06/06/2016
A fast growing population
Africa’s population has reached the
one billion mark and is projected to
exceed 2 billion by 2050. Our
continent has the world’s highest
birth and fertility rates which
makes it the fastest growing
population on the planet.
Shelter remains a basic need for
millions of Africans who need a roof
over their heads. Now and in the
near future, there is (and will be)
an explosive demand for housing.
This demand provides a lucrative
potential to investors and
entrepreneurs who are investing in
residential buildings and real estate
projects. Governments across the
continent are also investing in public
housing projects to reduce the
deficit in many towns and cities.
This population-driven investment in
real estate projects by both
investors and governments is
leading to a growing demand for all
types building and construction
materials.
2. Favourable economic growth
The 2013 report by the African
Development Bank, OECD, UNDP
and ECA reveals that Sub-Saharan
African economies are among the
fastest growing in the world.
According to the report,
“Africa’s economic growth
was 4.2 percent in 2012 and
is projected to reach 4.5
percent in 2013, and further
to 5.2 percent in 2014,”
Increased construction and building
activity is usually one of the signs
of positive economic growth.
Governments have more money to
invest in building and construction
projects such as infrastructure
(roads, bridges, dams etc) and basic
housing.
In times of economic boom, more
people have the financial power to
invest in real estate or start
building their personal houses.
Because business is good in times of
economic growth, companies expand
their capacity by building new or
larger warehouses and offices.
All of these building projects lead
to a demand for building materials
such as wood (timber), cement,
sand, steel and several other hot-
selling products which feed building
and construction activities.
3. Rapid urbanization
At the time of writing this article,
more than 40 percent of Africa’s
one billion people live in cities. This
proportion is much higher than
India’s 30 percent and comparable
to China’s 45 percent.
At an average urban migration rate
of 3.5 percent projected for the
coming years, more than 400 million
more Africans will become city
people in the next 10 to 20 years.
The demand for basic shelter is
concentrated in Africa’s urban
areas. At the moment, just about
50 African cities have a population
over 1 million. At the current rate
of migration, the number of cities
with over one million people will be
over 65 by the year 2030.
Because more people are flocking to
cities and towns in search of jobs
and a better life, they are putting a
lot of pressure on the inadequate
accommodation available in urban
areas. (source: Mckinsey Research).
Africa’s economic growth is also
concentrated in the cities and is
attracting a lot of local and foreign
businesses. Both small and big
businesses require office space and
residential apartments for their
local and expatriate workers.
As a result, private investors and
entrepreneurs are getting involved
in building projects and real estate
developments that will supply the
needed office and residential
accommodation to these businesses.
4. An expanding middle class
The African Development Bank
describes the ‘middle class’ as
people who spend between $2 to
$20 a day. Currently, there are
more than 300 million people on the
continent who fit into this
category.
A significant majority of Africans
in the middle class hold salaried
jobs or own a small business. Many
of them have access to mortgage
loans and are building their own
properties and homes. A lot of them
also invest in real estate projects
and have become landlords.
According to a recent Deloitte
report,
“Africa’s middle class has
tripled over the last 30
years, with one in three
people now considered to be
living above the poverty line –
but not among the wealthy.
The current trend suggests
that the African middle class
will grow to 1.1 billion (42%)
by the year 2060. As African
economies are growing (7 of
the 10 fastest growing in the
world are African), the
wealth is trickling down and
Africa now has the fastest
growing middle class in the
world.
