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Huge demographic shifts mean Africa is ripe for residential real estate investment

November 12, 2015Article by Charlotte Ashton

A fundamental shift is occurring across Africa that is exciting investors around the world. In fact, there are three key elements behind the opportunity.

The future of humanity

According to Unicef, “the future of humanity is increasingly African.” That is to say, by 2050, a full quarter of the world’s population will be African. Over 50% of the projected population increase of 2.2 billion over the coming 35 years is predicted to take place in Africa. Such rapid population growth can put vast pressure on resources, particularly when it comes to housing and other infrastructure elements. This creates a whole range of opportunities for investors.

Nowhere is this more apparent than in the sub-Saharan country of Uganda, which has been identified by the US-based Population Reference Bureau (PRB) as on track to have the highest population growth in the world. From 27.7 million people in 2013, Uganda’s population is tipped to grow more than fivefold by 2050, to 150 million people. According to the PRB, women in Uganda have 6.9 children on average, compared with the African average of 5.1 and the global average of 2.7.

A rush for the cities

Rapid population growth is not the only change that Uganda is undergoing. The country is also experiencing rapid urbanisation as citizens head to the cities in pursuit of a modern lifestyle. The capital city of Kampala is an ideal example. Ray Withers, CEO of specialist property investment company Property Frontiers, comments,

“We’re seeing a rush for the city in Kampala, as the draw of the urban lifestyle with its modern conveniences and retail therapy gains more and more traction amongst Uganda’s population. From shopping malls to high end housing, there’s a huge amount of development needed in order to keep pace with the growth in the city’s population.”

Jakana Heights is one such development. The secure, gated development is sited in one of Kampala’s premier locations, close to Entebbe international airport. The one, two and three bedroom apartments are already under construction, in response to strong demand for luxury housing in the city. Investment prices start at $125,000, 35% below market value based on independent Knight Frank valuations. Net yields in the region of 15% are anticipated, along with strong capital appreciation.

A flourishing middle class

The third demographic factor impacting on demand for such property in Kampala is the growth of Uganda’s middle class, which according to JLL is one of the reasons that Kampala has been flagged as one of Africa’s top 10 opportunity cities. The expansion of the middle class ties in with the increased consumer demand that has given rise to the city’s growing retail market. Slick shopping centres and the development of commercial offerings in areas such as the Kampala Industrial Business Park are being driven by heightened calls from this growing middle class for luxury fashion items and lifestyle products.

The demographic changes being experienced across sub-Saharan Africa are combining to make it one of the world’s most interesting and intriguing investment locations. Within this dynamic environment, cities such as Kampala stand out for their potential, particularly when it comes to residential real estate.

For more information about exciting buy-to-let opportunities in Kampala and other hotspots around the world, contact Property Frontiers or call +44 1865 202 700.

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