Infrastructure shortages in Africa will create opportunities for investment in the property sector, PricewaterhouseCoopers have said.
According to PwC in its Real Estate report noted that growth in other sectors of the economy will continue to create demand for infrastructure investment.
“Connections to road, rail and public transport are vital for urban success. Doing business in Africa remains a challenge as infrastructure lags well behind the rest of the world, but there are distinct regional differences.”
Recent PwC research suggests that infrastructure spending in sub-Saharan Africa will exceed US$180* billion per annum by 2025, representing a growth rate of 10 per cent per annum.
The rating agency pointed out that major infrastructure investment programmes in Nigeria and South Africa are now being accompanied by significant projects in other countries like Ghana, Kenya, Mozambique and Tanzania, but a huge shortfall in government funding have created opportunities for private investors to support this development need through direct investment and public-private partnership (PPP) agreements.
“The influence of government policy and legislation on the decision to invest will increase, while local partnerships will become increasingly important. Increased political stability on the continent and increased participation in local partnerships will continue to ease investors’ concerns relating to investing across Africa.
According to the report, “Collaborating with governments or involving a local partner in future real estate developments in Africa will become more important to mitigate the risks. Governments and the investment community will have to work together to fund and build cities and their infrastructure,” PwC.
Continued advancement within pension fund, stock exchange and banking regimes, PwC noted will drive investment, and an increased range of investors will drive demand for real estate investment opportunities.
As Development Finance Institutions (DFI), Sovereign Wealth Funds (SWF) – government-run investment vehicles that manage state-owned assets – and private equity providers continue to enter the market alongside private capital and institutional investors, developers and investors will find raising capital in the markets easier as the local financial apparatus develops.
