May 31, 2015
According to the United Nations, by 2030, Africa and Asia will have higher numbers of urban dwellers than any other major area of the world. This rapid urbanization is affecting many cities in Africa, where the working population is young, increasingly affluent, educated and career-focused; as the younger population has more disposable income, they are relocating from urban areas, and gaining more purchasing power. In my experience, this results in a migration to the city, which in turn increases demand for not only houses, but improved infrastructure, retail and commercial spaces.
In Africa, this is greatly affecting the real estate market. In fact, the United Nations stated that Africa will experience a 16 percent rise in its urban population by 2050 – growing faster than any other region worldwide. Let’s look at Nigeria, a country at the heart of Africa’s urbanization. Africa’s most populous country has an estimated population of 170 million, and around half of these people live in cities. With this rapid urbanization, the demand for low- and middle-income housing is quickly growing. According to BGL Research, Nigeria needs around 16 million housing units to accommodate its ever growing population.
Or take Naivasha, a city northwest of Nairobi in Kenya. Naivasha has attracted a number of developers into the region. Tourist attractions in and around Naivasha, for example the Lake Naivasha, Hell’s Gate, Aberdare Hills and Longonot National Park have led to the town’s development as a popular getaway location, increasing demand for holiday homes in the area. The environment is conducive to both business and leisure, which, in addition to the availability of land, suggests an abundance of residential, commercial and industrial real estate investment opportunities.
The number of rural residents moving into cities each year is resulting in an increasing demand for property. A recent World Bank report estimated that Ghana’s urban population will reach 22 million in the next 15 years. According to the research, 65 percent of the country’s population will move to urban areas by 2030. This creates a huge opportunity for real estate professionals, particularly developers, to provide access to affordable housing in livable cities.
To support the growth of these cities, high-quality commercial, retail and residential real estate units are in high demand. Deloitte recently reported that the construction, transport and energy projects sector in Africa saw an investment increase of 46 percent by the end of 2014 – an enormous growth across the continent, with Central Africa experiencing a 117 percent increase in the value of construction projects for the year.
Urbanization in Africa can create new jobs, improving local infrastructure, and provide new opportunities for millions. Cities across the continent are expected to double in size – this will of course cause a number of challenges. Now it is important for the government bodies in these countries across Africa to step up, strengthen their planning and improve public infrastructure, including transportation, electricity, water, and affordable housing opportunities.
Source: Huffington Post