Understanding Africa’s Real Estate Market
Africa’s real estate markets have laggedbehind compared to other developed economies. According to a report released by Mansiondeal - Kenya’s biggest online Karen real estate company, the prices of real estate continue to dip as the whole sector lags behind. The question remains why? Africa is a diverse continent with a wide range of different ecosystems that is contingent geographically, socially, economically and culturally. These factors are identified as the potential risks that threaten the growth and sustainability of Africa’s real estate markets. However, despite these factors, Africa is still a point of interest. Researchers have carried out several studies in trying to understand Africa’s real estate markets. This has been keenly motivated by potential opportunities that remain untapped in Africa real estate markets.
Focus on the opportunities in Africa Real Estate market
Fast growing cities in Africa such as Nairobi, Lagos, Johannesburg and Cairo have presented a broad range of return opportunities. The demand for housing due to increased population as a result of rural-urban migration have promoted the rise of real estate markets profits and sustainability in Africa.
2. The Global investable Real Estate universe
This aspect is a perfect opportunity for Africa’s real estate markets as a result of expansion, especially foreign investors who have ventured in Africa’s real estate investment as a developing economy. Technology and innovation have greatly encouraged this factor hence driving the real estate markets in Africa higher encouraging more opportunities and accumulation of profits.
3. Focus on Emerging Issues
Real estate markets have a broad range of risks that emerge everyday. The competition for prime assets will act as a balance for collaboration between the private and public sector which will help create a leverage on creation of opportunities and the formulation of friendly laws and policies regulating real estate markets.
Challenges facing Real Estate Markets in Africa
Despite Africa’s real estate market opportunities, the sector is also experiencing several loopholes which has greatly discouraged the development of the sector. Factors including lack of proper documentation and digitalization of real estate have been identified as areas of concern that need to be addressed in order to boost Africa's real estate markets.
1. Increased Rural-Urban migration
There has been an increased rural urban migration trend in Africa whereby citizens move to urban areas in search for greener pastures. This factor has however been misused by real estate agents by capitalizing on overpopulation where they hike rents and buying prices for houses.
2. Poor Building Quality
Credibility and quality in construction is a key aspect in real estate markets .Most of the real estate constructions are not done by qualified individuals .This is evident by the collapsing of buildings especially in urban areas thus weakening the image and growth of real estate markets.
3. Political Instability and Changing government policies
Different governments in Africa have different laws and policies governing real estate. Changing of laws and policies will greatly impact real estate growth. This concept is connected to the lack of economic diversity and volatility of local currencies against the US dollar.
The future of Africa’sReal Estate Markets
Africa real estate markets have untapped opportunities which can only be utilized by putting emphasis on technology and innovation which will assure the digitalization of real estate markets to match the global real estate market standards.