17PwC
Shifting demographic trends are
likely to create a huge need for
new and different real estate by
2020 and beyond. The burgeoning
middle-class urban populations in
Africa will need far more housing.
Residential real estate will become
more specialised, with local and
cultural differences influencing
how this evolves. For example,
young professionals may favour
smaller city apartments, while
young families may live in gated
community developments outside
the city centres. In terms of
financing these new developments,
residential property is an area
of anticipated growth for listed
property funds. Currently,
residential holdings make up only
2.5% of listed property funds, as
compared to 15% in developed
markets and 25% in other
developing markets.
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As markets
develop, funds will begin to increase
their residential holdings. The
rise of mixed-use developments in
Africa should not be underestimated
as people seek to reduce travel
times by living closer to centres of
employment, recreation and retail.
Satellite cities
Population increases in urban
centres will also lead to an increase
in the number of satellite cities,
albeit at a slower rate to that in
developed markets where major
cities have already felt the effects of
rapid urbanisation. The emergence
of satellite cities, defined as people
moving to rural environments as a
result of the ever-increasing density
of the main cities, is likely to impact
only the largest cities in Africa by
2020.
Ghana’s Hope City and Kenya’s
Konza City are examples of this
type of significant ultra-modern
satellite city development. Both
include a mix of both residential
and commercial premises.
Developers are also pursuing near-
city developments. Eko-Atlantic,
Nigeria, is a major near-city
development expected to change
Nigeria’s real estate landscape.
Research indicates that high-speed
railways make satellite cities more
attractive while relieving pressure
on main cities. By reducing travel
time, high-speed railways push
satellite cities closer to main cities.
Concerns have been raised by
commentators regarding the
financing, integration and economic
sustainability of some satellite
cities. However, announcements of
planned developments suggest this
will continue to be a trend in Africa.
Low-cost housing
Increasing urban populations will
increase demand for residential
property across the continent.
In the short term this demand
will be primarily for low-cost
housing through direct or indirect
investment spearheaded by the
public sector.
Innovative government solutions
to help low-income households
access mortgage finance are also
being developed, such as in Nigeria,
where 2.5% of wages is contributed
to a fund controlled by the Federal
Mortgage Bank of Nigeria to provide
mortgages to low-income families
and to support the development
of new homes. In South Africa,
the Gauteng Partnership Fund
(GPF) is mandated by the Gauteng
Department of Human Settlement
to accelerate the provision of
human settlements. The GPF aims
to assist housing developers with
equity-type loans, which enhances
the bankability of projects to
enable senior lenders to finance on
favourable terms. According to the
latest annual report, for the period
2012/13, the GPF helped to attract
US$210 million in private-sector
funding into the affordable housing
sector, leading to the delivery of
22000 houses between the GPF’s
inception in 2002 and 2013.
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Health sector
Increasing urban populations will
also impact on the provision of
healthcare. As urban populations
expand and patterns of settlement
shift, health providers in both the
public and private sectors will need
to increase the range and location
of service delivery. The population’s
changing age profile will also
have implications for the services
delivered by local health providers.
These demographic shifts will
present opportunities for real
estate developers as the public
sector struggles to meet the
escalating cost of public health
provision and the private sector
seeks ways of re-applying capital
to the delivery of core services.
To support these changes, an
increase in PPPs, development
agreements and sale and leaseback
of health facilities can be expected,
creating opportunities for specialist
developers and investors familiar
with the health market in other
territories. For example, in Ghana,
PPP projects are planned to improve
diagnostic services at Korle-Bu
Teaching Hospital and a proposed
new Urology/Nephrology Centre Of
Excellence.
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As new hospitals are developed
to meet growing demand, there
will also be a need to develop the
supporting infrastructure to provide
access to the sites, together with
secondary opportunities such as
retail, employee housing and other
related services.