In 2023, Africa's real estate investment volume reached $1 billion, representing a mere 0.15% of the global real estate market, which totalled $684 billion.
This is highlighted in the newly released “African Real Estate Capital Trends” report by Estate Intel, an African real estate market intelligence platform.
The report also revealed that Africa had the lowest real estate investment volume in 2023 at $1 billion, with the Middle East and South America also recording relatively low figures at $2 billion and $4 billion, respectively.
In stark contrast, North America led with $373 billion, followed by Europe at $162 billion, and the Asia-Pacific region at $140 billion.
Significant real estate investments in Africa in 2023 were driven by notable projects in countries such as South Africa and Kenya.
Key developments in South Africa included the Sam Ntuli Mall and the Standard and Nedbank buildings, while in Kenya, major projects such as the Highway House and Yaya Centre contributed to the investment volume.
According to the report, Southern Africa led with a total real estate investment volume of $21.5 billion during this 13-year period, predominantly in the commercial and industrial sectors.
South Africa is the major contributor, which is more than 90% of the region’s market.
One significant finding is the shift from the traditional build, stabilize, and exit private equity strategy initially favoured by many African institutional investors.
Slow growth in secondary market activity and the volatile nature of African real estate markets have prompted investors to adopt strategies focused on existing income-producing assets.
This transition, which started around 2016, has led to a decline in standard real estate fund closes and a rise in funds with income or hybrid strategies.
Growth in Green & ESG-Linked Property Finance
The ESG agenda has become increasingly influential in the African real estate capital landscape. Green and ESG-linked financing for real estate transactions has grown by an annual average of 41% since 2018, reaching a cumulative total of $4.2 billion by mid-2024.
Leading Markets
Over the past two decades, Africa has seen up to $30 billion worth of real estate transactions. Major cities in South Africa, Nigeria, and Egypt have been at the forefront due to their robust property markets and status as business hubs.
South Africa, in particular, benefits from strong capital markets. Additionally, smaller economies like Mauritius and Mozambique have attracted substantial institutional capital, especially in the hospitality and industrial sectors.
Institutional interest has historically been strong in the hospitality, retail, and office sectors, with investment volumes in these areas growing by an average of 22% per annum since 2010.
Outside of South Africa, the hospitality sector accounts for the majority of activity in terms of both value and transaction count. However, interest in office and retail sectors has recently declined due to shifting lifestyle trends, resulting in stagnant growth rates. Despite an increase in office market investment value in 2024, deal volumes remain low.
Emergence of Data Centres
Since 2020, there has been a noticeable increase in investments in data centres. One of the largest transactions in this sector was the acquisition of the Etix Centre by Orange Maroc in Morocco, valued at $66 million.
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