further noteworthy event during 2016                 backed developments in Sub-Saharan                   world where such yields can be achieved
                                                                                                                                                was the creation of Mara Delta, a pan-                 Africa include the UAE firm Eagle Hills’             by prime assets, not all international
                                                                                                                                                African real estate fund formed from                   Century City project in the Nigerian capital         investors will feel that these yields
A growing volume of capital is targeted at Sub-Saharan Africa                                                                                   the merger of Delta Africa and Mara                    Abuja. There is also strong interest from            adequately compensate for the higher risk
                                                                                                                                                Diversified Property Holdings. During                  Middle Eastern groups in Africa’s growing            profile of African markets. Yield levels are
real estate investment and development.                                                                                                         2016, Mara Delta was one of the most                   hospitality real estate sector.                      supported by the strength of demand for
                                                                                                                                                acquisitive buyers of real estate across the                                                                the very limited number of institutional-
                                                                                                                                                                                                       Among Asian investors, Chinese groups
The persuasive long-term investment              Investors’ appetite for Sub-Saharan            Actis’ two previous funds, closed in 2006       region, growing a portfolio which currently                                                                 grade assets that come to the market,
                                                                                                                                                                                                       are most visible in Africa, although the             and this dynamic is likely to be maintained
case for Sub-Saharan Africa has drawn            real estate was highlighted in 2016 by         and 2012, have been involved with some          includes assets in Kenya, Mauritius,
                                                                                                                                                                                                       Japanese government has also taken                   as recently-launched investment vehicles
increased numbers of international               the announcement that the UK-based             of Sub-Saharan Africa’s most modern             Morocco, Mozambique and Zambia.
                                                                                                                                                                                                       significant steps to encourage investment            seek to grow their funds.
investors to investigate opportunities           emerging markets specialist Actis had          commercial property developments, in
                                                                                                                                                The activities of South African investors in           into Africa. Chinese institutions are
within the region over recent years, albeit      raised US$500 million for its third African    countries such as Ghana, Kenya, Nigeria                                                                                                                     Developments made by groups such
                                                                                                                                                the rest of Africa are part of a wider trend           heavily involved with the financing and
transactional activity has been restricted       property fund, Actis Africa Real Estate        and Tanzania. In recent years, Actis has                                                                                                                    as Actis and RMB Westport will add
                                                                                                                                                that has seen them increasingly move into              construction of large infrastructure
by the limited availability of investment-       Fund 3. This is the largest amount that        exited from many of its first wave of                                                                                                                       significantly to Sub-Saharan Africa’s
                                                                                                                                                foreign markets in order to hedge against              projects across Africa, but pure-play
grade stock and the opacity of the               has ever been raised for a private real        investments, selling its interests in assets                                                                                                                investment stock over the next five years,
                                                                                                                                                a weak rand and a sluggish domestic                    property investment involving Chinese
markets outside of South Africa. Interest        estate fund focused on Sub-Saharan             including the Accra Mall, Nairobi Business                                                                                                                  increasing the availability of assets that
                                                                                                                                                economy. This has also led to South                    firms is much less common. Notable
in the sector remains heightened, despite        Africa outside South Africa, and it included   Park and Ikeja City Mall.                                                                                                                                   meet international institutional investors’
                                                                                                                                                African investors directing significant                large-scale urban development projects
the weakening of some Sub-Saharan                a commitment from the Government of            When Actis launched its first Sub-Saharan                                                                                                                   requirements. However, global investors
                                                                                                                                                volumes of capital to Central and Eastern              involving Chinese investors include
economies over the last two years.               Singapore Investment Corporation (GIC).        Africa fund over a decade ago, it was a                                                                                                                     seeking to enter African markets may feel
                                                                                                                                                Europe, attracted by the relatively high               Shanghai Zendai’s Modderfontein New
                                                                                                pioneer entering a market largely untapped                                                                                                                  that it is prudent to initially follow the path
                                                                                                                                                yields on offer in this region. During 2016,           City, near Johannesburg. Additionally,
                                                                                                by global property funds. However, its third                                                                                                                taken by GIC and Grosvenor by investing
FIGURE 7                                                                                                                                        South African investors including Hyprop,              China’s state-owned AVIC has made a
                                                                                                fund will enter a significantly more crowded                                                                                                                in funds created by established investors
Africa prime office yields                                                                                                                      Redefine and Tower acquired US$2.1                     substantial investment in the mixed-use
                                                                                                marketplace as a series of property                                                                                                                         within the region, rather than making
                                                                                                                                                billion of property in CEE markets.                    Two Rivers development in Nairobi.
                                                                                                investment vehicles have emerged in                                                                                                                         direct property investments. When raising
                                                                                                recent years targeting Sub-Saharan real         Significant demand for African real estate             Recent transactional evidence indicates              capital, the new wave of Sub-Saharan
                                                                                                estate. Many of these are South African-        stems from Middle Eastern investors, who               that yields within the 7-9% range are                property funds will seek to tap into the
                                      ADDIS ABABA 6.00%
                                                                                                controlled funds, albeit often registered or    generally have a preference for large-scale            typical for investment-grade assets in the           burgeoning demand from international
                                        HARARE 8.00%
                                                                                                listed offshore in Mauritius.                   development projects rather than direct                most attractive Sub-Saharan markets.                 investors seeking to gain exposure to
                                        NAIROBI 8.00%
                                                                                                                                                property investment. Middle Eastern-                   While there are few other regions of the             Sub-Saharan Africa.
                                       GABORONE 8.25%                                           A prominent example is RMB Westport,
                                      CASABLANCA 8.50%                                          which was created in 2008 as a joint
                                     JOHANNESBURG 8.50%                                         venture between Rand Merchant Bank
                                                                                                                                                Selected Sub-Saharan Africa investment transactions, 2015-16
                                       PORT LOUIS 8.50%                                         and the Westport Property Group. Its
                                       WINDHOEK 8.50%                                           current development projects include            Date         Property                        Location                    Sector          Seller             Buyer            Estimated        Reported
                                        ABIDJAN 9.00%                                           the Wings Office Complex in Lagos and                                                                                                                                          price            yield
                                                                                                                                                                                                                                                                              (US$ million)
                                         ACCRA 9.00%                                            Muxima Shopping Centre in Luanda. RMB
                                                                                                Westport’s second fund, which has a target      Q4 2015      Ikeja City Mall                 Lagos, Nigeria              Retail          Actis/RMB          Hyprop (75%)/         91.0          >8.00%
                                       CAPE TOWN 9.00%
                                                                                                                                                                                                                                         Westport/Paragon   Attacq (25%)
                                     DAR ES SALAAM 9.00%                                        of raising US$450 million, has attracted
                                                                                                commitments from both GIC and the UK            Q2 2015      Two Rivers Development          Nairobi, Kenya              Mixed Use       Centum             Aviation              70.0            N/A
                                         LAGOS 9.00%                                                                                                         (39% stake)                                                                                    Industry
                                                                                                investor Grosvenor.
                                         ABUJA 9.50%                                                                                                                                                                                                        Corporation of
                                                                                                                                                                                                                                                            China (AVIC)
                                       BLANTYRE 9.75%                                           Other real estate investment vehicles
                                                                                                to have been launched in the last two           Q4 2015      East Park Mall, Acacia          Lusaka & Ndola,             Retail/Office   Casilli Group      SA Corporate          49.6           8.68%
                                        ALGIERS 10.00%                                                                                                       Office Park & Jacaranda         Zambia
                                                                                                years include a pan-African joint venture
                                                                                                                                                             Mall (50% stakes)
                                        DAKAR 10.00%                                            created by Growthpoint and Investec,
                                                                                                                                                Q3 2015      Wings Oando Development         Lagos, Nigeria              Office          RMB Westport       Pivotal               49.0            N/A
                                        DOUALA 10.00%                                           which has the target of raising US$500                       (37.1% stake)
                                       KAMPALA 10.00%                                           million. Momentum Global Investment
                                                                                                                                                Q2 2015      Vodacom Building                Maputo, Mozambique          Office          Sociedade De       Delta (now            46.0           6.63%
                                                                                                Management and Eris Property Group have                                                                                                  Construçoes        Mara Delta)
                                        LUSAKA 10.00%
                                                                                                also formed a joint venture, the US$250                                                                                                  Catemba
                                        MAPUTO 10.00%                                           million Momentum Africa Real Estate Fund,       Q4 2016      Cosmopolitan Mall               Lusaka, Zambia              Retail          Rockcastle         Mara Delta            37.1           7.75%
                                         CAIRO 10.50%                                           which has allocated capital to development                   (50% stake)

                                         TUNIS 10.50%
                                                                                                projects in Ghana and Nigeria.                  Q4 2015      Bagatelle – Mall of Mauritius   Bagatelle, Mauritius        Retail          Atterbury          Ascencia              28.9         c.7.00%
                                                                                                                                                             (34.9% stake)
                                         KIGALI 11.00%                                          The Anglo-South African group Old Mutual
                                                                                                                                                Q4 2015      Makuba Mall & Kafubu Mall       Kitwe & Ndola, Zambia       Retail          Rockcastle         Delta (now            21.6           7.75%
                                                                                                signalled its intention to expand its African
                                       KINSHASA 12.00%                                                                                                       (50% stakes)                                                                                   Mara Delta)
                                                                                                footprint by announcing a partnership
                                                                                                                                                Q4 2015      Greenspan Mall                  Nairobi, Kenya              Mixed Use       Greenspan          Stanlib Kenya         20.0           8.10%
                                        LUANDA 14.00%                                           with the Nigerian Sovereign Investment
                                                                                                                                                                                                                                         Mall Limited       Fahari I-REIT
                                                                                                Authority in the second half of 2016. This
                                                                                                                                                Q1 2016      Barclays House                  Ebene, Mauritius            Office          Jade Group         Delta (now            13.4           8.30%
                                                                                                venture aims to raise US$500 million for a                                                                                                                  Mara Delta)
                                                                                                real estate fund, in addition to a US$200
Source: Knight Frank Research                                                                   million agriculture investment vehicle.         Source: Knight Frank Research/Real Capital Analytics/Company reports and financial statements

8                                                                                                                                                                                                                                                                                                         9
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                         RESEARCH

                                                       SECTOR FOCUS: RETAIL                                                                                             SELECTED SHOPPING MALL OPENINGS
                                                       Sub-Saharan Africa’s modern retail stock continues to                                                            2015-Q1 2017
                                                       grow in size and quality.
     The development of                                The retail property sector has been a
                                                       major focus for development activity
                                                                                                                         Garden City Mall (33,500 sq m) in 2015,
                                                                                                                         followed by the opening of The Hub
     modern shopping                                   within Africa over the last decade,                               (30,000 sq m) in the affluent suburb of
     malls is changing the                             causing the shopping mall concept to
                                                       take root in increasingly wide range
                                                                                                                         Karen in 2016. The 67,000 sq m Two
                                                                                                                         Rivers Mall, which is now the largest in
     urban landscapes of                               of major African cities. Development                              Kenya, opened in February 2017.
     Sub-Saharan Africa                                has been driven by the growth of the
                                                                                                                         Elsewhere, developers including                                             20,000                         15,000                           14,000                 12,000
                                                       continent’s consumer markets and the
                                                                                                                         Atterbury, Novare, Resilient and RMB                                        sq m                           sq m                             sq m                   sq m
                                                       expansion of domestic and international
                                                       retailers, particularly the leading South                         Westport have all delivered modern mall                                    PLAYCE MARCORY                  ACHIMOTA RETAIL CENTRE           DELTA MALL             ONITSHA MALL
                                                                                                                         projects over the last two years, adding                                   Abidjan, Cote d’Ivoire          Accra, Ghana                     Warri, Nigeria         Onitsha, Nigeria
                                                       African supermarket chains such as
                                                                                                                         to the retail stock of countries including                                 Opening date Q4 2015            Opening date Q4 2015             Opening date Q2 2015   Opening date Q2 2016
                                                       Shoprite, Pick n Pay and Game.                                                                                                               Developer/investor              Developer/investor               Developer/investor     Developer/investor
                                                                                                                         Ghana and Nigeria. The positive growth                                     CFAO                            Atterbury/Delico                 Resilient Africa       African Capital Alliance
                                                       South Africa is by far the largest and                            outlook for Côte d’Ivoire and Senegal has                                  Anchor tenants                  Anchor tenants                   Anchor tenants         Anchor tenants
                                                       most mature retail market in the Sub-                             caused these countries to also attract                                     Carrefour                       Shoprite, Palace                 Shoprite               Shoprite
                                                       Saharan region, with approximately 23
                                                                                                                         increased interest, having previously
                                                       million sq m of shopping centre floor
                                                                                                                         seen relatively limited modern retail
                                                       space, compared with only about 3
                                                                                                                         development.  350Of particular note, CFAO
                                                       million sq m in the whole of the rest of
                                                                                                                         has opened PlaYce Marcory in Abidjan as
                                                       Sub-Saharan Africa. The South African                                           300
                                                                                                                         the first of a series of Carrefour-anchored
                                                       market continued to grow in 2016,
                                                                                                                         malls that are  planned for West and
                                                                                                                                       250
                                                       most notably through the completion
                                                                                                                         Central Africa.
                                                       of Atterbury’s 131,000 sq m Mall of                                           200                                                                                            25,000                           22,000                 22,000
                                                       Africa, the largest single-phase mall                             Large volumes of modern retail space                                                                       sq m                             sq m                   sq m
                                                                                                                                       150
                                                       development ever in Sub-Saharan Africa.                           remain in the pipeline across Sub-                                                                         JABI LAKE MALL                   NOVARE LEKKI MALL      XYAMI SHOPPING NOVA VIDA
                                                                                                                                                                                                                                    Abuja, Nigeria                   Lagos, Nigeria         Luanda, Angola
                                                       Outside of South Africa, the Kenyan                               Saharan Africa,
                                                                                                                                       100 although the weakening
                                                                                                                                                                                                                                    Opening date Q2 2015             Opening date Q3 2016   Opening date Q4 2015
                                                       capital Nairobi has the greatest volume                           of the oil-driven economies has led to                                                                     Developer/investor               Developer/investor     Developer/investor
                                                                                                                                        50
                                                       of modern retail floor space in Sub-                              the postponement or scaling down of                                                                        Actis/Laurus/Duval Properties    Novare/Urshday         Zahara Imobiliária
                                                                                                                         some projects0in these countries. With                                                                     Anchor tenants                   Anchor tenants         Anchor tenants
                                                       Saharan Africa, and it continues to be a                                                                                                                                     Shoprite, Game                   Shoprite, Game         Kero
                                                       development hotspot. The city saw the                             most of the region’s major capital cities
                                                       completion of the first phase of Actis’                           now having at least one modern mall,
                                                                                                                         developers have increasingly targeted
                                                                                                                         secondary cities in order to gain first-
FIGURE 8
                                                                                                                         mover advantage in these locations.
Completed shopping centre space in Sub-Saharan African cities
                                                                                                                         There are also signs that pragmatic
  500,000
                                                                                                                         developers are now concentrating on
                                                                                                                         the delivery of well-located small and
                                                                                                                         500000
  450,000
                                                                                                                         medium-sized convenience shopping
                                                                                                                         450000
  400,000
                                                                                                                         centres rather than regional mega-malls.
                                                                                                                         400000
  350,000                                                                                                                                                               131,000                      67,000                         33,500                           30,000                  26,000
                                                                                                                         As the
                                                                                                                         350000  sector grows and competition           sq m                         sq m                           sq m                             sq m                    sq m
  300,000

  250,000                                                                                                                between retail schemes intensifies,
                                                                                                                         300000                                         MALL OF AFRICA              TWO RIVERS MALL                 GARDEN CITY MALL (PHASE ONE)     THE HUB KAREN          COSMOPOLITAN MALL
                                                                                                                         developers will seek to differentiate their
                                                                                                                         250000                                         Guateng, South Africa       Nairobi, Kenya                  Nairobi, Kenya                   Nairobi, Kenya         Lusaka, Zambia
  200,000
                                                                                                                         malls by offering access to international
                                                                                                                         200000                                         Opening date Q2 2016        Opening date Q1 2017            Opening date Q2 2015             Opening date Q1 2016   Opening date Q1 2016
  150,000                                                                                                                                                               Developer/investor          Developer/investor              Developer/investor               Developer/investor     Developer/investor
                                                                                                                         brands, leisure facilities and upscale
                                                                                                                         150000                                         Attacq/Atterbury            Centum/Athena Properties        Actis/Aspire/Mentor Management   Azalea Holdings        Rockcastle
  100,000
                                                                                                                         consumer experiences. Selecting the
                                                                                                                         100000                                         Anchor tenants              Anchor tenants                  Anchor tenants                   Anchor tenants         Anchor tenants
     50,000                                                                                                                                                             Edgars, Woolworths, Game,   Carrefour, LC Waikiki           Game, Nakumatt                   Carrefour              Shoprite, Game
                                                                                                                         right
                                                                                                                          50000micro-locations for development
         0
                                                                                                                                                                        Checkers Hyper
                                                                                                                         will be
                                                                                                                               0 crucial to the success of new
              I

                           NE

                                              RE

                                                S

                                              AM

                                                           A

                                                                 JA
                                               LA

                                              KA

                                              DA
                      K
              OB

                                                                          N

                                                                                 O

                                                                                       LI

                                                                                                  A

                                                                                                         R

                                                                                                                     E

                                                                                                                   SA
                                             GO

                                                        CR
                     OE

                                                                                                                  GW
                                                                                               AB
                                                                               UT

                                                                                                      KA
                                                                       JA
                                                                  U
                                            PA

                                           RA

                                                                                     GA
                                           SA
                          RO

                                           AN

                                           LA

                                                                                                                         centres, particularly in cities that already
           IR

                                                                                                                 HA
                                                               AB
                   DH

                                                      AC
                                         LA

                                                                              AP
                                                                      ID

                                                                                            AB

                                                                                                      DA
                               M
         NA

                                   HA

                                                                                     KI
                                        LU

                                                                                                            ON
                        BO

                                        LU

                                        SA

                                                                                                               NS
                                                                      AB
                             KA
                IN

                                                                           M

                                                                                          IS
                      GA

                                                                                                           LIL
                W

                                     ES

                                                                                                             KI
                                                                                         D

                                                                                                                         have successful existing malls. Modern
                                                                                      AD
                                   R
                                DA

                     Completed GLA (sq m)
                                                                                                                         mall development will play a major role in
Source: Knight Frank Research
Graph excludes South African cities
                                                                                                                         shaping the future landscapes of Africa’s
Floor space estimates include schemes with a minimum gross leasable area (GLA) of 5,000 sq m                             growing cities.

10                                                                                                                                                                                                                                                                                                               11
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
AFRICA REPORT 2017/18                      RESEARCH

SECTOR FOCUS:                                                                                                                                                         SELECTED LOGISTICS
LOGISTICS                                                                                                                                                             DEVELOPMENT PROJECTS
The logistics property sector has emerged as
a growing focus for new development.                                                                                                                                                                                                                                   Africa Logistics
                                                                                                                                                                                                                                                                       Properties
Over the last decade, modern                  ports are also hotspots for logistics                                                                             Tunisia
                                                                                                                        Morocco                                                                                                                                        Nairobi, Kenya
commercial property development within        developers, as Africa’s reliance on sea
Sub-Saharan Africa has largely been           transport for international trade means                                                                                                                                                                                  Africa Logistics Properties (ALP) is an
concentrated on the retail and office         that its ports are crucial locations in firms’                                                                                                                                                                           investment vehicle backed by the East
                                                                                                                                                 Algeria                                                                                                               African group Maris. ALP is seeking
sectors, with logistics development           logistics networks. Dubai’s DP World                                                                                                  Libya                                                                              to raise US$65-70 million, including a
being more limited. However, there is         is notably active in the development                                                                                                                                 Egypt
                                                                                                                                                                                                                                                                       proposed investment from the World
a growing recognition that the region’s       and operation of ports and associated                                                                                                                                                                                    Bank’s International Finance Corporation
key cities are undersupplied for modern       logistics property in Africa.                                                                                                                                                                                            arm, to develop logistics parks on sites
logistics space. Development activity                                                                                                                                                                                                                                  around Nairobi.
is burgeoning, supported by demand            The future of African logistics property
for high quality space from retailers and     markets will be shaped by the impact
                                                                                                           Mauritania
consumer goods manufacturers seeking          of disruptive technologies. Drones,                                                                                                                                                                                      CoastDryport
to expand their African operations and        for example, have the potential to                                                       Mali
                                                                                                                                                                                                                                                                       Soga, Tanzania
                                                                                                                                                              Niger
improve distribution networks and             help logistics operators overcome                                                                                                                                      Sudan
supply chains.                                the deficiencies of African transport                                                                                                                                                                                    The US-based BlackIvy Group has plans
                                                                                                   Senegal                                                                                                                                                             to build a dry port and intermodal logistics
                                              infrastructure, by enabling the movement                                                                                                     Chad
New developments opened in 2016                                                                                                        Burkina
                                                                                                                                                                                                                                                                       park at the village of Soga, west of Dar es
                                              of goods to locations without reliable                                                    Faso                                                                                                                           Salaam. The 500 acre site will be served
included York Commercial Park in the
                                              road networks. A system described                            Guinea                                  Benin                                                                                                               by two dedicated rail lines.
Zambian capital Lusaka and the Agility
                                              as the world’s first commercial drone                                                     Ghana
                                                                                                                                                           Nigeria
Distribution Park at the Port of Tema in
                                              delivery service was launched in Rwanda                                        Côte                                                                                                         Ethiopia
Ghana. Both projects offer built-to-suit                                                                                    d’Ivoire
units of a quality previously unavailable     by the US company Zipline in 2016.                                                                                                            Central
                                                                                                                                                                                                                  South Sudan
                                                                                                                                                                                                                                                                       Kigali Logistics Platform
                                                                                                                                                                                       African Republic
                                                                                                                                                                                                                                                                       Kigali, Rwanda
in these markets. The Ghanaian project        The rise of online retailing will also shape                                                                           Cameroon
is the first of a number of logistics parks   logistics property markets going forward.                                                                                                                                                                                DP World has been granted a concession
                                                                                                                                                                                                                                                     Somalia
that the Kuwaiti developer Agility plans      While small by global standards, Africa’s                                                                                                                                                                                to develop and operate a new logistics
to build across Africa, with Angola,                                                                                                                                            Republic                                                                               centre in Kigali. The first phase will be
                                              online retail sector has started to grow                                                                                           of the                              Uganda
Côte d’Ivoire, Mozambique, Nigeria and                                                                                                                                Gabon      Congo                                                                                 built on 90,000 sq m of land and will
                                              at a fast pace, driven primarily by the                                                                                                                 Democratic                                                       comprise a 12,000 sq m container yard
Tanzania among its target markets.            increased penetration of smart mobile                                                                                                                    Republic   Rwanda                 Kenya
                                                                                                                                                                                                     of the Congo                                                      and a 19,600 sq m warehousing facility.
Several major logistics and industrial        devices. Pioneering online retailers
parks are in the pipeline as part of          such as Nigeria’s Jumia and Konga
wider urban developments such as              are building distribution networks that
                                                                                                                                                                                                                                   Tanzania
                                                                                                                                                                                                                                                                       Tatu Industrial Park
Rendeavour’s Tatu City near Nairobi and       will require increasingly sophisticated                                                                                                                                                                                  Nairobi, Kenya
Roma Park in Lusaka. The areas around         logistics properties.
                                                                                               Dakar Free Zone
                                                                                               Dakar, Senegal                                                                                                                                                          Part of the Tatu City urban development
                                                                                                                                                                                            Angola                                                                     project, Tatu Industrial Park comprises
                                                                                               DP World has agreed with the Senegalese
                                                                                                                                                                                                                                Malawi                                 450 acres of serviced land suitable for
                                                                                               government to develop a logistics                                                                         Zambia                                                        light industrial, warehouse and logistics
                                                                                               free zone at the new Blaise Diagne
                                                                                                                                                                                                                                                                       uses. Unilever has signed an agreement
                                                                                               International Airport on the outskirts of
                                                                                                                                                                                                                                                                       to acquire 70 acres of land at the park.
                                                                                               Senegal. The group already operates the                                                                                                                   Madagascar
                                                                                                                                                                                                                                Mozambique
                                                                                               Port of Dakar Container Terminal.
                                                                                                                                                                                                                  Zimbabwe
                                                                                                                                                                                           Namibia                                                                     York Commercial Park
                                                                                               Agility Distribution Park                                                                                                                                               Lusaka, Zambia
                                                                                                                                                                                                       Botswana
                                                                                               Tema, Accra, Ghana                                                                                                                                                      Actis, in conjunction with the South
                                                                                                                                                                                                                                                                       African developer Improvon, is developing
                                                                                               In October 2016, Agility opened the
                                                                                                                                                                                                                                                                       a modern logistics park in the south
                                                                                               first phase of a logistics park built on a
                                                                                                                                                                                                                                                                       of Lusaka. The park’s first phase was
                                                                                               45 acre site at Tema Free Zone, east
                                                                                                                                                                                                                                                                       completed in early 2016.
                                                                                               of Accra. When fully built, the park is
                                                                                               expected to have 100,000 sq m of                                                                   South Africa
                                                                                               warehouse space.
 Port of Cape Town

12                                                                                                                                                                                                                                                                                                                 13
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
Gambia
                                                                                                                                                                             Guinea                                                                                    Chad                    Sudan
                                                                                                                                                                             Bissau
                                                                                                                                                                                          Guinea
                                                                                                                                                                                          Sierra                                   BeninAFRICA      REPORT 2017/18                      RESEARCH                                            Soma
                                                                                                                                                                                          Leone                                 Togo          Nigeria
                                                                                                                                                                                                             Ivory                                                                                                    Ethiopia
                                                                                                                                                                                               Liberia       Coast        Ghana
                                                                                                                                                                                                                                                                  Central Africa Republic
                                                                                                                                                                                                                                                     Camaroon

             ALGERIA                                                                                                                                                                                                                         Equatorial
                                                                                                                                                                                                                                               Guinea
                                                                                                                                                                                                                                                                                                     ANGOLA
                                                                                                                                                                                                                                                                                                       Uganda
                                                                                                                                                                                                                                                                                                                      Kenya
                                                                                                                                                                                                                                                     Gabon Congo
                                               Oran
                                                                                                                                                                                                                                                                                               Rwanda
                                                                                                                  Key facts                                                      Key facts
                                                  Algiers                                                                                                                                                                                                                 Democratic
                                                      Constantine                                                                                                                                                                                                         Republic of
                                                                            Tunisia                               Population                39.7 million                         Population                      25.0 million
                                                                                                                                                                                                                                                                           the Congo                       Tanzania
                                                                                                                  Major cities:                                                  Major cities:
                              Morocco                                                                             Algiers                   2.6 million                          Luanda                          5.5 million
                                                                                                                  Oran                      0.9 million                          Huambo                          1.3 million                                   Luanda
                                                                                                                  Constantine               0.5 million                          Official languages              Portuguese
                                                  ALGERIA                        Libya
                                                                                                                  Official languages        Arabic                               Total area                      1,246,700 sq km                                ANGOLA
                                                                                                                  Total
                                                                                                                   Egyptarea                2,381,741 sq km                                                                                                          Huambo
                                                                                                                                                                                 GDP growth (2016)               0.0%
                                                                                                                                                                                                                                                                                             Zambia         Malawi
n                                                                                                                 GDP growth (2016)         3.6%                                 Key export                      Petroleum
                                                                                                                  Key export                Petroleum                            Currency                        Kwanza (AOA)
                                                                                                                  Currency                  Algerian Dinar (DZD)                 EIU country risk                D
                   Mauritania                                                                                     EIU country risk          D                                    rating (E=most risky)                                                                                        Zimbabwe
                                                                                                                  rating (E=most risky)                                          World Bank Doing                182
                                           Mali                                                                   World Bank Doing          156                                  Business rank                                                                    Namibia
                                                                    Niger                                         Business rank                                                  (out of 190 countries)                                                                           Botswana
             Office market                                     Industrial market                                  (out of 190 countries)     Eritrea                                                                                     Office market                                  Industrial market
     Senegal                                                                                                            Sudan
       The traditional office locations in Algiers of          Algeria’s oil-dependent economy Chad is                                                                                                                                   Falling oil prices have had a dramatic      Luanda’s main industrial and
Gambia                                                                                                                                                                           Luanda prime rents and yields
           Hydra and the city centre generally remain          currently depressed and attempts to                                                                                                                                       impact on Angola’s oil-dependent            warehousing locations are in and around
    Guineathe prime areas for local businesses. Benin          diversify the economic base have had                Algiers prime rents and yields Djibouti                                                                               economy and the real estate sector.         the port area and Viana to the east of
                 Guinea
    Bissau However,    international corporate occupiers       only limited success. It is anticipated that
                                                                                                                                                                                  Prime rents                                   Prime
                                                                                                                                                                                                                                         Office demand in Luanda has virtually Souththe   city. Historically, it has been very
                                   Côte                                                                                              Prime rents               Prime             		                                             yields                                                Africa
           with Sierra
                 larger requirements have tendedTogo
                                                   to shift    theNigeria
                                                                    government will increase taxes and                                                                                                                                   ground to a halt and supply has             difficult to find good quality warehousing
                                 d’Ivoire                                                                          		 Ethiopia yields                                            Offices           US$80/sq m/month              14%
                Leone
           eastwards    towards the airport and the new        subsidised fuel prices in 2017, targeting                                                                                                                                 increased, causing vacancy rates for new    in Luanda, but the drop in demand from
                                                                                               CentralThis
                                                                                                        African        South Sudan
                                                                                                                    Offices          US$30/sq m/month           10%              Retail            US$60/sq m/month              12%                                                 the oil sector and an increase in supply
           commercial     districts of Bab Ezzouar
                    Liberia                 Ghanaand           businesses more than individuals.                                                                                                                                         buildings to rise above 20%, with further
                                                                                                  Republic          Retail           US$33/sq m/month             9%                                                                                                                 has caused the market to become more
           Alger Medina. Banking, in particular, is            will negatively   impact
                                                                           Cameroon       Algeria’s appeal as                                                                    Industrial        US$10/sq m/month              14%     increases expected in 2017. Luanda still
           largely no longer headquartered in the city         a manufacturing location and discourage              Industrial       US$9.50/sq m/month         13%              Residential       US$15,000/month*              11%     has the highest office rents in Africa, but balanced. Rents and values have fallen
           centre, with Natixis, BNP Paribas, Citi and         international                                                                                     Somalia                                                                 Grade A rents have almost halved in the     by 30-50% in the last couple of years. In
                                                                Equatorial investment, which is already             Residential Uganda
                                                                                                                                     US$4,500/month*            7.5%             Source: Knight Frank LLP
           HSBC all now out to the east. Trust Bank and              Guinea
                                                               deterred   by restrictions on foreign               Source: Knight Frank LLP          Kenya                       *4 bedroom executive house – prime location             last three years. The market has also       the short-term, the market is expected
           Al Baraka Bank also have new headquarters           ownership. There areCongo  several major            *4 bedroom executive house – prime location                                                                           been affected by recently-introduced        to remain stable, but values should
           under construction in Bab Ezzouar. The                           Gabon
                                                               industrial zones     around Algiers including                                                                                                                             legislation prohibiting real estate rents   increase once the economy recovers
                                                                                                       Democratic
           office market has been subdued over the             Rouïba, Ouled Fayet, Birtouta and Dar    Republic
                                                                                                            El           Rwanda                                                                                                          from being set in, or linked to, a foreign  and government initiatives to promote
                                                                                                      of the   Congo        Burundi                                              Contacts                                                                                            diversified industries have an effect.
           last year as a result of economic uncertainty       Beïda/Oued Smar; these are all practically                                                                                                                                currency. This has badly impacted
           and many of the largest construction projects
                                                                                                                   Contact                                                       Peter Welborn, Managing Director, Africa
                                                                                                                                                                                                                                         landlords who have typically borrowed
                                                               full and it is difficult to find good quality                                                                     +44 20 7861 1200
                                                                                                                   Peter Welborn, Managing Director, Africa
           have made slow progress. However, prime             real estate. There is a pharmaceutical/
                                                                                                                   +44 20 7861 1200      Tanzania                                peter.welborn@knightfrank.com                           in US dollars but are now receiving their   Residential market
           rents have been stable, as the availability of      biotechnology cluster at Sidi Abdallah,             peter.welborn@knightfrank.com                                                                                         revenues in kwanza.                         As is the case in other real estate
                                                                                                                                                                                 Tim Ware, Managing Director, Zambia
           space suitable for international occupiers          30 km south west of Algiers, where Sanofi                                                                                                                                                                                sectors, high-end residential apartments
                                                                                                                                                                                 +260 211 250 538/250 683
           remains limited.                                    is building a factory.                                                                                            +260 211 255 992-3                                      Retail market                                  and villas in Luanda are the most
                                                                                                                                                                                 tim.ware@zm.knightfrank.com                             The retail sector in Luanda remains at         expensive in Africa, despite a 30-50%
             Retail market                                     Residential market
                                                                               Angola                                                                                                                                                    a nascent stage of development, with           fall in prices in recent years. Unlike other
                                                                                                                                    Malawi
             The informal retail sector is still predominant   The prime residential area of Algiers is     Zambia                                                                                                                       the majority of activity being either          sectors, residential values were already
             in Algeria, but a series of modern retail         Hydra, which is also the main area of                                                                                                                                     informal trading or in standalone units.       in decline before the drop in oil prices,
             developments have emerged over the last           the city for the diplomatic sector. The                                                                                                                                   International retailers, who were looking      due to increased levels of new supply in
             decade. The first of these was Sidar’s Al         upmarket housing market has slowed in                                  Mozambique                                                                                         at the market in 2013-14, have all but         2013-14. The prime residential market is
             Qods in Chéraga, which has since been             the last two years and rents have fallen,          Zimbabwe                                                                                                               disappeared. However, local investors          dominated by the expatriate community,
                                                                                       Namibia                                                             Madagascar
             joined by SCCA’s Centre Commercial Bab            with the potential for further decreases                                                                                                                                  have promoted the expansion of the             who generally look to rent rather than
             Ezzouar, Arcofina’s Ardis-Medina Center           due to the depressed economic                                                                               Mauritius                                                     mall operator Xyami, which is rolling          buy. A four-bedroom villa on one of
             and Chaïbi/Asicom’s City Center. These            conditions. Lease renewals are beingBotswana                                                                                                                              out retail centres in Luanda and other         the most sought-after compounds in
             shopping centres are all performing well in       agreed without review or at discounts to                                                                                                                                  Angolan cities. There are currently            Talatona can still fetch US$15,000
             terms of occupancy and footfall, although         previous levels. The Finance Act 2017 has                                                                                                                                 fourteen shopping centres in Greater           per month, but in 2014 the same villa
             Algeria’s current economic challenges are         raised taxes on landlords’ rental incomes,                                                                                                                                Luanda, mainly concentrated in the             would have achieved US$25,000 per
             likely to slow further development. Carrefour     impacting the attractiveness of residential                                                                                                                               downtown and Talatona, where many              month. Despite the weaker rental
                                                                                                    South Africa
             has recently re-entered Algeria but the           investment. There is strong potential                                                                                                                                     expatriates live. There has been a lack of     market, yields have actually hardened
             requirement to form a joint venture with          demand for affordable housing and                                                                                                                                         open market transactions, but anecdotal        slightly, as investors have bought real
             local partners is an inhibitor to the market      government initiatives have attempted to                                                                                                                                  evidence suggests that rents have fallen       estate to hedge against inflation and the
                                                                                                                Bab Ezzouar Mall, Algiers                                          BESA Headquarters, Luanda
             entry of other international retailers.           encourage investment in this sector.                                                                                                                                      by around 50% since 2014.                      devaluation of the kwanza.

             14                                                                                                                                                                                                                                                                                                                        15
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
of the Congo
                                                         Burundi

                                                                        Tanzania                                                                                 Mauritania                                                             AFRICA REPORT 2017/18                           RESEARCH

                                                                                                                                                                                                          Mali
                                                                                                                                                                                                                                                          Niger

BOTSWANA         Angola
                                                                       Malawi
                                                                                                                                                   Senegal                                                                                                                               CAMEROON
                                                                                                                                                                                                                                                                                                Chad
                                                                                                                                                                                                                                                                                                                                         Su
                                              Zambia
                                                                                                                           Gambia

                                                                                                     Key facts                                                                Key facts
                                                                           Mozambique                                              Guinea
                                                                                                                                   Bissau                      Guinea                                                           Benin
                                                                                                     Population                     2.3 million                               Population                      23.3 million
                                                     Zimbabwe
                                                                                                     Major cities:                                                            Major Côte
                                                                                                                                                                                    cities:
             Namibia                                                                                     Madagascar                                                                                                    Togo                          Nigeria
                                   Francistown                                                       Gaborone                        0.2 million                              Yaoundé
                                                                                                                                                                                  d’Ivoire                    3.1 million
                                                                                                     Francistown                     0.1 million               Sierra         Douala                          2.9 million
                                                                                                                                             Mauritius         Leone
                                                                                                     Official languages              English                                  Official languages              French, English
                             BOTSWANA                                                                Total area                      581,730 sq km                            Total area                      475,440 sq km                                                                        Central African                       So
                                                                                                                                                                   Liberia                                  Ghana                                                                                    Republic
                                 Gaborone                                                            GDP growth (2016)               3.1%                                     GDP growth (2016)               4.8%
                                                                                                     Key export                      Diamonds                                 Key export                      Petroleum                                        CAMEROON
                                                                                                     Currency                        Pula (BWP)                               Currency	
                                                                                                                                                                                       Central African                                                           Douala
                                                                                                                                                                                       CFA Franc (XAF)                                                                    Yaoundé
                                                                                                     EIU country risk                B                                                                                                                                                                  Democratic Republic
                                South Africa                                                         rating (E=most risky)                                                    EIU country risk                D                                                                                            of the Congo
                                                                                                     World Bank Doing                71                                       rating (E=most risky)
                                                                                                     Business rank                                                            World Bank Doing                166                                                                       Congo
                                                                                                     (out of 190 countries)                                                   Business rank                                             Equatorial Guinea
Office market                                    Industrial market                                                                                                                                                                      Office market                                    industrial centre. However, there is also
                                                                                                                                                                              (out of 190 countries)
Office supply continues to outstrip              Demand for industrial space is focused on                                                                                                                                                                          Gabon                significant development activity further
                                                                                                                                                                                                                                        Cameroon has some significant
demand in Gaborone and this imbalance            units of less than 500 sq m, as tenants have                                                                                                                                                                                            south around Kribi, where a new deep-
                                                                                                     Gaborone prime rents and yields                                                                                                    advantages, having a good education
is likely to worsen for secondary space.         started to use newly built business space                                                                                    Cameroon prime rents and yields                           system that produces high quality                water port is under construction. The
With several large CBD office towers due         as cheaper quasi-offices or showrooms.                                                                                                                                                                                                  country is rich in natural resources with
                                                                                                      Prime rents                                     Prime                                                                             employees and being both English and
for completion in 2017 and government            The lack of strict planning controls within                                                                                  DOUALA                                                                                                     significant industrial-scale agriculture
                                                                                                     		                                               yields                   Prime rents                                    Prime     French speaking. However, a challenging
departments set on moving to new CBD             industrial areas has enabled this trend. For                                                                                                                                                                                            including rubber, palm oil and coffee. The
                                                                                                     Offices           US$11.50/sq m/month 8.25%                              		                                              yields    business environment has held back the
buildings, older and poorly located offices      new warehouses under 200 sq m, rents                                                                                                                                                                                                    stability of the local currency, which is
                                                                                                                                                                                                                                        development of its office market. There
will be left empty with little expectation       are now as high as 50 pula/sq m/month,              Retail            US$26.50/sq m/month             7.5%                   Offices           US$26/sq m/month                10%
                                                                                                                                                                                                                                        are hardly any good quality office buildings     pegged to the Euro, is an advantage, as
that they will be taken up by the private        close to half the level of fully-fledged offices.   Industrial        US$4.75/sq m/month               9%                    Retail            US$46.50/sq m/month 8.75%                                                                is Cameroon’s geographical position and
                                                                                                                                                                                                                                        and rents are flat. Douala is the main
sector. Fairgrounds Office Park remains          Demand for larger space is dominated by             Residential       US$1,900/month*                  6%                    Industrial        US$4.50/sq m/month              12%     commercial city, while the capital Yaoundé       the potential to sell into the landlocked
the decentralised location of choice,            quasi-retailers seeking prominent properties                                                                                 Residential       US$2,800/month*               7.5%
                                                                                                     Source: Knight Frank LLP                                                                                                           has a much smaller corporate market which        countries of Chad and the Central African
with rents around 20% lower than in the          with good visitor parking. With Botswana            *4 bedroom executive house – prime location
                                                                                                                                                                                                                                        generally accommodates businesses that           Republic. However, road networks are
CBD. Despite the perceived oversupply,           reaching 50 years of independence in 2016,                                                                                   YAOUNDÉ
                                                                                                                                                                                                                                        need access to government departments.           relatively poor, which creates distribution
several occupiers with requirements for                                                                                                                                        Prime rents                                    Prime
                                                 many 50-year Fixed Period State Grant                                                                                        		                                              yields    Office development has tended to be by           challenges, and there are persistent delays
500-1,000 sq m are unable to secure
                                                 (FPSG) leases are nearing expiration and            Contacts                                                                                                                           local individuals and businesses and is          and other issues associated with moving
appropriate accommodation in the new                                                                                                                                          Offices           US$22/sq m/month                10%
                                                 industrial property owners are anxious to           Curtis Matobolo, Managing Director                                                                                                 below the standards required by global           products through the port.
CBD buildings, and many high-rise                                                                                                                                             Retail            US$22/sq m/month                9%
                                                 see how the state treats requests to renew          +267 395 3950                                                                                                                      corporate occupiers.
towers with smaller floor plates do not                                                                                                                                                                                                                                                      Angola
                                                 FPSG leases.                                        curtis.matobolo@bw.knightfrank.com                                       Industrial        US$2/sq m/month                 15%
suit corporate occupiers.                                                                                                                                                                                                                                                                Residential market
                                                                                                     David Watson, Director                                                   Residential       US$2,800/month*               7.5%      Retail market
                                                 Residential market                                  +267 395 3950                                                                                                                                                                       Almost half of Cameroon’s population Zambia
Retail market                                                                                        david.watson@bw.knightfrank.com
                                                                                                                                                                              Source: Knight Frank LLP
                                                                                                                                                                              *4 bedroom executive house – prime location
                                                                                                                                                                                                                                        There are only a small number of
                                                                                                                                                                                                                                                                                         lives in informal dwellings, and there is a
                                                 Gaborone has a diminishing supply of                                                                                                                                                   international retailers present in Cameroon
The retail sector continues to see new                                                                                                                                                                                                                                                   housing supply deficit estimated to be the
                                                 low-to-middle income housing, with most                                                                                                                                                and most of these, such as Casino and
development, but demand for space has                                                                                                                                                                                                                                                    equivalent of 100,000 units per year. This
                                                 people on average incomes finding it difficult                                                                                                                                         City Sport, are operated as franchises. Until
waned, with few new market entrants                                                                                                                                           Contact                                                                                                    will be compounded in future years as the
                                                 to locate affordable housing or finance their                                                                                                                                          recently, there were no malls in Cameroon
and existing businesses contracting in                                                                                                                                        Peter Welborn, Managing Director, Africa                                                                   middle class swells and due to diaspora
                                                 own self-build homes. The drift to smaller                                                                                                                                             but Douala has lately seen the opening
response to weak consumer spending.                                                                                                                                           +44 20 7861 1200                                                                                           demand. It is very difficult to get financing
                                                 and cheaper properties has been reinforced                                                                                                                                             of L’Atrium, anchored by Spar, and Kadji                                                         Zim
Historically, mall developers have                                                                                                                                            peter.welborn@knightfrank.com                                                                              unless you are a government employee,
                                                 by an increased number of single-family                                                                                                                                                Square, which has a Super U hypermarket.
targeted South African chains, who were                                                                                                                                                                                                                                                  Namibia
                                                                                                                                                                                                                                                                                         with  funding mainly available through the
                                                 households due to growing student and                                                                                                                                                  The largest retail spaces in Yaoundé are
able to obtain exemptions to legislation
                                                 elderly populations. Many residential buy-to-                                                                                                                                          mostly supermarkets or general stores            government agency, Credit Foncier de
that limits the granting of certain trading
                                                 let investors are struggling to find tenants,                                                                                                                                          such as Casino, Mahima and DOVV. CFAO/           Cameroun. With supply lagging demand,
licenses to local businesses. However,
                                                 particularly as expatriate workers have found                                                                                                                                          Carrefour have targeted both cities, and are     house prices are increasing,Botswana
                                                                                                                                                                                                                                                                                                                         particularly
a hardening of the government’s stance
                                                 it difficult to renew work permits. Demand                                                                                                                                             most likely to open first in Douala, possibly    at the mid-to-top end of the market where
meant that South African retailers were
unable to obtain exemptions throughout           for multi-residential housing has increased                                                                                                                                            as a standalone supermarket rather than a        financing is a less important consideration.
2016. If this situation persists, it will        and developers are increasingly tailoring                                                                                                                                              mall-with-supermarket format.                    The best residential zones in Douala are
deter the development of new malls and           schemes to the demands of average local                                                                                                                                                                                                 Akwa, Bonapriso and Bonamoussadi.
landlords will have to target Botswana-          buyers and tenants. Sales at the high end                                                                                                                                              Industrial market                                In Yaoundé, the prime areas are mainly
based tenants, who generally occupy              of the market are far less frequent and likely                                                                                                                                         As the location of Cameroon’s main               around Centre Ville, Quartier du Lac and
                                                                                                       Zambezi Towers, Gaborone                                                 New office development, Yaoundé
smaller shops of less than 200 sq m.             to stay muted for some time.                                                                                                                                                           port, Douala is the country’s principal          Bastos/Golf.
                                                                                                                                                                                                                                                                                                                 South Africa

16                                                                                                                                                                                                                                                                                                                               17
AFRICA REPORT - RESEARCH - REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY - Knight Frank
Algeria
                                                     Mediterranean Sea
                                                                                                                                                                                                                                AFRICA REPORT 2017/18                           RESEARCH
co
                              Tunisia                                                                                                                                                                                                     Western
                                                                                                                                                                                                                                           Sahara

                                                                                                                                                                                                                                                                       CÔTE D’IVOIRE
         Algeria
             CHAD                                    Libya                       Egypt                                                                                                                                                               Mauritania

                                                                                                                   Key facts                                            Key facts
                                                                                                                                                                                                                                         Senegal                                                                  Niger
                                                                                                                   Population                     14.0 million          Population                      22.7 million
 Mali                                                                                                                                                                                                                                                                  Mali
                                                                                                                   Major cities:                                        Major cities:
                                                                                                                   N’Djamena                      1.3 million           Abidjan                         4.9 million
                                  Niger                                                                            Eritrea
                                                                                                                   Moundou                        0.1 million           Bouaké                          0.8 million               Guinea
                                                                                                                                                                        Yamoussoukro                    0.3 million               Bissau             Guinea                                          Benin
                                                     CHAD                            Sudan                         Official languages             French, Arabic
                                                                                                                                                                        Official languages              French
                                                      N’Djamena
                                                                                                                   Total area                     1,284,000 sq km
                                                                                                                                                                                                                                                     Sierra
                                                                                                                                                                                                                                                                        CÔTE                       Togo            Nigeria
                                                                                                                   GDP growth (2016)              -1.1%
                                                                                                                                                                        Total area                      322,463 sq km
                                                                                                                                                                                                                                                     Leone             D’IVOIRE
     Benin                                                                                                                                 Somalia                      GDP growth (2016)               8.0%
                                                                                                                   Key export                 Petroleum                                                                                                                        Bouaké
                                                     Moundou                                                                                                            Key export                      Cocoa                                               Liberia                      Ghana
     Togo                 Nigeria                                                                              Ethiopia
                                                                                                                  Currency	
                                                                                                                           Central African CFA                                                                                                                         Yamoussoukro
                                                                                 South Sudan                                                      Franc (XAF)           Currency	
                                                                                                                                                                                 West African CFA
Ghana
                                                        Central African                                                                                                          Franc (XOF)                                                                                   Abidjan                                               Came
                                                                                                                   EIU country risk               D
                                                          Republic                                                 rating (E=most risky)                                EIU country risk                C
                                  Cameroon                                                                         World Bank Doing               180
                                                                                                                                                                        rating (E=most risky)                                                                                                                                Equatori
                                                                                                                   Business rank                                        World Bank Doing                142
             Office market                                      Industrial market                                                                                                                                               Office market                                    Industrial market
                        Equatorial                                                            Uganda               (out of 190 countries)                               Business rank
                                                                                                                                                                        (out of 190 countries)
                                                                                                                                                                                                                                                                                                                                  Guinea
                                                                Chad is consistently ranked as one of the Kenya                                                                                                                 The leasing of Green Buro in Cocody              Much of Abidjan’s industrial activity is
             Recent construction activity in N’Djamena
             has largely related Guinea
                                    to hotels andCongo
                                                   ministries,  most challenging countries in the world                                                                                                                         Ambassades in early 2016, to tenants             located in areas to the south of the lagoon
                                                                                                                                                                                                                                                                                                                                   Gabo
                                     Gabon                      in which to do business. As a landlocked                                                                                                                        including GE, Pfizer and ExxonMobil,             near the port, such as Vridi, Zones 3 and 4,
             rather than commercial offices. There is
             a large area of the city which has been                                   Rwanda
                                                                country with a relatively    small and low-     N’Djamena prime rents and yields                        Abidjan prime rents and yields                          established a new benchmark for prime            and Koumassi. These traditional industrial
                                                               Zaire
                                                                income   population,   Chad   is not a target                                                                                                                                                                    areas are essentially at full capacity.
             designated as the Cité Internationale des                                                                                                                                                                          rents in Abidjan of XOF17,000/sq m/
                                                                market for international manufacturers,                           Prime rents               Prime        Prime rents                                   Prime    month. This confirmed Abidjan as the             Occupiers are either in legacy real estate
             Affaires, but it is unclear if this will present
                                                                and activity mainly involves local              		                                          yields      		                                             yields
             opportunities to corporate occupiers and,                                                                                                                                                                          market with the fastest rental growth in         or need fast access to the port for import/
                                                                                                     Tanzania
                                                                businesses involved with agri-processing.
             if it does, this will not happen for several                                                        Offices          US$55/sq m/month           10%        Offices           US$32/sq m/month               9%     Africa over recent years. Several new office     export activity. To the north of the lagoon,
                                                                In N’Djamena, industrial activity is mostly
             years. The city’s office market is basic,                                                           Retail           US$46.50/sq m/month 9.5%              Retail            US$46.50/sq m/month 8.75%             developments have been announced by              the most important industrial zone is
                                                                concentrated around Farcha where some
             and purpose-built offices are generally not                                                         Industrial       US$3.75/sq m/month         13%        Industrial        US$6.50/sq m/month            12%     international developers, notably Actis’         Yopougon, where the majority of
                                                                of the oil companies have bases. There is
             suitable for international companies. As                                                            Residential US$4,600/month*                   8%       Residential       US$3,700/month*                8%     Renaissance Plaza project in Plateau, but        businesses are larger users processing
                                                                significant oil activity in the south and west
             a result, such operations often work out           of the country, where ExxonMobil has large                                                                                                                      no significant new supply will come to the       local products. International companies
                                                                                                                Source: Knight Frank LLP                                Source: Knight Frank LLP
             of hotels and apartments where rents can                                                                                                                                                                           market until at least 2018, putting further      in this location include Nestlé and Cargill.
             be very high at XAF30,000/sq m/month-
                                                        Angola operations. However, the government has          *4 bedroom executive house – prime location             *4 bedroom executive house – prime location
                                                                                                                                                                                                                                upward pressure on rents. Development            Further north, Heineken and CFAO are
                                                                a history of tense relations with foreign
                                                                                                      Malawi
             plus. However, the local rate for offices is       oil companies Zambia
                                                                                 and it recently imposed                                                                                                                        tends to be focused on Plateau, which is         building a new brewery on the road to
             around one-third, or less, of this. The US         on ExxonMobil a fine equivalent to seven                                                                                                                        the established CBD where skyscraper             Yamoussoukro, which will open in 2017
             Embassy’s relocation to Dembé/Chagoua              times the country’s GDP for the alleged         Contact                                                 Contact                                                 construction is permitted, but many              and give some critical mass to the proposed
             is likely to spur the movement of other            non-payment of taxes.                   Mozambique
                                                                                                                Peter Welborn, Managing Director, Africa                Peter Welborn, Managing Director, Africa                international companies prefer Marcory           PPP-funded PK24 industrial zone.
             administrative functions to this area of                                                           +44 20 7861 1200                                        +44 20 7861 1200                                        and Cocody.
                                                                                     Zimbabwe                   peter.welborn@knightfrank.com
             the city.                               Namibia Residential market                                             Madagascar                                  peter.welborn@knightfrank.com                                                                            Residential market
                                                                N’Djamena saw a surge in the                                                                                                                                    Retail market                                    Upmarket residential development tends
             Retail market                                                                                                                                  Mauritius                                                                                                            to focus on Zone 4/Bietry to the south,
                                                                development
                                                                     Botswana  of high-end villas and hotels                                                                                                                    The opening of CFAO/Carrefour’s PlaYce
             There are no international retailers in            in the run-up to the 2015 African Union                                                                                                                         Marcory in December 2015 gave Abidjan            and Cocody and the Rivieras to the north.
             N’Djamena, and the formal retail market            summit, including a 60-villa compound at                                                                                                                        its first investment-grade mall, along with      Recent years have seen the development
             largely comprises small supermarkets               Sabangali, and a residential development                                                                                                                        a variety of new and mainly-French retail        of a significant volume of luxury apartment
                                                                alongside the Ledger Plaza hotel. However,                                                                                                                      brands. The same group is developing a           buildings, and this trend is continuing.
             selling imported products. Supermarket
                                                                the summit was cancelled due to the                                                                                                                                                                              The market was boosted by the return of
             brands include Modern Market,                                                                                                                                                                                      second mall to the north of the lagoon,
                                                                country’s economic crisis and, since                                                                                                                                                                             the African Development Bank to Abidjan
             Alimentation Générale and Alimentation                                                                                                                                                                             known as PlaYce Palmeraie, which is
                                                                then,South    Africa
                                                                       construction  activity has almost                                                                                                                                                                         in 2014, but with the bank now starting a
             La Tchadienne. The most significant                                                                                                                                                                                progressing quickly and will open in 2017.
                                                                entirely halted. At the top end of the                                                                                                                                                                           process of “decentralisation”, high-end
             retail and commercial street in the city is                                                                                                                                                                        The nearby Abidjan Mall opened in August
                                                                market, property is generally developed                                                                                                                                                                          residential demand may be negatively
             Avenue Charles de Gaulle. In early 2016,           for owner-occupation or for leasing to                                                                                                                          2016, adding further to the recent rapid         impacted. Increased development
             N’Djamena’s first mall opened opposite             expatriates. The expatriate leasing market                                                                                                                      growth of Abidjan’s mall sector, which is        outside of Abidjan is being encouraged
             the Cité Internationale des Affaires,              is currently dominated by the diplomatic                                                                                                                        now significantly ahead of other markets         by improvements to roads and other
             anchored by a 2,600 sq m Modern                    sector as oil companies have downsized                                                                                                                          in Francophone Africa. In the immediate          infrastructure. Most of this is at the affordable
             Market. However, this is still a fairly basic      operations. Prime residential rents are                                                                                                                         future, any further construction activity is     end of the market, with small plots being
             development by international standards,            around XAF1.75-2.5 million/month, which                                                                                                                         likely to comprise the upgrading of older        bought for the construction of owner-
             being essentially ground floor space               is slightly down on a year ago, and the                                                                                                                         centres and new development in more              occupied housing, but there has also been
                                                                                                                     New housing next to Ledger Plaza, N’Djamena          PlaYce Marcory, Abidjan
             under apartments.                                  market is generally stagnant.                                                                                                                                   peripheral locations such as Yopougon.           a significant amount of speculative activity.

             18                                                                                                                                                                                                                                                                                                              19
Mali                                                                                                                                                                                                                                      AFRICA REPORT 2017/18                           RESEARCH
                        Niger
                                                                       Sudan               Eritrea
                                              Chad

                                                                                                            Djibouti

            DEMOCRATIC REPUBLIC OF THE CONGO                                                                                                                                                                                                                                                                   EGYPT
          Benin
       Togo          Nigeria
                                              Central African                                 Ethiopia
                                                Republic              South Sudan
Ghana
                                                                                                                                                                                                                            Tunisia
                           Cameroon                                                                          Key facts                                                   Morocco Key facts                                                                                              Alexandria
                                                                                Uganda                     Somalia
                 Equatorial
                                    Republic
                                                    DEMOCRATIC                              Kenya             Population                      77.3 million                         Population                      91.5 million                                                          Giza     Cairo
                  Guinea
                                     of the         REPUBLIC OF                                               Major cities:                                                        Major cities:
                               Gabon Congo          THE CONGO                                                 Kinshasa                        11.6 million                         Cairo                           18.8 million
                                                                            Rwanda                            Lubumbashi                      2.1 million                          AlexandriaAlgeria               4.8 million
                                                                                                              Mbuji-Mayi                      2.0 million                          Giza                            3.6 million
                                                                            Burundi                           Kananga
                                                                                                                                             Western
                                                                                                                                              1.2 million                                                                                          Libya                           EGYPT
                                                                                                                                                                                   Official languages              Arabic
                                           Kinshasa        Kananga
                                                                                                              Official languages
                                                                                                                                              Sahara
                                                                                                                                              French
                                                               Mbuji-Mayi          Tanzania                                                                                        Total area                      1,001,450 sq km
                                                                                                              Total area                      2,344,858 sq km                      GDP growth (2016)               3.8%
                                                                                                              GDP growth (2016)               3.9%                                 Key export                      Petroleum
                                                            Lubumbashi                                        Key export                      Copper                               Currency	
                                                                                                                                                                                            Egyptian Pound
                                                                                                              Currency	     Mauritania
                                                                                                                       Congolese Franc                                                      (EGP)
                                            Angola                                                                     (CDF)                                                       EIU country risk                C
                                                                                                              EIU country risk       D                                           rating (E=most risky)
                                                                                                                                                                                Mali
                                                               Zambia                  Malawi                 rating (E=most risky)		                                              World Bank Doing                122
            Office market                                    Industrial marketMozambique                     World Bank Doing
                                                                                                                                     Senegal
                                                                                                                                         177                                       Business rank                                          Office market                                   the currency devaluation will have on
                                                                                                                                                                                                                                  Niger                                                   consumer spending. No new    Eritrea
                                                                                                                                                                                                                                                                                                                          malls were
                                                                                                             Business rank                                                         (out of 190 countries)                               A major issue affecting all property market
            Office development accelerated after the        Historically,  prime industrial property
                                                                       Zimbabwe                                           Gambia                                                                                                                                                          delivered to the Cairo market in 2016,
            presidential elections in 2011, but  market                                                      (out of 190 countries)
                                                                                                           Madagascar
                                          Namibia           has  been   located in the city centre and                                                                                                                                  sectors is the floating of the Egyptian
            activity has more recently slowed due to        Gombe, resulting in relatively high rents.
                                                                                                                          Guinea                                                                                                                      Chad                                and the opening of the massive Mall of
                                                                                                                                                                                                                                                                                          Sudan
                                                                                                                                                                                                                                        pound, which    happened in November
            uncertainty caused by the postponement Botswana
                                                                                                                          Mauritius                                                                                                                                                       Egypt (165,000 sq m GLA) was put back
                                                            However, more recent development                                                                                                                                            2016 and led to a sharp devaluation
            of the next elections from 2016 to 2017.        has generally occurred in the east of the         Kinshasa prime rentsGuinea
                                                                                                                          Bissau    and yields                                   Cairo prime rents and yields                           against the US dollar. As a result, where         to 2017. Prime rents for small retail units
            New occupiers entering the Kinshasa             city, in areas between the port and the                                                                                                                                     rents are payable by local companies              can be in excess of US$100/sq m/month,
            market are rare, resulting in weak demand       international airport. Industrial property         Prime rents Sierra                            Prime                         Benin   Prime rents                  Prime                                                     but rates for larger units are typically in the
                                                                                                              		                                             yields              		                                             yields
                                                                                                                                                                                                                                        at a dollar equivalent rate, they have
            for the space that is currently available.      is clustered around the Route des Poids                                                                                                                                                                                       order of US$50-70/sq m/month.
                                                                                                                                                                                     Togo                           Nigeria             effectively doubled in local currency
            The prime area for offices is in the north of
                                                       SouthLourds,
                                                              Africa particularly in Kingabwa and              Offices          US$25/sq m/month              12%     Ivory       Offices          US$35/sq m/month            10.5%                                                                                       Ethiopia
                                                                                                                                           Leone                                                                                        terms. Some landlords have been forced
            the city, with many of the most prominent       Limete. Medium and large industrial                Retail           US$25/sq m/month Liberia
                                                                                                                                                     12%                      Ghana
                                                                                                                                                                                  Retail           US$70/sq m/month              8.5%   to cap the rate at which their rents are           Industrial market
            buildings being along Boulevard du              properties are generally owner-occupied,                                                                  Coast
                                                                                                               Industrial       US$15/sq m/month              15%                 Industrial       US$3.50/sq m/month            12%    converted to the local currency and it is          The Industrial Development Authority
            30 Juin. International companies with           there is little speculative development, and                                                                                                                                          Central Africa Republic
            a presence include Ericsson, Orange,                                                               Residential      US$10,000/month*              12%                 Residential US$3,500/month*                    7.5%   likely to be some time before the market           continues to control and promote new
                                                            the leasing market mostly comprises basic                                                                                                                          Camaroon stabilises. Cairo’s main office areas are
            Citibank, Elf, Vodacom, Nestlé and                                                                Source: Knight Frank LLP                                           Source: Knight Frank LLP                                                                                  industrial activity in Egypt. It owns
                                                            second-hand units. Industrial rents in the
            Alcatel-Lucent. Most of these have offices                                                        *4 bedroom executive house – prime location                        *4 bedroom executive house – prime location            Downtown and New Cairo to the east                 significant areas of land which are
                                                            newer areas drop by as much as 50%
            in Gombe, which is regarded as the most                                                                                                                                                                                     of the city. The latter offers commercial          available for sale or lease. Land in
                                                            compared with the city centre. Much of                                                                                                                           Equatorial                                                                Uganda
            secure area. Office buildings in Kinshasa                                                                                                                                                                                   and residential accommodation in a less            outlying areas such as Upper Egypt may
                                                            the centrally-located industrial space can
            are generally of a poor standard and many                                                                                                                                                                                   congested environment than the city                                                  Kenya
                                                            be expected to be gradually converted to          Contact                                                            Contact                                      Guinea centre                                                even be offered free, while in other areas
            lack air conditioning or elevators.                                                               Tim Ware, Managing Director, Zambia                                Peter Welborn, Managing Director, Africa      Gabon        Congoand a number of major companies
                                                                                                                                                                                                                                                                                           land is available at discounted rates.
                                                            office or residential use.
                                                                                                              +260 211 250 538/250 683                                           +44 20 7861 1200                                       and   bank  headquarters are now located
                                                                                                                                                                                                                                                                                           Rents for industrial buildings are in the
            Retail market                                                                                     +260 211 255 992-3                                                 peter.welborn@knightfrank.com                          in this area. The government appears to             Rwanda
                                                             Residential market                               tim.ware@zm.knightfrank.com                                                                                               be pressing ahead with Zaire
                                                                                                                                                                                                                                                                   plans to create
                                                                                                                                                                                                                                                                                           region of US$2/sq m/month, and for
            The Kinshasa retail market has shown                                                                                                                                                                                                                                           warehousing are in the range of
            limited progress in recent years. The            With security concerns becoming more                                                                                                                                       a new administrative capital to the east
                                                             acute, residential values have risen                                                                                                                                                                                          US$3-3.50/sq m/month.
            10,000 sq m Le Premier Shopping Mall                                                                                                                                                                                        of New Cairo which may cause a further
            opened on Avenue de la Justice in                dramatically in the parts of Kinshasa                                                                                                                                      shift in focus away from the city centre.
            2016, while Conimmo has plans to build           regarded as being safe. There has                                                                                                                                          Prime city centre office rents are in the
                                                                                                                                                                                                                                                                                           ResidentialTanzania
                                                                                                                                                                                                                                                                                                       market
            the 32,000 sq m City Mall in Gombe.              been a significant volume of apartment                                                                                                                                     region of US$30-35/sq m/month, and                Developers have reported good take-up
            However, the massive and unfinished              development, but the availability of                                                                                                                                       drop to around US$25/sq m/month in New            of residential units in high quality new
            Gare Centrale mixed-use development              standalone houses in good, secure                                                                                                                                                                                            developments, although to some extent
                                                                                                                                                                                                                                        Cairo, albeit prime schemes such as Cairo
            provides a reminder of the difficulties          locations remains limited. The best
                                                                                                                                                                                                                                        Festival City quote higher rates.                 this reflects the release of a decreased
            of developing in Kinshasa. Shoprite              residential areas are generally in the
                                                                                                                                                                                                                                                                                          number of units to the market. High-
            is the only major international retailer         north of the city and include Gombe,
                                                             Kintambo, Binza, Lingwala and Barumbu.
                                                                                                                                                                                                                                          RetailANGOLA
                                                                                                                                                                                                                                                Market                                    end residential development is primarily
            in Kinshasa, having a supermarket on
                                                             A number of relatively small developments                                                                                                                                    The floating of the local currency has          focused on 6th of October City and New
            Avenue de l’OUA. Rents for ground                                                                                                                                                                                                                                                               Malawi
            floor retail space are at a similar level to     targeting expatriates have been completed                                                                                                                                    caused additional issues for retailers, as      Cairo. The devaluation of the Egyptian
                                                                                                                                                                                                                                                                                        Zambia
            office rents, highlighting the immaturity of     in recent years, and these have been                                                                                                                                         they have not just seen rents rise in local     pound will create issues in this sector as
            the sector as a higher value is attached         successfully leased. Prime rents are in the                                                                                                                                  currency terms, but the cost of imported        developers face increased costs in local
            to ground floor retail units in more             region of US$10,000/month, but drop off                                                                                                                                      goods has also increased. There is              currency terms and, as a result, may seek
                                                                                                                Immeuble Tilapia, Kinshasa                                          Maadi Technology Park, Cairo
            advanced markets.                                dramatically outside of the safe areas.                                                                                                                                      further uncertainty over the impact that        to increase local currency prices.
                                                                                                                                                                                                                                                                                          Zimbabwe

            20                                                                                                                                                                                                                                                                                                                        21
                                                                                                                                                                                                                                                Namibia
You can also read