Transparency Rising: Real Estate and Africa’s Urban Growth

Author: Matthew McAuley Matthew McAuley

Sub-Saharan Africa has recently been identified as the top improving region for real estate market transparency by JLL’s Global Real Estate Transparency Index. Results from the Index, which measures real estate market transparency in 102 countries around the world, found that Kenya, Ghana, Nigeria, Zambia and Mauritius all made the list of top ten improvers this year. While many of these countries are at an early stage of their efforts to improve market transparency, tangible signs of progress can be seen in regulatory environments and market data availability across the region.

As governments seek to capitalise on growing international interest in Africa’s rapidly growing economies, a number of countries are pushing through changes which are laying the groundwork for more transparent commercial real estate markets. Recent regulatory improvements, such as the introduction of REITs’ legislation in South Africa and Kenya last year, have created, potentially, the eighth largest REIT market globally in South Africa and improved the transparency of the listed real estate sector in both countries. Governments in Uganda, Ghana, Nigeria and Kenya have also been working to improve the quality and coverage of land registry data, with the Kenyan government estimating that efforts toward digitisation of land registry data have already increased income from property tax ten-fold.

Meanwhile, the growing presence of international real estate consultants and domestic industry bodies is providing a new source of market data for the region. Examples such as the Kenya Property Developers Association annual State of Development Report highlight efforts being made to increase transparency by domestic real estate organisations, while the launch of an annual IPD index for Botswana is an indication of growing international interest in Africa’s real estate potential.

Much of the interest in Africa’s potential is focused on its major cities, where economic and population growth is creating markets of a global scale. Cities such as Lagos, Addis Ababa and Accra are among the fastest growing urban economies in the world, with growth averaging over 9% a year for the last five years. This is attracting interest from international corporations, with Greenfield’s investment into business services across Africa jumping by 375% last year.

Africa’s urban middle class is growing as well. The World Bank estimates that there are 130 million middle class households across Africa, most of them living in urban areas. In cities such as Lagos and Luanda the number of households earning more than $20,000 annually has been growing by more than 8% a year for the past five years, outstripping population growth. This new middle class is helping to create demand for new retailers and quality retail space.

Growth in Africa’s urban economies, populations and wealth is driving a need for more modern real estate, from offices to malls. International businesses and real estate investors are increasingly noticing this need and registering interest in the potential of Africa’s cities. Increasing real estate transparency, while still at an early stage, promises to accelerate the possibilities offered in Africa’s urban real estate markets.

Interested in learning more? The JLL Africa Interface provides an interactive map with a range of economic, demographic and real estate indicators for 40 of Africa’s largest cities, while JLL’s Africa Research Programme is analysing these trends as they impact the real estate landscape across the continent.

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