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Five real estate trends and opportunities in Africa


Work-from-home has not replaced the office; corporate accommodation presents attractive potential; and industrial real estate continues to outperform. These are some of the property trends and opportunities on the continent, according to Niyi Adeleye, Standard Bank’s head of real estate finance for Africa, excluding South Africa. Here are highlights from his conversation with Jaco Maritz.

1. The office is not dead

Adeleye says the Covid-19 pandemic has not had a significant impact on demand for office properties in most of the countries he covers. “Employers continue to encourage a centre of commercial activity, which remains the office.” One of the reasons why office rentals have been more resilient is because working from home is a less attractive proposition in many African countries where there is unreliable business infrastructure, such as internet connectivity and electricity. The benefits of in-person collaboration is also more critical in complex environments.

2. Opportunity: housing solutions for international organisations

According to Adeleye, there is an opportunity to develop corporate accommodation projects anchored by multinational companies and international government entities operating in Africa. These organisations often have a presence in several African countries, and developers can therefore cater for their corporate residential needs in more than one market.

3. Industrial real estate the best performing sector

Industrial real estate in Standard Bank’s portfolio has broadly been the best performing and most resilient property sub-sector over the past few years. Kenya stood out in terms of performance while warehousing space catering for the agricultural sector in Côte d’Ivoire and Ghana has done well.

Whereas in the past, many manufacturers owned their factories and warehouses, there is a growing trend for companies to rent custom-built industrial space from professional developers. Property developers are also buying existing factory space from manufacturing companies and leasing it back to them, which allows manufacturers to free up capital to invest in their core business.

Multinational companies are also under increasing pressure to ensure their properties adhere to green-building standards, which pushes them to partner with professional developers that can deliver on these metrics.

Adeleye points to the emergence of industrial real estate developers focusing on specific segments – such as cold storage or warehousing – and offering these solutions to their clients across several countries.

He adds that overall, there remains a dearth of A-grade industrial real estate on the continent.

4. Shopping centres still viable but require a measured approach

In 2021, South African grocery chain Shoprite announced the sale of its 25 stores in Nigeria; it has also discontinued operations in UgandaKenya and Madagascar. In addition, Walmart-owned Massmart revealed its intention to sell its once-prized Game stores in five countries on the continent. Other South African stores like Mr Price, Truworths and Woolworths have also pulled back from several markets north of the Limpopo. This, together with inflation, higher import costs owing to the strong US dollar, and the continuing prevalence of informal trade has led some to question the viability of large shopping malls in many African markets.

Adeleye says the retreat of South African retailers doesn’t mean there is not a viable retail market, and points to the growth of French chain Carrefour and Turkish fashion brand LC Waikiki in several countries. The growth of domestic operators in countries like Nigeria, which often have a better understanding of local realities, is also a positive sign.

He believes there is still a structural lack of modern retail space in most of West and East Africa. However, rental rates must be more in step with local spending power. Over the past two decades, many of the mall developments in countries like Ghana, Nigeria and Kenya were funded by private equity money, which in some cases demanded unsustainable rents. He adds that shopping centres should be developed in smaller stages and expanded along with demand. Tenant selection also has to reflect domestic brand affiliations. West African consumers have a greater affinity for European and American retailers than South African shopkeepers, whereas consumers in the SADC region gravitate towards South African retailers as a result of the proximity. For instance, while Shoprite has pulled out of some East and West African markets, it maintains a presence in countries like Angola, Zambia, Botswana and Mozambique.

5. Growth markets: East Africa to lead the charge

Adeleye expects East African countries to show the greatest growth in real estate. In Kenya, the recent peaceful conclusion of its presidential election has bolstered investment sentiment while greater infrastructure spend is a positive for the property industry. Neighbouring Uganda’s emerging oil industry is anticipated to have positive knock-on effects on the sector.

In Southern Africa, a more stable Zambian economy is buoyed by a recent IMF loan approval and Adeleye adds the development of Mozambique’s natural gas resources could spur growth in real estate.

In Nigeria, a shortage of US dollars has slowed down real estate investment activity. However, the country was in a similar position in the mid-2010s and Adeleye says the market could turn swiftly if these challenges are resolved as the shortages are policy driven. There has also been an uptick in real estate activity in Côte d’Ivoire after a lull of a few years.


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