The housing market is being stymied by continuing borrowing problems, says Akinola Olawore, Executive Director, African Real Estate Society
JUST like in the UK, the African housing market is being hampered by the difficulty in getting affordable finance.
So even though the demand is there from the expanding and aspiring middle income sector, the credit just isn’t available for people to buy affordable homes.
Security of tenure is another major issue with a lack of land titling – most African countries have fewer than 10 per cent of their land mapped.
Also, construction companies are struggling to find finance at affordable rates to provide quality mass housing projects needed to address the growing housing deficit, especially among the middle class.
Real estate is considered one of the key drivers of the social and economic development of Africa, and, in my opinion, the future looks promising even though we are going through a bad patch at the moment.
In most African countries there is a housing deficit – in Nigeria it is especially critical – but this will provide business opportunity for foreign investors.
There are investment gaps in land reform infrastructure, development of primary and secondary mortgage systems, land and market information and low-cost building solutions.
With the current global crisis in the developed economies, it is becoming increasingly clear that the developing economies of Africa are where investment funds should go.
The African economies have capacity for double digit GDP growth and with increased investment, the potential could
A major bugbear, though, is the cost of building materials. Most are imported, especially steel, and due to the weak currencies, these imports turn out to be quite expensive and impact greatly on market capability, almost as much as the
poor mortgage support.
For the UK, there are major investment opportunities in Africa. As well as helping to set up land information systems, there’s investment in trust schemes, provision of infrastructure and construction finance and investment in the power sector to reduce the running costs of housing developments.
Nigeria, especially, welcomes investment in power, whether for on-grid or off-grid, and there is enough legal structure to protect an investor.
The steel sector, too, is crying out for investment, along with alternative building technology.
Each country has its own challenges and the African Real Estate Society is currently collecting data from them regarding the reforms being put in place and property prices.