Africa's real estate attracts global interest after Covid

According to the report, an unprecedented level of sovereign-level interest presents a unique opportunity for private and institutional investors to capitalise on emerging prospects within various real estate sectors, including data centres, manufacturing, environmental, social and governance (ESG), infrastructure developments, and agro-processing.

The report delves into these sectors, providing in-depth insights and identifying five standout investment opportunities.

It highlights Cairo as the newest addition to the firm's Africa network and North Africa's rising star, attracting considerable interest from Middle East sovereign wealth funds.

These funds have disclosed plans to invest up to $120 billion (Sh17 trillion) over the coming years.

According to the report, rapid urbanisation in Africa creates real estate investment opportunities as mega-cities grow, with a projected population of 145 million by 2030.

Securing funding for urban expansion remains challenging due to political instability and inadequate infrastructure, but opportunities exist in agriculture, data centres, and manufacturing sectors.

The demand for data centres in Africa surges due to online retail growth and logistics needs. Manufacturing potential in Africa, the report says, faces challenges but has growth opportunities through government policies and the African Continental Free Trade Area (AfCFTA).

ESG considerations are gaining momentum globally, and efforts are underway for sustainable financing and an ESG-focused mindset in Africa.

In the agro-processing sector in Africa, it found out that it grows with increased farming, crop diversification, and export opportunities.

Tremendous potential

Knight Frank Kenya Chief Executive Mark Dunford said there is "tremendous potential" for industrialisation in Africa, thus presenting an opportunity for its manufacturing industry to become one of the most dynamic globally.

"Notably, North Africa stands out as the most industrialised sub-region, where manufacturing contributes more than 20 percent to the Growth Domestic Product (GDP) of certain countries.

"In East Africa, notable strides have also been made towards industrialisation, exemplified by the manufacturing sector's share of 7.8 percent in Kenya's GDP and 8.2 percent in Tanzania's GDP as of 2022," he said.

On data centres, investors are capitalising on the surging demand in Africa, driven by online retail growth and logistical needs.

Data centres provide a cheaper and more efficient IT capability than inbuilt servers, aiding their popularity. They also offer cloud services, allowing organisations to focus on their core functions.

Africa's manufacturing potential faces obstacles such as limited energy access and inadequate infrastructure, but government policies, the AfCFTA, technological advancements, and industrial parks present opportunities for growth and competitiveness in the sector.

The ESG considerations, the report says, have gained momentum globally, but the African market still lags. Infrastructure development is crucial for driving progress in Africa but the report says it is fraught with challenges, such as poor transport connectivity and inadequate road and electricity infrastructure, impeding economic growth and productivity.

However, governments and relevant initiatives are cognisant of the importance of infrastructure investment and have undertaken projects across various sectors, including toll roads, renewable energy, ports, water utilities, and social infrastructure.

Agro-processing, which is expanding in Africa, is driven by food shortages during the pandemic and the need to reduce post-harvest losses.

Knight Frank's Africa research analyst Boniface Abudho said the growth of the agricultural industry stimulates demand for raw materials, thereby leading to new markets.

"Consequently, this generates income for farmers, enabling them to invest in equipment and adopt new technologies that enhance productivity," he said.