For the African diaspora, large scale investment in the continent is fraught with difficulty. People are afraid of losing the little money they have, particularly when it comes to an environment where the rules of engagement and doing business are unfamiliar and in many cases unclear. Property is one of the most capital intensive endeavours, with undoubtedly high returns for those who are prepared to take the risk.
There is no shortage of opportunity. The graphic below from Jones Lang LaSalle has identified twenty cities across Africa that present the hottest prospects for commercial real estate growth by 2020 as retailers, corporates and real estate investors target growing urban centres in countries with solid GDP growth prospects.
A spotlight on Nigeria as an example shows the extent of the opportunity from a housing perspective, the area of greatest need:
- The Nigerian mortgage sector currently contributes less than 1 per cent to GDP, Gimba Kumo, managing director of the Federal Mortgage Bank of Nigeria (FMBN) believes that that could rise to up to 15 per cent.
- The country needs 17 million housing units.
- A co-operative loan scheme catering to low income households is necessary. Most property investment is currently skewed towards the high income and luxury sector, an imbalance which needs urgent attention.
- A wholesale reduction in bureaucracy to access mortgages would also be necessary to create a level of dynamism in the market.
- Currently it takes 360 days to register a property in Nigeria compared to 10 days in Ghana.
So, there are lots of opportunities across the continent but as can be seen from the Nigerian example, the need to understand the market cannot be over emphasised.