Aston Lukoye
- The real estate sector in East Africa will continue to see increased capital investment, primarily from multinational real estate funds and institutional players.
- According to Niyi Adeleye, Stanbic Bank’s Head of African Real Estate, the region’s interest has been fueled by a dynamic macroeconomic environment that has created opportunities for investors to look up to the region for diversification opportunities as well as niche markets.
“Since the emergence of COVID-19 headwinds, the real estate sector has been characterized by a higher interest rate environment, justifying value acquisitions for funds with availability and sound asset management capabilities capable of managing these assets at more optimal levels,” explained Mr Adeleye.
Mr Niyi was addressing ahead of the 10th annual East Africa Private Investment Summit, which will be placed on May 17-18, 2023 in Nairobi, Kenya.
Pricing Possibilities
Furthermore, the region’s Light Industrial and Warehousing sector’s resiliency and success open up a new frontier for investors looking to acquire new assets and boost returns in the short term. “While it is still in its infancy, A-grade industrial real estate in the region has shown outstanding performance potential to be able to weather any downturns expected,” Donald Borthwick of London-listed Grit Real Estate Income Group said.
The maturing sub-segments of the region are also supporting allocations and strategy. Retail, student housing, and industrial tend to be more mature than other places on the continent, except South Africa. “Nairobi’s position as East Africa’s hub has also increased occupier demand.” So far, Kenya has had a 9% growth in the number of registered firms in Q1 2023, resulting in 37,176 registrations. Key occupiers in the financial services and technology sectors are driving demand in the commercial sector, indicating cautious optimism in the traditional real estate sectors as well.” Tilda Mwai, Research Associate at Estate Intel, made the observation.
Analysts are cautiously bullish about the middle-income residential, student housing, corporate accommodation, and data centre sectors, as well as the performing retail and office sectors.
