Emmanuel OchayiA report by Estate Intel paints a challenging picture of African real estate in 2024 as the continent’s real estate sector, once seen as a beacon of potential, is grappling with the dual impact of macroeconomic and political uncertainties, exacerbated by global tensions.
“The attractiveness of real estate markets is increasingly influenced by core macroeconomic indicators,” the report states, pointing to currency performance, inflation, escalating debt levels, and the looming specter of potential defaults.
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Investors are becoming jittery as these factors converge to create a landscape where market activity is witnessing a noticeable decline.
Nigeria, in particular, takes a hit with an alarming 83% depreciation in the official exchange rate, making it the third least attractive market. The report highlights heightened currency changes, a soaring inflation rate of 27.33%, and construction costs estimated at USD1,700 per sqm.
On the flip side, Botswana and Morocco emerge as real estate havens, boasting relative currency stability, low inflation rates, and lower construction costs.
The contrast is stark – while Botswana and Morocco record inflation rates of 3.1% and 4.3%, respectively, Egypt and Ghana struggle with rates as high as 35.8% and 35.2%. Morocco’s construction costs per sqm stand at an average of US$600, a stark difference from the all-country average of US$1,366.
As the report warns of the impact on commercial real estate leasing and financing for social infrastructure, it predicts that continued local currency depreciation could render financing real estate projects across the continent an expensive endeavor.
The looming consequence: a limited development pipeline in many markets with constrained domestic capital-raising capabilities.
