Académique Documents
Professionnel Documents
Culture Documents
2. Favourable Demographics
Africas demographic boost Africa is becoming a market of global scale - its population, currently in excess of one billion, is expected to double over the next 25 years, the fastest growth rate of any continent. Its working-age population is growing especially vigorously, with 70% of the total population aged under 30, delivering a potentially huge demographic boost. By 2040, Africas working-age population will be larger than either China or India. Africa is a mosaic of 54 countries, yet several heavily populated countries are likely to dominate future market opportunities. Nigeria (the continents largest market with a population of 174 million), Ethiopia (94 million), Egypt (82 million), South Africa (52 million), Kenya (44 million) and Morocco (33 million) are providing true scalability for corporations, retailers, hotel operators and real estate developers.
Working-Age Population defined as 15-64 age cohort Source: UN World Population Prospects, 2012
3. Rapid Urbanisation
Africa is urbanising more rapidly than any other continent The real estate sector will play a major role in shaping Africas urban future as city infrastructures strain under the pressures of flash urbanisation. Africa is urbanising more rapidly than any other continent, with its city-based population expanding by 3.5% per year. Some cities are growing considerably faster (such as Abuja at 9% and Luanda at 6% a year). 60 cities across Africa currently have a population of more than one million; a total of 170 million city dwellers whose incomes are typically nearly double their respective countrys national average. The continent is also home to four of the worlds megacities - Cairo, Lagos, Kinshasa and Johannesburg each providing huge population catchments. Many African cities are showing remarkable economic dynamism. Accra and Addis Ababa are booming, and are among the worlds fastest growing city economies. Luanda, Maputo, Lusaka, Lagos and Abuja are also expanding rapidly, while Kigali (in Rwanda) has ambitious plans to transform itself into the centre of urban excellence in Africa.
Source: IHS Global Insight, September 2013 (National Data); Jones Lang LaSalle, 2013
*National data Source: IHS Global Insight, Jones Lang LaSalle, 2013
Nairobi, Kenya
Based on presence of Hewlett Packard, IBM, Intel, Microsoft, Siemens, Vodafone, Huawei and Cisco Source: Jones Lang LaSalle, 2013
Based on presence of a basket of key African and international banks, accountants and insurance companies Source: Jones Lang LaSalle, September 2013
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KPMG
9. Offshoring Activities
Africa emerges as an offshoring destination In comparison with the more established offshoring markets in India, Central Europe and South East Asia, Africa is a relatively recent entrant to the offshoring sector. The continent has, however, seen a strong uptick in activity in recent years, driven primarily by its low-cost proposition, talent availability, English and French language skills, and favourable time zones for Europe. Johannesburg, Cape Town, Cairo and Casablanca have evolved as the leading cities in terms of a critical mass of offshore services, while Nairobi and Accra are also developing their offshoring capability. Several African governments, such as Ghana and Kenya, are making concerted efforts to improve the attractiveness of the operating environment by creating technology parks and developing their skills base.
Risk: Country Risk, IHS Global Insight, September 2013. Growth: GDP Change 2011-13, IHS Global Insight, September 2013 Source: Jones Lang LaSalle, September 2013
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and strong demand from businesses and consumers for a modern real estate infrastructure. Nonetheless, the continent remains severely undersupplied with high-quality commercial space, and a lack of experienced local developers will create opportunities for international players.
*Excluding South Africa. Relates to modern offices and shopping malls Source: Jones Lang LaSalle, Emerging Markets Consultants, SACSC, IHS Global Insight
International retailers are responding to the growth opportunities The growing number of brand-conscious urban consumers is not going unnoticed by developers and retailers. South African retailers such as Shoprite, Pick n Pay, Massmart and Woolworths have taken the lead, but a number of other international retailers are now assessing the opportunities. Retailer expansion, however, will continue to be hindered by a lack of high-quality retail accommodation. Jones Lang LaSalle estimates that the stock of Grade A shopping malls across Africa (excluding South Africa) is less than 1.5 million square metres thats barely equivalent to the stock of Hungary, a country of 10 million people against one billion in Africa.
Mall construction is poised for lift-off Nonetheless, shopping mall construction is poised for lift-off as developers and retailers respond to the severe supply-demand imbalance. The stock is rapidly expanding at a rate of over 20% a year, spearheaded by Cairo, Casablanca, Lagos and Nairobi. Nigerias main cities have become a key target due to the scalability opportunities of a country of over 170 million consumers.
Corporates lead the charge Corporates are leading the charge into Africa and, out of necessity, are acting as a catalyst for new real estate development. Many multinationals have already established significant footprints across the continent, and are facing the typical challenges of operating in frontier markets, such as poor transparency, bureaucracy, high costs, skill shortages and an absence of suitable real estate.
Dearth of quality office space There is an urgent requirement for quality office assets to meet the strong demand from a broad range of growing corporate sectors such as finance, outsourcing, oil and commodities, manufacturers and telecoms. We estimate that there is less than 2 million square metres of Grade A stock across Sub-Saharan Africa (excluding South Africa), of which around half is located in just four cities - Nairobi, Lagos, Luanda and Port Louis.
Sharp increase in the hotel development pipeline In line with the corporate and urban development taking place in Sub-Saharan Africa, the hotel landscape is witnessing strong growth, led by upscale business hotels. Africa is estimated to have around 90,000 branded hotel rooms4, which compares to around 128,000 in London alone. With more than half of the hotel rooms concentrated in just three North African countries (Egypt, Morocco and Tunisia), the potential opportunities for the hotel sector in the SubSaharan region are substantial, and international and regional hotel operators are actively seeking to expand their presence. The hotel development pipeline is increasing significantly, and Nigerian, Ghanaian and Tanzanian cities are emerging as a primary focus of activity.
International capital perceives opportunities Africa currently accounts for less than 0.5% of global direct commercial real estate investment volumes, the bulk of which is transacted domestically within South Africa. But, international capital is beginning to move into Africa as investors seek to access the continents growth prospects. A number of real estate funds have been created to focus on the commercial property market, with South African capital taking the lead.
Poor transparency will hinder investor activity While Sub-Saharan Africa is a compelling longterm growth story, poor infrastructure, corruption, scale of markets and low liquidity will continue to deter most investors. The key to success for international investors will be to secure the right local partners to guide them through the complications of land title, bureaucracy and political risk. Doing business in Africa is not easy and poor real estate transparency will continue to be a binding constraint in all but a few markets across Africa. Nonetheless, for many international real estate players the possibilities offered by Africas fast-growing markets will be too great to ignore.
Increasing demand for budget and mid-market hotels So far, hotel development in the Sub-Saharan region has largely targeted the full service upscale international business market. However, there is a growing focus on the local customer base (both for leisure and business), as spending power increases. Groups such as Accor are already responding to the increasing demand for budget and mid-market accommodation.
Source: Jones Lang LaSalle Global Real Estate Transparency Index, 2012
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To find out how Jones Lang LaSalle can assist you in making real estate decisions in Africa contact: Vincent Lottefier Global Director & CEO EMEA Corporate Solutions Tel: +33 140 554 992 vincent.lottefier@eu.jll.com Mark Bradford Chairman Sub-Saharan Africa Tel: +27 11 507 2200 mark.bradford@eu.jll.com Jeremy Kelly Director Global Research Tel: +44 20 3147 1199 jeremy.kelly@eu.jll.com Chiheb Ben Mahmoud Head of Hotels & Hospitality Group Middle East & Africa Tel: +971 4 4362408 chiheb.ben-mahmoud@jll.com
November 2013 A special thanks to Emerging Markets Consultants who helped in the compilation of this report www.emergemarkets.com
COPYRIGHT JONES LANG LASALLE IP, INC. 2013. This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this report. No investment or other business decisions should be made based solely on the views expressed in this report.