Real Estate Themes in Africa

April 30, 2024
3 mins read

Adapting for Future Climate Challenges

Environmental, Social, and Governance (ESG) considerations are gaining increased prominence in the African real estate sector. The escalation of billion-dollar climate events and the implementation of stricter government regulations and ESG mandates, particularly in leading commercial Real Estate markets, underscore the growing importance of prioritizing ESG for property owners and managers. Stakeholders are increasingly committing to net-zero targets, advocating for sustainable practices, and actively seeking environmentally friendly properties. In South Africa, sustainable real estate investment is on the rise despite challenges, propelled by the influence of green financing and transformative investment trends reshaping the traditional real estate landscape. The emphasis on energy efficiency and environmental sustainability is increasingly becoming a pivotal factor in investment decisions, with more properties attaining green building certifications. (3)

Navigating Real Estate through AI

The African real estate industry is poised for a transformative shift through the integration of artificial intelligence (AI) across crucial aspects. AI-driven valuation and pricing strategies enhance market transparency, offering precise property valuations and empowering buyers and sellers with insightful decision-making tools. Predictive analytics in demand forecasting enables developers to make informed choices, minimizing investment risks. AI facilitates swift market analysis, providing investors with data-driven insights to discern trends and seize opportunities with accuracy. Virtual reality (VR) and augmented reality (AR) technologies driven by AI redefine property viewing experiences, making the process more efficient and accessible. Additionally, AI plays a pivotal role in risk assessment, fraud detection, smart property management, automated document processing, and predictive maintenance, contributing to a more secure, efficient, and technologically advanced future for the African real estate market. Embracing these advancements positions industry players as leaders, enabling them to adapt to evolving market dynamics and meet the changing demands of buyers and sellers. 

Hospitality Market Leading the Real Estate Sector’s Activity

The hospitality market takes center stage in African real estate, witnessing heightened transaction volumes and a flourishing development pipeline. Notably, Kenya sees a substantial investment of USD 44.4 million from 2021 to 2023, marked by acquisitions such as Actis obtaining three City Lodge hotels in 2021 and Kasada securing Crowne Plaza Hotel in 2022. The vibrant development pipeline projects 482 hotels in 2023, with Egypt, Nigeria, and Morocco leading the development activity with 103, 42, and 46 hotels, respectively. Despite economic challenges, both Egypt and Nigeria continue to attract significant hotel investment interest. This trend is expected to persist as developers aim to formalize the hospitality market and cater to growing demand from international and domestic markets. The post-pandemic shift in industries, including fintech and entertainment, transforms the global tourism market, contributing to a 51% YoY increase in international tourist arrivals in Africa. Lagos signed 11 new hotel deals in 2022 alone. Despite economic hardships, Nigeria secured the second-highest hotel investment. By September 2023, key performance indicators reflect a dynamic hospitality sector in Africa, with various destinations exceeding 2019 occupancy levels. (8) Sub-Saharan Africa reports a 25% increase in average rates, while North Africa exhibits a remarkable 77% surge. Emerging markets like Rwanda, Nairobi, and Morocco show promising growth, and the forecast anticipates occupied room nights surpassing pre-COVID levels by the end of 2024, with major cities like Abidjan and Abuja projected to achieve indexes close to 150% by 2025 compared to 2019. (9) Exemplifying this trend, Lakowe Lakes Golf and Country Estate in Lagos offers a luxurious retreat experience.  This exclusive estate combines a world-class 18-hole golf course with stunning lakeside residences and a 5-star hospitality complex, attracting both business and leisure travelers seeking a sophisticated escape. The occupancy rate at Lakowe Lakes Golf and Country Estate has grown from 49% to 69% between 2021 and 2023.

In summary, the African real estate sector is undergoing significant transformations driven by environmental, social, and governance (ESG) considerations, with stakeholders increasingly prioritizing sustainable practices and net-zero targets. Moreover, the integration of artificial intelligence (AI) is revolutionizing various aspects of the industry, from valuation and pricing strategies to risk assessment and property management, leading to a more efficient and technologically advanced future. Additionally, the hospitality market emerges as a key player in African real estate, experiencing heightened transaction volumes and a flourishing development pipeline, with destinations like Kenya, Egypt, Nigeria, and Morocco attracting significant investment interest and witnessing promising growth despite economic challenges. This trend is expected to persist as the industry adapts to post-pandemic shifts and continues to cater to growing demand from international and domestic markets.

Tade Adeniyi

Commercial Strategy

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