NAIROBI, KENYA: Multinational professional services firm PricewaterhouseCoopers (PwC) has released key trends expected to drive growth in real estate sector for the next five years. In its report titled Real Estate: Building the Future of Africa, the firm says the influence of government policy, industrialisation, export of natural resources, technology and infrastructure shortage will drive the growth. “Levels of investment in real estate in Africa are low by global standards, while significant challenges exist in exploiting potential opportunities,” says Ilse French, the PwC Africa Real Estate Leader. “Our research suggests the impact of certain trends across the world on Africa will be huge,” she noted.
According to the report, PwC says increased political stability on the continent and increased participation in local partnerships will continue to ease investors’ concerns relating to investing across Africa. “Collaborating with governments or involving a local partner in future real estate development in Africa will become more important to mitigate the risks. Governments and investment community will have to work together to fund and build cities and their infrastructure,” says the report. It says technology will also impact business and building practices as well as consumer behavior. Online technology is already having a significant impact on the finance banking industry across Africa with the rise of mobile banking. However the full impact of technology on real estate in Africa will only be felt in the medium to long term, as access to technology increase across the continent and traditional consumer culture in Africa begins to change. “Innovative and low-cost building technologies will also help make housing affordable,” says PwC in the report. The PwC report 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.
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 behavior 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.
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