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Report: PwC outlines key real estate trends

FINANCIAL STANDARD
By Kagure Gacheche | March 24th 2015

Global megatrends, such as rapid urbanisation and demographic changes, will drive growth in the real estate industry across Africa over the next five years, according to audit firm PwC.

Investors around the world are seeing the growth potential of Africa, in particular its substantial demographic edge, economic growth, improving political stability and ongoing investments in infrastructure.

The PwC publication, Real Estate: Building the Future of Africa, provided an assessment of the current state of the real estate industry across Africa through 10 countries that provide insight into the local, regional and global influences on real estate markets.

The report found the demand for high-quality retail, office and industrial space continues to outstrip supply as international and local occupiers respond to new economic opportunities.

Consumer behaviour

Huge shortfalls in residential property across the continent are also expected to give rise to private investment on a grand scale. Further, a lack of local funding for infrastructure projects provides a platform for new private partnerships with the public sector.

Shifting demographic trends and changes in consumer behaviour are also likely to create huge demand for new and different real estate by 2020.

According to the report, we will also see the entry of more specialist investors into the market. Projected forecasts of 20 per cent net annual returns from investing in shopping malls, office blocks or industrial complexes in countries across the continent continue to draw in new investors.

Eight drivers for growth were identified:

1. Africa’s young population, and the expansion of current cities and rise of new ones

2. Industrialisation accompanied by rapid growth in the retail sector

3. The export of natural resources and agriculture, though this will expose certain countries to increased risk

4. Infrastructure shortages creating opportunities for investment

5. The influence of state policy and legislation on the decision to invest will increase, while local partnerships will become increasingly important

6. Continued advancement within pension fund, stock exchange and banking regimes will facilitate investment

7. Technology will impact business and building practises, as well as consumer behaviour

8. Sustainability will become entrenched in building design to meet occupier requirements

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