At a glance: Key findings from Africa Horizons report 2021

This past year has been a testament to the breadth of opportunities and market resilience that Africa continues to represent. From institutional investors, occupiers and landlords, this report seeks to fill in the knowledge gap that continues to persist across the continent. 

Market Resilience

Despite the pandemic, the case for investment across the continent is too compelling. Many of the key opportunities opening up to investors stem from demographic trends. The continent currently boasts the largest share of adults with mobile money accounts in the world, and with almost 60% of its population under the age of 25, tech adoption and the fintech space will continue to expand.

Growing competition between emerging powers such as China and the UAE and countries with longer-standing economic ties, such as the UK, US and France, in terms of FDI flows and to win lucrative investments and open up new trade, should put African nations and businesses in a stronger position to negotiate a bigger share in the profits.

As one of the hardest-hit sectors across the real estate market, the retail sector has remained resilient. Africa’s retailers were initially hit hard by the Covid-19 pandemic, but with the help of some innovative thinking they are already bouncing. Trends such as touch-free shopping, growth in neighbourhood malls and the changing dynamics between landlords and tenants have contributed towards the recovery of the sector.

Innovation

Innovation will be key in attracting funding and providing long-term social solutions to city residents across Africa. Nairobi is the top city in Africa for innovation and ranks among the top 100 globally. The city offers a good balance between the number of research institutions, available innovation funding and innovation activity (including start-up activity), as well as ease of doing business. It is closely followed by Cape Town, Kampala and Cairo respectively.

The move towards innovation will result in opportunities in the data centres market. The main drivers towards the growth of this asset class are anticipated to be the move towards localisation of data, rising demographics and the influx in capital focused on data centres. 

At the moment Africa continues to lag behind in terms of data centres capacity with leading markets such as Johannesburg and Nairobi recording total live IT power of 54.9MW and 19.04MW respectively compared to data centre hubs such as Dublin and London whose live IT power stands at 795.8MW and 728.25MW respectively.

The move towards ESG investing is not just occurring at a global level but in Africa as well. Rapid green growth has been witnessed across the continent underpinned by a range of factors. There are currently over 700 green buildings in Africa and we anticipate this number will grow by 50% by 2025.

Health and Wellness

There are changing attitudes towards homeownership in Africa especially across the youthful demographic. Leisure amenities, outdoor space and access to quality healthcare feature at the top of buyers’ wish lists across Africa. Buyers are now more likely to purchase a home in rural or coastal areas across different countries.

Employee health and wellbeing will now form a core aspect towards office re-occupancy across the continent. With many of the office schemes in the development pipeline in key markets across Africa expected to reflect these aspects, the flight to quality is set to remain a key trend. We anticipate this will provide greater stability across the prime office market in Africa which has suffered from a sharp supply-demand imbalance, widening vacancy rates and falling rents over the past year.

The spectrum for healthcare provision across Africa is now widening to include wellness. Between 2015 and 2017, 65 million wellness trips involving US$4.8 Billion in expenditure were made in Sub Saharan Africa. This number is set to rise with wellness opportunities for investment ranging from alternative medicine, nutrition planning to regenerative medicine.