In 2024 Real Estate will Play a Pivotal Role in African Economic Growth

ESV Oluwabusuyi Adepoju,

Reports from the Economist Intelligence Unit (EIU), the research and advisory unit of the Economist Group, have projected Africa to emerge as the second-fastest-growing major economy globally in 2024. Among other factors, the African real estate market will play a catalytic role in this regard.

As of December 2023, a report by the United Nations estimates puts African population at 1,476,462,909. Out of this figure, 44.7% is urban, that is to say, 44.7% of the African population resides in the urban areas of the countries that make up Africa. To many economic analysts, these figures represent both strengths and weaknesses, depending on how the African political and economic leaders manage the growing African population.

Going by the EIU’s timely predictions, even in the midst of the growing economic and political challenges that are bedeviling the African continent, Africa will be the second largest economy. No doubt, this sounds paradoxical, but this is very possible if the congenial economic and political environment for economic activities is provided by the key actors of the African continent.

One area the African economies must look into in driving the envisaged African growth in 2024 is the real estate space. With its fast-growing population, Africa has a market businesses can leverage for growth and significantly contribute to the regions Gross Domestic Product (GDP).  In Africa, investments in residential real estate are still grossly underdeveloped, and urbanization is a key factor in the demand for residential real estate. Virtually all African countries have huge housing deficits. With a 44.7% urban population, and a housing deficit of 51 million, studies in the recent years have shown that $1.4 trillion is needed to bridge the African housing deficit. By this simple analysis, the African real estate market presents an investment opportunity for both local and foreign investors across Africa. 

The African real estate market is dynamic and has the potential to turn the fortunes of most African economies if well harnessed. The contribution of real estate to economic growth and development cuts across all sectors of the economy.   The EIUs projected growth in Africa can be driven by real estate activities.

The first task before the African leaders is to provide the needed economic, political, and social environment to drive the envisaged growth. A continent that is characterized by weak democratic governments, weak institutions, and incessant coups cannot attract the projected investments into the African market. Regional institutions like the Economic Community of West African States (ECOWAS), the African Union, and the African Development Bank (AfDB) have strong roles to play in entrenching the needed economic growth and development in Africa.

Partnership is another strategy that should be adopted by the African leaders. In partnership with multilateral institutions like the World Bank, investments from multinationals should be encouraged to invest in African countries.  The huge market in Africa is already a bate for investors, and this should be a marketing tool for wooing foreign investors into Africa. 

 The AfDB Group, in its 2023 report, projected that after Asia, Africa will be the fastest-growing continent in 2024. To achieve this, the Bank Group recommended a robust policy action that will engender this growth. Thus, without the needed economic policies and political will, these predictions will be a mere display of economic jargon.

 Governments across Africa should leverage private sector financing to achieve the economic forecasts. One sector that can contribute immensely to this growth is the real estate sector. As the African population continues to grow, the real estate sector has the potential for both individual, country, and regional growth.

ESV Oluwabusuyi Adepoju is a registered Estate Surveyor and Valuer. He sent this piece from Lagos.