According to a survey by Estate Intel, global investors find African real estate unappealing due to macroeconomic and political concerns.
It was mentioned that in 2024, the weakening macroeconomic indicators might have an impact on African real estate, which would result in a drop in market activity throughout the continent.
The report also stated that countries were already witnessing a decline in investment preference due to factors like currency performance, inflation, rising debt levels, and possible default.
In summary, the paper stated that the African real estate industry, which is frequently praised for its potential and growth prospects, has been facing numerous difficulties, including political and economical instability as well as the fallout from international conflicts.
Due to the convergence of these elements, real estate markets’ desirability is now more heavily impacted by fundamental macroeconomic indicators, which has resulted in a discernible decrease in market activity throughout the continent.
Without a doubt, a country’s economic stability may often be inferred from the performance of its currency. Nonetheless, there’s good cause for investors to be nervous right now. Countries are already witnessing a decline in investment preference due to rising inflation, rising debt levels, and possible default.
The research claims that with an 83% fall on the official rate, the Nigerian naira saw the highest rate of devaluation in the year ending in December 2023.
It’s interesting to note that Nigeria also placed third due to high building costs—estimated at USD 1,700 per square meter—high inflation (27.33 percent), and strong currency fluctuations (83.66 percent YTD).
Ghana and Angola were placed as the least real estate appealing nations, according to the report’s real estate attractiveness rating, which put Botswana and Morocco at the top of the list.
Notably, the top two countries in terms of real estate market attractiveness were Morocco and Botswana. Relative currency stability, low rates of inflation, and cheaper building costs have supported this.
For instance, the inflation rates in Botswana and Morocco are 3.1% and 4.3%, respectively, which are much lower than the rates in Ghana (35.2%) and Egypt (358.8%). Furthermore, the average building cost in Morocco is expected to be US$ 600 per square metre, which is lower than the US$ 1,366 national average.
“This currency performance is generally expected to have an impact on financing for green field investments, particularly for social infrastructure like affordable housing, as well as leasing activity in commercial real estate, particularly for the retail and office sectors.”
It claimed that loans used to finance real estate projects across the continent would become more costly if local currency depreciation persisted.
“We are likely to see a limited development pipeline in the majority of the markets with a limited domestic capital-raising landscape,” the report stated.