Real estate firm, Knight Frank, has expressed concerns that economic challenges in Sub-Saharan Africa have implications for the sector across the region, with growth in several countries, including Nigeria, hampered by conflicts, energy crises, and a subsequent weakening in demand across all sectors.
The firm revealed this in its 2024/25 Africa Report, which includes comprehensive coverage of property markets in 19 countries, as well as detailed insights from experts exploring retail, economic, and healthcare trends across the continent.
It noted that Nigeria, the largest economy in the region, is challenged by disruptive economic policies and currency demonetisation since 2023, which contributed to weakened growth in the business services sector.
Furthermore, the firm said the continuous rise in inflation in the country, which climbed to a 15-year high of 33.2 per cent in the 12 months to the end of March, has curbed consumer spending and retail footfall.
Accra, Ghana emerged as Africa’s third fastest-growing real estate market, trailing only Nairobi, Kenya and Lagos Nigeria, according to data from the Statista and Knight Frank’s Africa Report.
Managing Director, Knight Frank Middle East and Africa, James Lewis, said over 95 per cent of the African markets tracked by the firm have fully rebounded from the COVID-19 pandemic, with most now matching pre-pandemic figures in transactions, prime rents, and average yields across major real estate sectors.
He pointed out that the office sector across the continent is witnessing increased demand for Grade A stock, with ESG-compliant stock growing in popularity. This shift, he explained, is also prompting some developers to refurbish older buildings to Grade A standards to sustain demand and occupancy levels, as has been the case in Uganda.
“Overall, Grade ‘A’ offices boast an average occupancy rate, 10 per cent higher than lower grade offices. Elsewhere, the retail sector continues to evolve, with a heightened focus on enhancing consumer experiences. For instance, retail shopping in Kampala and Entebbe has transformed from necessity-driven downtown markets to leisure experiences in modern shopping centres.
“Africa’s industrial markets have shown remarkable resilience, bolstered by government initiatives in countries like Kenya and Zimbabwe, with their Special Economic Zones (SEZs) and Export Processing Zones (EPZs) helping to create new demand. Additionally, the rise of e-commerce across the continent is driving requirements for efficient storage and distribution facilities, prompting the development of modern industrial zones equipped with state-of-the-art logistics infrastructure”, Lewis noted.
According to him, in the residential sector, the global trend of the live-work-pay model is driving demand for mixed-use and community living developments.
“For most households aspiring to transition from renting to owning, however, affordability remains a key concern. Developers are addressing this by offering innovative financing options, complementing government initiatives like Egypt’s ‘Housing for All scheme’, which provides long-term subsidised mortgage loans,” he added.
Head of Research and Strategic Consulting – Knight Frank Kenya, Charles Macharia, argued that increased conflict and violence in the Sub-Saharan region are further hampering economic activity, while also dissuading real estate investors.
In addition, he emphasised that high levels of national debt leave little room for fiscal manoeuvring amongst Central Banks, which is creating challenges for those seeking real estate financing.
He said: “Debt service ratios are continuing to rise, with public investments, including infrastructure development, emerging as casualties. The shift from concessional borrowing to private creditors is increasing the vulnerability of regional economies to economic shocks, which we believe is constraining the real estate market’s growth potential.”
