APRIL 2013 |www.opp-connect.com WORDS | Francine Carrel


All eyes turn to Africa K


night Frank’s recently released Africa Report 2013 made for extremely interesting reading


(if you haven’t had a look at it yet, I’d strongly recommend that you do; it can be found at my.knightfrank.com/ research-reports/africa-report.aspx). It would seem that Africa, once damningly dubbed “the hopeless continent” by The Economist, is now growing (in economic terms) very quickly and creating myriad opportunities for international investors. We’ll be focussing more closely on individual markets within the continent in further editions of OPP, but for now let’s stick with an overview. As Knight Frank detailed in its


report, Africa has risen by over 5% per annum, on average, since 2000. The World Bank now classifi es 27 of Africa’s 54 countries as mid- or high- income nations – adding 12 in the last 12 years. The strong growth of the region is


widely expected to continue – creating, as it does, wealthier populations (especially in the largest and fastest-growing cities). Middle class consumers now make up over a third of Africa’s population. The number of households with disposable income has been projected to grow 50%


within the next decade.


Urban centres hailed as “mega- cities” are a big drive behind the dynamic expansion – Lagos, Nairobi, Lusake and Dar es Salaam are attracting droves of occupiers, developers and investors into their midst. Looking specifi cally at the residential centre, the wealthier populations of some African cities are creating demand for huge volumes of higher-quality housing. This is refl ected in a number of impressive new suburbs fringing some of Africa’s larger cities, either currently under construction or being planned by private developers. (One striking example is the Eko Atlantic scheme on Victoria Island in Lagos, which is reclaiming a huge chunk of land and expects to house 250,000 people.) Most of these projects are currently in the very early stages, but if they prove successful (which seems likely) they may be only the fi rst wave of ambitious, middle-class orientated real estate projects across Africa. Property investors searching for opportunities in an emerging market are starting to look to Africa as the markets in Asia-Pacifi c and Eastern Europe begin to mature. It can be diffi cult to do business in many African countries, but the


Urban sprawling | Suburbia is growing in Africa


potential for a high return is attractive. International investment over the past decade has come largely from China, who seem to have picked up on the size of Africa’s potential before investors from the West. China overtook the US as Africa’s biggest trading partner in 2009 and has been heavily involved in investment in infrastructure, mining, real estate and many other sectors.


“The growth of the region is expected to continue – creating, as it does, wealthier populations”


China’s infl uence in Africa has not been welcomed by all – it has caused localized unrest in some regions. The general feeling, though, seems to be that the money coming in from the superpower is mainly for the good. On a smaller scale, Russia, India and Brazil are also active in the continent. Russia seems mainly interested in natural resources, India in technological and pharmaceutical markets and Brazil in building a market for its own produce.


BUSINESS


AFRICA | 53


Africa, seen for a long time as an exclusively ‘poor’ continent, is fast becoming a hub of business. As a burgeoning economy branches out and brings wealth with it, a new middle class is growing quickly – good news from the property market. Read on for the fi rst in a series of articles on this astounding continent


Each country has its own expertise to help Africa realise its potential. The largest African property market


by far is South Africa, but there are opportunities to be had in some of the smaller, low-risk countries such as Botswana. However, many African countries can be diffi cult places in which to do business. Mauritius, South Africa and Tunisia were the only three African nations to make it into the top 50 of the World Bank’s ‘Ease of Doing Business’ chart, with most countries gathered right near the bottom. Trade barriers are one of the biggest challenges any business person faces while working in Africa – in a recent report looking at the barriers that prevent easy cross-border trade in the continent, the World Bank revealed that Shoprite (Africa’s largest retailer) spends an eye-watering US$20,000 a week on import permits in order to transport goods to Zambia alone. Corruption is also a big problem. 90%


of Sub-Saharan countries scored below 50 (out of a possible score of 100) in 2012’s Corruption Perception Index. Next month I’ll focus on the biggest


and best-known market in the continent: South Africa.


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