Estate Intel recently published the African Real Estate Capital Trends Report, an in-depth analysis of Africa’s real estate capital trends, investment volumes, capital values, yields and key investors active within Africa, aimed at helping institutional investors and advisors gain a deeper understanding of market activity. Here are the sample key capital trends that have been shaping the market’s direction over the last two decades:

Investors are transitioning away from build & flip private equity strategies
Our headline finding is the transition from the standard build, stabilise, and exit, private equity strategy most African institutional investors initially took. This is being replaced with one more centred around existing income-producing assets. The change was led by slow growth in secondary market activity and the realisation that the volatile nature of African real estate markets requires longer holding periods to extract inherent value. As such, these investors are switching to income fund strategies, searching for a partial exit and the capacity to hold onto assets for longer. As the illustration below shows, new ‘standard’ strategy real estate fund closes dried up around 2016, and funds with income or hybrid strategies began to take over. 

Standard vs. Income & Hybrid Funds

Source: Estate Intel
* Click here to find out more on the key players per year

Green & ESG-linked property finance has grown by 41% p.a since 2018

ESG agenda has played an increasingly prominent role in shaping the African real estate capital landscape. We have seen the provision of green & ESG-linked financing for real estate transactions grow by an annual average of 41% since 2018, bringing us to a cumulative total of US $4.2b in mid-2024. So far, 2024 has seen the highest investment value of US $1.3b led by firms such as IFC and Standard Bank. This is already higher than 2023’s US $0.8b, indicating increased investor interest in this segment. An important point to note is IFC’s direct or indirect involvement with over 50% of all green & ESG-linked financing transactions we are tracking. 

Cumulative Green & ESG-Linked Financing for African Real Estate

Source: Estate Intel
* Click here to find out more about the key players per year and the respective countries

As expected, the biggest markets offer the most exits

Estate Intel data shows that up to US $30b worth of transactions have been undertaken in Africa over the past two decades. Key cities in South Africa, Nigeria, and Egypt have led the charge, with the overall attraction underpinned by their robust property markets, popularity as Africa’s business hubs consequently attracting investment, and specifically South Africa’s robust capital markets supporting its investments. Notably, there are a few stand-out countries that have attracted large amounts of institutional capital with a relatively smaller economy. These include Mauritius and Mozambique, all of which have been very popular with the better-performing hospitality and industrial sectors.

Source: Estate Intel, JLL(South Africa Data)

Institutional interest is strongest in the hospitality market

As shown in the graph below, strong institutional interest has historically been seen in the hospitality, retail, and office sectors. Overall, the three sectors’ investment volumes have grown by 22% per annum on average since 2010. Excluding South Africa, our data indicates that the hospitality sector in particular accounts for the lion-share of activity, when total value and count are considered.

On the other hand, investor interest in former office and retail favourites has recently waned causing an overall stagnant growth rate, owing to a shift in lifestyle. While the office market has increased investment value in 2024, deal volumes are still very low.

Further, we note the emergence of more Data Centres investments since 2020, with one of the largest transactions in this market being the Etix Centre acquisition by Orange Maroc in Morocco, worth US $66m. 

Source: Estate Intel

For more trends and the market’s outlook, click here to download the report. 

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