Africa’s Imminent Real Estate Boom: Driven by Fast Growing Population

There is nothing that drives demand like numbers. The larger the population the higher the demand for infrastructure and property services. Africa seems to have the number on its side.

Firstly, Africa is a large continent in size. Africa is larger than the Unite States of America, China, India, Japan and most parts of Europe all combined. Africa is 11 million squares miles. So, Africa is a massive continent.

The African continent has the world’s highest birth and fertility rates making it the continent with the fastest growing population. The population is expected to double to over 2 billion by 2050.

The top 10 countries with the highest birth rates are all in Sub-Saharan Africa. The average woman gives birth to about five children in her lifetime. Countries like Niger have an average birth rate as high as seven. On the other hand western countries have birth rates of 1 or less.

Another example, at the moment, annually, there are more babied born in Nigeria, one African country, than those born in the whole of eastern Europe. And these babies are growing up to be soon adults.

Since property is a basic need this high population growth is the major reason for the huge demand for infrastructure and property in Africa. This includes the homes, business facilities, social facilities and related infrastructure services.

In most of the African towns and cities the demand for decent housing exceeds supply. This has resulted in;

• informal settlements to mushroom around cities,
• informal settlements to pop out close to sources of employment and
• informal structures to be erected in back yards in urban areas.

Governments and municipalities have master plans that lack resources (capital and human) for implementation. They are battling to invest in public housing projects to reduce the deficit in many towns and cities. This has created opportunities for private sector investment.

Recently, in February 2019, the City of Johannesburg introduce a policy in which it is forcing private developers to allocate 30% of their housing units for affordable housing. Although this is still to be tested, it shows how desperate local authorities are to provide housing.

Due to the low level of development in Africa, the bulk of the infrastructure and housing needs falls under the low-income group. This creates a challenging task for private investors who want to service this housing market.

The high income group tends to be able to take care of itself due to affordability that attracts investors. However the demand at this level is not as high. Hence private investors are targeting the middle class. The demand is growing at a fast rate as the population of Africa’s middle class grows.

The provision of housing in Africa is not just a race against time, it is a race against the fastest growing population in the whole. 

Next time we will look at how the high urbanisation rate is driving Africa’s Real Estate boom.