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Africa’s population boom and what it means for property investors
October 1, 2015Article by Clare Moorhouse
The rapidly growing economies of Africa are increasingly catching the attention of property investors and corporate occupiers. Africa is no longer viewed as a region of economic distress but as a continent of opportunity. Thanks to the substantial economic growth Africa is achieving, it’s no wonder that investor attention has turned away from domestic markets to continents such as Africa for exciting and lucrative opportunities.
By 2050, Africa’s population is forecast to grow by a staggering 1.3 billion people – the largest growth of any region in the world. According to PwC, by 2100, it is projected that nearly 40% of the world’s population will live in Africa. When you think that in 1950, only 9% of the world’s population was African, it puts the growth into perspective.
This population shift is causing huge disparity between housing supply and demand. Today, there is already the need for well-located, well-planned residential properties such as Jakana Heights in Uganda which provides spacious one, two and three bed apartments within a secure, gated community, ideal for both domestic and expat residents.
Kampala has a reputation as being a safe and welcoming city. It boasts a large expat community, a thriving business environment with 25 of the country’s commercial banks headquartered there. The city has become a magnet for many business sectors and is attracting Ugandans from all over the country, especially from rural villages. But the city is unable to support this migration. Uganda will have a housing deficit of some 8 million units by 2030 with a current 100,000 unit shortage in the capital city of Kampala alone (PwC, 2015). This deficit in supply and demand will create a lucrative opportunity for property investors who are looking for longer term investments.
Rapid urbanisation, especially across Sub-Saharan African nations such as Uganda, will bring opportunities for governments to improve the provision of public transport, as well as housing, electricity, water and sanitation. Today, around one third of Sub-Saharan Africa’s population lives in urban areas. By 2035, half the population could be urban dwellers. Cities will become increasingly populated by young, educated workers, who are affluent, with higher disposable incomes as they move from rural areas to more developed cities.
Rising middle class
In Uganda, primary industries such as mining and agriculture have fuelled the growth of a rapidly expanding middle class as an increasing number of families are now able to buy their own home. According to the Deloitte Consumer Review, Africa: A 21st century view, 355 million Africans were considered to be middle class in 2010. That figure is expected to increase to 1.1 billion by 2060, driving demand from improved connectivity to contemporary housing.
Property investment is not just about a booming population however. Oil production, when it commences in Uganda in 2017, will bring further economic growth, as well as a knock-on effect on the housing market as expatriates arrive seeking high-quality, luxury housing in gated communities.
From an investment perspective, the demand for residential property in cities such as Kampala, is something quite unprecedented. And with a huge population boom and the rapid growth of middle class, Jakana Heights is precisely the kind of contemporary urban development that both domestic and expatriate residents will be looking for. Those who enter this thriving market early will reap the rewards in the form of high returns and a stable long term investment.
Contact one of our Investment Consultants on +44 1865 202 700 to find out more.