Office yields remained largely stable in most African markets over the past two years, anchored by patient domestic capital, with local investors assuming a longer-term perspective, and new analysis by Knight Frank shows. analysis, published in a new Knight Frank report dubbed Africa Horizons, shows that out of 35 office markets covered, yield remained stable in 1
"By taking a longer-term perspective , and in some cases a lower return profile, local investors have remained more active than headline figures suggest. This explains how the yields in most major markets have remained stable in the face of weaker reported transactions, "the report states.
Just under US $ 2 billion worth of deals in Africa were publicized in 2018, mainly involving assets in South Africa. Contrary to the global trend, Africa's recorded transaction activity peaked in 2016, and has since eased. Notably, private capital remains an important driver of investment activity in much of Africa, although it is somewhat opaque.
According to the report, healthy economic prospects suggest that Africa will remain a compelling investment destination for those targeting key centers.
"We anticipate rising investor demand for those African locations that can demonstrate something of a counter-market in these locations, the report notes, rising wealth will favour sectors exposed to consumer logistics, and selectively, cyclical nature, combined with rising domestic wealth, "the Africa Horizons report concludes.
In 2018, Africa recorded more than 700 separate inward investment projects, half of which originated from corporations domiciled in the US, UK, France, China and Germany .
In Nairobi, yields in 2018 stood at 8% for office, 8.5% for logistics property , and 9% for retail. A-grade warehousing around the capital currently commands monthly rents in the upward US $ 6 per square meter, almost double that of the predominant stock of older units that lack modern features such as cross-docking and intermodal facilities
Ben Woodhams, Knight Frank Kenya Managing Director, said: ""
According to the Africa Horizons report, top residential investment opportunities across the continent include student accommodation (with Zambia, South Africa and Kenya being education hotspots), retirement homes, and middle-income housing as demographics change. In Kenya's logistics sector, formal retailers have emerged as a major driver of growth due to their growing need for large centralized warehouses as they gain critical mass countrywide