Interest in sub-Saharan property is waning - report
Interest in the sub-Saharan property market has shown a downward trend since peaking in 2011 and developers and investors are becoming more careful before investing in Africa, according to a new African property report.
|||Johannesburg - Interest in the sub-Saharan property market has shown a downward trend since peaking in 2011 and developers and investors are becoming more careful before investing in Africa, according to a new African property report.
JHI, which is part of Excellerate Property Services, partnered with property researchers Urban Studies to compile the report, which includes a series of reviews of the property markets in 12 sub-Saharan countries.
Marna van der Walt, the chief executive of Excellerate, said despite headwinds in many African economies brought on by reduced commodity prices and a decline in demand from the Chinese economy, there were still indications of optimism in selected markets.
Dirk Prinsloo, the founder of Urban Studies, said in the report that the outstanding aspect regarding property development in sub-Saharan Africa was not to focus on the region as a whole or specific countries with high gross domestic product (GDP) growth, but to concentrate on individual cities with real potential.
Prinsloo said GDP growth in sub-Saharan Africa would come under severe pressure this year and this trend would most probably continue for the next two to three years.
He said sub-Saharan Africa GDP per capita growth increased on average by 3.4 percent a year from 2004 to 2014, but was expected to drop to between 1.4 percent and 1.9 percent this year.
“Based on previous growth rates, the per capita GDP would have doubled in 20 years’ time. But, based on existing low growth, per capita income will only double in 40 to 50 years.
“This will have a major impact on the growth expected to happen in the middle segment of the consumer market. This sector also has a direct effect on shopping centre and residential development, which will slow down.
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Prinsloo said Africa faced a triple threat this year and next year from a changing global environment. These threats included the significant drop in the prices of main export products such as oil and metal, which had been influenced by low demand mainly because of the slowdown in China, further increases in interest rates influencing external borrowing costs and climate change playing a major role in east and southern Africa.
Prinsloo said there were specific countries that were more at risk than others, such as oil exporters. Countries including Angola, Cameroon, Chad, the Democratic Republic of Congo, Equatorial Guinea, Gabon, Nigeria, Zambia and South Sudan would experience major problems, because of a decline in crude oil and mineral exports, he said.
Prinsloo said countries rated with the highest development opportunities at the top end of the market included Mauritius, South Africa and Botswana, while countries in the middle segment included Ghana, Kenya, Namibia and Zambia.
Countries at the lower end of the market also indicated low property development potential and included Burundi, Malawi, Mali and Uganda, Prinsloo said.
The country specific report on the South African property market said about 2 million square metres of shopping centre supply was currently in the development pipeline, with the majority of this development in Gauteng.
BUSINESS REPORT