Sub-Saharan Africa has 'Real Potential'

Jonathan Yach, MD of Broll Kenya says while returns apparent in Africa beckon, investors want to ensure that growth is a sure thing.

Sub-Saharan African economies are tipped as locations where property investors should look to for real growth in the next decade.

Sub-Saharan Africa has typically been classified as a natural-resource play for foreign investors.

Economic growth in the region is set to accelerate during the next couple of years, bolstered by robust domestic demand, the global recovery, and rising investment inflows, according to World Bank's latest ‘Global Economic Prospects’ report.

It said that growth in the region would accelerate to 4.9% this year from 4.4% last year, quickening to 5.2% next year and 5.4% in 2015.

Africa is now the second-fastest growing region in the world and those estimates are not far behind the bank’s projections for the pace of expansion in the developing world overall, which it puts at 5.1% this year and 5.6% for both next year and 2015.

In tandem with the broader growth story, interest in developing the continent's property sector is booming.

As the economic hub of East Africa, with sound macroeconomic and political policy in place, Kenya is attracting multinational companies. Nairobi is proving increasingly popular for corporate head offices on the continent and in the region, according to Malcolm Horne, Group CEO of Broll Property Group.

This is driving the demand for support from real estate services.

“Kenya’s property market is very sophisticated, and competitive and full of prospects,” says Jonathan Yach, MD of Broll Kenya. “Its retail property market is growing and the list of new retailers entering the market is deepening, the retail market here is primed and is ripe for growth.”

Yach explains that Kenya has an advanced office property market, commanding solid rentals, reflected in both new and older skyscrapers that dot the skyline of its key business hubs.

“When it comes to industrial property, we’ve seen a strong commitment by businesses here to absorb and adopt international best practice within their logistics" notes Yach.

Yach notes that investors from around the world enjoy and require democracy, stability and certainty when considering investment in emerging markets.

“While the returns apparent in Africa beckon, investors want to ensure that growth is a sure thing,” says Yach. “Most governments in Africa have learnt that enjoying democracy, applying strong economic principles and fiscal discipline, attracts investors.”

He adds that like South Africa, and several West African countries, Kenya and its East African neighbours are opening up to and embracing foreign direct investment and transnational businesses.

“Where transnational companies go, they support and become part of the local economies,” says Yach. “Their economic participation creates a multiplier effect. So, for example, more retail brings more choice; this benefits consumers and drives stronger back-of-house logistics support which also fuels a positive demand to invest in infrastructure.