As retailers, corporate and investors target growing urban centres in countries with solid GDP growth prospects, JLL has argued that now is the time for Africa to step up” in the global commercial real estate market.
The firm highlighted Angola’s Luanda, Mozambique’s Maputo, Alexandria and Cairo in Egypt, Abuja and Lagos in Nigeria, Addis Ababa in Ethiopia, Cape Town, Durban and Johannesburg in South Africa, Accra in Ghana, Dar es Salaam in Tanzania, Mombasa and Nairobi in Kenya ,Tunis in Tunisia, Casablanca, Rabat, Tangier and Marrakech in Morocco and Lusaka in Zambia as all promising investment locations.
Together, the 20 cities represent an urban population of 70 million people, while 11 of the cities are located in just four countries: Egypt, where Cairo is a “key target for developers, despite political and economic uncertainties”, Morocco, where Casablanca is “an emerging outsourcing hub”, Nigeria, where Lagos is “witnessing rapid GDP growth at over 7 percent” and South Africa, the continent’s only transparent real estate market.
Indeed, poor transparency constrains many of the real estate markets, warns JLL, but there are “potentially huge pay-offs” if the cities can improve regulatory environments and transaction processes.
Mark Bradford, Managing Director, Jones Lang LaSalle South Africa, commented: “The last 15 years have seen economies like Brazil and China emerge and lead global growth. This was because they possessed the right balance between the consumer growth opportunity and appropriate operational infrastructure which attracted retailers. We feel now is the time for Africa to step up and take centre stage for the next 15 years.”
According to JLL, Africa’s strengthening regional economies and improving operating environment, rapid urbanisation and emerging middle class consumerism present strong opportunities for established international retailers to expand their footprints and enter new markets.
“This influx of retailers is really the start of the process. It encourages retail real estate developers to build better quality shopping malls, which encourages investors who see the growing development cycle. In South Africa, total commercial real estate investment volumes were USD 4.5 billion over 2011 and 2012, of which USD 2.2 billion was focussed on retail. However, this retail component was dominated by domestic investors, with only 20% of retail real estate investment being cross-border, involving overseas partners. This compares to the mature real estate markets of Europe such as the UK, France and Germany, where around half of retail real estate investment is cross-border in nature. The question is, are we ready for the next wave of global investment?” added Bradford.