The Group Chief Executive Officer, Broll Property Group, Malcolm Horne, has predicted that the African real estate market would normalise and bounce back to pre-Covid-19 levels by Q1 2023.
He stated this during a keynote address ‘on the real estate market in the next decade’ at the African Property Investment summit 2021. The API Summit is a platform that attracts investors and occupiers, service providers and financiers. It is an aggregator of people interested in occupying or investing in real estate and cuts across all sectors, from residential to commercial.
Horne said an interesting correlation that is monitored is the potential relationship between the vaccination rollout in Africa and the associated economic recovery across the continent. He maintained that the obvious winners at present in the sector are industrial, data centres and lifestyle and healthy living, in addition to healthcare.
He said: “There seems to be a real correlation across the board between those resilient sectors that have stood out. In Africa, industry, data centres and hospitals have been at the forefront of much development. Secondary emerging investment sectors that are rapidly gaining traction includes cold storage, self-storage facilities and affordable housing.”
“The real challenges lie in offices, retail and hotels. In the case of retail, the sector continues to attract investment. Yes, there have been major retailers exiting some African markets, but if you look at the international trend, a lot of landlords have invested in retailers to get them going again. We have observed a similar trend in Africa in terms of a resurgence of local investor interest in the retail sector.”
In terms of the office sector and the global ‘work from home’ phenomenon, he said while a general return to the office environment is predicted by Q3 this year, with a hybrid model most likely to be adopted, Africa is an interesting exception. This, he said, is due to the slow rollout of vaccines across the continent, as a lot of firms are still working remotely as a result.
However, Horne said he does not expect the office sector to necessarily shrink in size as companies downsize or consolidate adding that offices are going to have to be repurposed for increased spacing between workers, which will result in fewer employees per square metre and the adoption of more flexible workspace solutions.
He added, “Many of the trends dominating the international real estate market at present were already prevalent or on an upward tick before Covid-19. A lot of the trends we have seen, whether globally or in Africa, had their roots before the pandemic. It was not a case of Covid-19 suddenly leading to massive change. It did accelerate market trends, especially as the sectors benefiting now had already started to grow before Covid-19.
“Hopefully by Q1 2023, the supply and demand issues related to the vaccines will largely have been resolved, with a sufficient supply to Africa so we can gain momentum across the continent in terms of the vaccination drive. That will be positive and see the start of a ramp-up in economic activity. In most countries, people are back in the malls and spending. Lockdowns mustn’t be instituted again, which is why the successful vaccine rollout is so critical.”
The Director, Africa Desk at Cushman & Wakefield, Patrick Katabua said: “It is fairly complex to compare the DRC real estate market to that in Nigeria or Kenya, for example, which have established stock exchanges and large property funds. A lot of big brands have found that the ‘cut-and-paste’ model does not work in the rest of Africa. You need to customise according to the local context.”