East Africa’s real estate sector will continue to witness an increase in capital investment chiefly from international real estate funds and institutional players.
This has been revealed by Niyi Adeleye, Stanbic Bank’s Head of African Real Estate who noted that the interest in the region has been fueled by a dynamic macro-economic environment that has created opportunities for investors to look up to the region for diversification opportunities as well as search for niche markets.
“Since the emergence from COVID-19 headwinds, the real estate sector has been characterized by a higher interest rate environment that justifies value acquisitions for funds with liquidity and sound asset management capabilities able to manage these assets at more optimal levels,” Mr. Adeleye said.
Mr. Niyi was speaking ahead of the upcoming 10th annual East Africa Private Investment Summit set to take place on 17-18 May, 2023 in Nairobi, Kenya.
Pricing Opportunities
Additionally, the resilience and performance of the Light Industrial and Warehousing sector in the region provide a new frontier for investors to acquire new assets and increase returns in the short term. “While it is still in its infancy, A-grade industrial real estate in the region has shown outstanding performance potential to be able to weather any downturns expected,” said Donald Borthwick of London-listed Grit Real Estate Income Group.
The region’s maturing sub-segments are also supporting allocations and strategy. These include retail, student housing and industrial which appear to exhibit a higher level of maturity than other regions in the continent except South Africa. “Nairobi’s position as the hub of East Africa has also enhanced occupier demand. So far, Kenya has seen a 9% increase quarter on quarter in the number of registered businesses in Q1 2023 resulting in 37,176 registrations in Q1 2023. Key occupiers in the financial services and tech sectors are continuing to drive demand in the commercial sector pointing to cautious optimism on the traditional real estate sectors as well.” Tilda Mwai, Research Associate at Estate Intel noted.
Property analysts remain cautiously optimistic about middle-income residential, student housing, corporate accommodation and data centers, as well as performing retail and office sectors.