Properties used by manufacturing and production industries recorded the highest yields in Africa, growing at a 12 per cent average.
According to a study by Knight Frank, the growth in the industrial sector based real estate is despite the industry being “relatively undersupplied” amid an increase in demand due to various economic diversification initiatives adopted by governments in the continent.
The report projects increased demand for sophisticated and centralised warehousing facilities across the continent as a result of the growth of the online retail sector. Knight Frank Researcher for Africa Tilda Mwai called for innovation in the African real estate sector to help it adapt to change.
“As the real estate markets in Africa become increasingly sophisticated, innovation has been at the core. What started as a trickle, through the introduction of online search platforms, has become a wave of disruptive and cutting-edge technologies that continue to improve transparency and efficiency,” she said.
There about 500 co-working operations across African markets, 80 per cent of which have come up over the past two years according to the report.
Knight Frank Managing Director for the Middle East and Africa James Lewis said the sector continues to grow as evidenced by the increase in prime real estate demand across African countries.
Improvements in infrastructure and monetary integration are expected to result in the key cities in Africa developing as global business hubs, he noted.
“Real estate remains the most preferred asset for investment across the continent for investors in their hunt for yield. We anticipate a period of market correction and stabilisation in a majority of the markets in the short term but remarkable growth in the long term as Africa continues to grow,” said Lewis.
Knight Frank Kenya Managing Director Ben Woodhams noted that Nairobi has remained a major commercial hub and a favourite location for multinationals looking for regional headquarters.
This will see the capital city continue to see global occupier trends such as co-working and flexible spaces.
“The growth in the number of international developers and funds has led to increased segmentation among investors, with focus on specific asset classes including hospitality and affordable housing sectors and student housing,” said Woodhams.
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