RESEARCH

AFRICA REPORT 2017/18

REAL ESTATE MARKETS IN A CONTINENT OF GROWTH AND OPPORTUNITY AFRICA REPORT 2017/18 RESEARCH

CONTENTS AFRICA: STILL RISING? 03 Africa: still rising? The rise of Africa’s economies has been interrupted by recent external shocks, 08 Capital markets review but there remain grounds for optimism over the longer-term outlook. 10 Sector focus: retail After decades of disappointing 12 Sector focus: logistics FIGURE 1 performance, African economic growth African GDP in current US$ 14 began to accelerate around the turn of 15 the century. The continent averaged GDP growth of more than 5% per annum 2,000 16 between 2000 and 2014, primarily driven by fast-growing Sub-Saharan economies. Cameroon 1,500 17 During this period, the term “Africa Rising”, 18 Chad popularised by publications such as The Economist, became shorthand for this 1,000 19 Côte d’Ivoire rapid economic growth and the increased optimism about Africa’s future prospects. US$ billions) GDP (Current 500 20 Democratic Republic of the Congo However, economic growth has since 21 Egypt 0 moderated, due primarily to the exposure 22 Equatorial Guinea of African countries to external factors 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 including falling commodity prices and 23 Ethiopia slower growth in China. The International Source: World Bank/Knight Frank calculations Monetary Fund (IMF) estimates that 24 Gabon and commodity-exporting countries entered recession in 2016, African GDP growth slowed to 3.4% in since 2015. The major oil exporters, in while the IMF expected Angola to 25 2015, easing further to 2.1% in 2016. particular, have been impacted by low record zero growth for the year. Smaller Growth for the Sub-Saharan region was 26 Kenya estimated at just 1.5% in 2016. Against oil prices, but more resilient growth rates oil-driven economies, such as Equatorial have been seen in oil-importing countries. Guinea and Gabon, have also been 27 this backdrop, the question “is Africa still severely impacted by the decline in rising?” has moved to the forefront of Within Sub-Saharan Africa, the drop in commodity prices. 28 economic debate. GDP growth can be largely attributed to 29 Mali the region’s three biggest economies; Although South Africa is a net oil A multi-speed Africa Nigeria, South Africa and Angola. As importer, its growth has been subdued 30 Mauritania The headline GDP figures disguise Africa’s two largest oil exporters, Nigeria by weakness in the mining and 31 the increasingly multi-speed nature of and Angola have both seen oil revenues manufacturing sectors and the effect African economies. In broad terms, there badly hit by lower prices, and this has of a severe drought on agricultural 32 Morocco has been a divergence between the additionally put strain on government production. The country only narrowly growth rates of commodity-importing spending, debt levels and currencies. avoided entering recession in 2016. 33

34 FIGURE 2 FIGURE 3 35 Nigeria Sub-Saharan Africa GDP growth Sub-Saharan Africa GDP growth rates rates by decade 36 Rwanda 6 10% 37 Senegal 5.64 8% 5 ESTIMATE

38 South Africa FORECAST 4.06 6% 39 Tanzania 4 3.79 3.33 4% 40 Tunisia 3 2% 41 2 1.70 0% 42 1.01 1 Compound annual growth rate (%) rate Compound annual growth -2% 43 Zimbabwe 2010 2011 2012 2013 2014 2015 2016 2017 0 1960s 1970s 1980s 1990s 2000s 2010s 44 Africa commercial occupier guide to date

47 Knight Frank in Africa Source: World Bank/Knight Frank calculations Source: International Monetary Fund

2 10% 3

8% ESTIMATE FORECAST

6%

4%

2%

0%

-2% 2010 2011 2012 2013 2014 2015 2016 2017

AFRICA REPORT 2017/18 RESEARCH

In contrast, a group of commodity- food and agriculture processing, populations with limited access to importing East African countries, business process outsourcing, financial formal banking. East Africa, in particular, AFRICA GDP GROWTH including Tanzania, Ethiopia, Kenya and services and construction. There is is a hotbed for innovation in this Rwanda, have all maintained GDP growth also significant growth potential for sector and, according to Global Findex RATES, 2016 rates well in excess of 5%, benefiting manufacturing industry in Africa, as this data, Kenya leads the world, with from low oil prices and growth in private sector consistently underperforms in 58% of the population having mobile comparison with other emerging markets. consumption and investment. The West money accounts. African economies of Côte d’Ivoire and Technological change will be at the heart Senegal have also emerged as two of the African mobile phone markets have of the future growth and diversification continent’s strongest performers aided now entered a second phase of growth, SA of African economies. Mobile by improved political stability, economic as consumers shift from basic feature telecommunications have already had a reforms and infrastructure investment. phones to smartphones. By 2020, it is RCC transformative socio-economic impact expected that smartphone connections In a reversal of the general pattern of in Africa by allowing large sections of the will be the majority in Africa. The adoption AERA A recent years, the North Africa region saw population to skip landlines and move E straight to wireless technology. This has of more sophisticated mobile technology higher GDP growth than Sub-Saharan ESER Africa in 2016. However, growth within led to African consumers embracing will have a large role in shaping consumer SAHARA the region has been uneven and Libya mobile banking and payment services, behaviour, and it will drive the growth of and Algeria have both been impacted by improving the financial inclusion of sectors such as online retailing. lower oil prices. ARAA A SA ERREA CA FIGURE 4 ERE ER Economic diversification Africa’s largest oil-exporting countries and technological change SEEA CHA HE AA RA The current struggles of Africa’s oil- 100 100 SAA EA AS EHA producing countries emphasise the 90 90 SSA EA ERA need for the continent’s economies to HAA SH 80 80 Oil’s share of total exports (%) SA diversify so that they are not dependent CE 70 70 SERRA CERA ARCA on commodities, or any other single EE RE REC 60 60 E CAER source of economic output. Expediting ERA AA 50 50 the ongoing process of economic EARA EA EA diversification is an absolute priority for 40 40 30 30 S A many African governments. RCE ECRAC RAA Value of oil exports (US$ billion) of oil exports Value 20 20 REC R Potential sources of growth and HE C 10 10 SECHEES diversification for African economies 0 0 AAA include sectors such as retailing, NIGERIA ANGOLA ALGERIA LIBYA EGYPT EQUATORIAL REPUBLIC GABON SOUTH CAMEROON REC GUINEA OF THE SUDAN CONGO HE C CRS

Source: Observatory of Economic Complexity (2014)/Knight Frank calculations AA Data includes crude and refined oil AA AA

FIGURE 5 Africa mobile technology growth forecasts AE AE ARS

800 80 AAASCAR AA SAA 700 70 Smartphone connections (% of total)

600 60 SAA

500 50 GP growth estimates, 01 ESH 400 40 0 SH ARCA 300 30 10

200 20 210

Unique mobile subscribers (millions) 0120 100 10 0 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Dar es Salaam Source: GSMA Intelligence Source: International Monetary Fund

4 5 AFRICA REPORT 2017/18 RESEARCH

Population growth FIGURE 6 and urbanisation Global population forecasts AFRICA POPULATION DENSITY While economic growth has faltered in AND CITY GROWTH parts of Africa, demographic trends remain 6 favourable to the continent’s longer term development. The population of Africa is 5 3.5m 3.2m 3.6m 4.8m 18.8m 5.1m rising at a faster rate than that of any other 4 global region and its demographic profile is both young and increasingly urbanised. 3 1.2% 3.1% 3.0% 1.8% 1.8% 2.8%

Africa’s population has more than doubled 2 over the last 30 years to over one billion, and Population (billions) the United Nations (UN) forecasts that it will 1 surpass four billion by 2100, which would be 0 3.2m around 40% of the global population. With 2000 other global regions likely to be characterised 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070 2075 2080 2085 2090 2095 2100 by slower population growth and ageing 3.1% Source: United Nations Population Division trends over the coming decades, Africa 3.5m will be home to an increasingly significant Cities Institute suggest that Lagos, environment also appears increasingly portion of the global workforce. McKinsey and Dar es Salaam will be the three most fractured. Recent patterns of growth projects that, by 2034, Africa’s working-age 3.8% 1.9m populous cities in the world at the end of have highlighted the diverse nature population will be 1.1 billion, overtaking both the century. The heavily urbanised stretch of Africa’s economies, and significant China and India. of coast running from Lagos through to variations in growth rates will persist, 4.2% Rural-to-urban migration is intensifying the Ivorian capital Abidjan, covering the especially if oil prices fail to recover population growth rates within many best part of 1,000 km, may provide the to levels that are more sustainable for major cities in Africa. Currently, the urban foundation for a future global megalopolis. Africa’s oil-exporting countries. population of Africa is increasing by more 3.9m Rapid population growth will create The outlook for 2017 and beyond is than 15 million people each year and the UN challenges for city authorities and put strain 4.9m forecasts that Africa’s overall urbanisation coloured by wider global concerns. on urban infrastructures. It will also create rate will increase from its current level of Much attention will be paid to the effects 4.0% opportunities for property development as of the Trump presidency on Africa and around 40% to over 50% by 2040. % huge investment will be needed in the built whether, among other concerns, it 3.4 The fastest growing cities of Africa are nearly environment of African cities if they are to threatens the future of the US African all within the Sub-Saharan region, outside cope with the pressures of population growth. Growth and Opportunity Act (AGOA) South Africa. Cities such as Kampala, trade agreement. However, it is possible 2.3m 2.4m 5.1m and Nairobi are currently growing at A complex but that OPEC deals limiting oil production rates in excess of 4% per annum and, over will work to the benefit of African oil positive outlook % % % the coming decades, an increasing number exporters and spur a better-than- 2.0 5.5 5.5 of Sub-Saharan cities will join the ranks of A more complex and challenging expected bounce in these economies. the world’s megacities with populations over economic outlook has emerged for Africa, 10 million. Projections made by the Global at a time when the global geopolitical Economic growth for Sub-Saharan Africa is generally expected to show a 13.1m 11.6m moderate recovery in 2017 and the IMF FIGURE 7 forecasts that regional GDP growth will Africa urbanisation forecasts % 4.0% be back above 4% by 2019. Over the 4.2 longer term, many of the factors that

1,400 70 supported economic growth in the early part of the century will remain in Africa’s 1,200 60 5.5m favour and its growing, young urban People per sq km

Urbanisation rate (%) 1,000 50 population could prove to be Africa’s

800 greatest asset in an ageing world. % 40 <1 >1,000 4.3 600 30 Recent events have underlined how important it is for investors targeting 400 20 3.7m 9.4m 2.2m Urban population (millions) Africa to gain a detailed understanding 200 10 of individual markets and to time their

0 0 market entry correctly. Africa continues to 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 201 1.1% 2.0% 4.7% offer great opportunities to investors able 2012020 to navigate the markets astutely and for Source: United Nations Population Division those with long-term investment horizons. Source: Socioeconomic Data and Applications Center (SEDAC)/United Nations Population Division/Knight Frank

6 7 AFRICA REPORT 2017/18 RESEARCH

A further noteworthy event during 2016 backed developments in Sub-Saharan world where such yields can be achieved CAPITAL MARKETS REVIEW was the creation of Mara Delta, a pan- Africa include the UAE firm Eagle Hills’ by prime assets, not all international African real estate fund formed from Century City project in the Nigerian capital investors will feel that these yields A growing volume of capital is targeted at Sub-Saharan Africa the merger of Delta Africa and Mara Abuja. There is also strong interest from adequately compensate for the higher risk Diversified Property Holdings. During Middle Eastern groups in Africa’s growing profile of African markets. Yield levels are real estate investment and development. 2016, Mara Delta was one of the most hospitality real estate sector. supported by the strength of demand for acquisitive buyers of real estate across the the very limited number of institutional- Among Asian investors, Chinese groups The persuasive long-term investment Investors’ appetite for Sub-Saharan Actis’ two previous funds, closed in 2006 region, growing a portfolio which currently grade assets that come to the market, are most visible in Africa, although the case for Sub-Saharan Africa has drawn real estate was highlighted in 2016 by and 2012, have been involved with some includes assets in Kenya, Mauritius, and this dynamic is likely to be maintained Japanese government has also taken increased numbers of international the announcement that the UK-based of Sub-Saharan Africa’s most modern Morocco, Mozambique and Zambia. as recently-launched investment vehicles significant steps to encourage investment investors to investigate opportunities emerging markets specialist Actis had commercial property developments, in seek to grow their funds. The activities of South African investors in into Africa. Chinese institutions are within the region over recent years, albeit raised US$500 million for its third African countries such as Ghana, Kenya, Nigeria the rest of Africa are part of a wider trend heavily involved with the financing and Developments made by groups such transactional activity has been restricted property fund, Actis Africa Real Estate and Tanzania. In recent years, Actis has that has seen them increasingly move into construction of large infrastructure as Actis and RMB Westport will add by the limited availability of investment- Fund 3. This is the largest amount that exited from many of its first wave of foreign markets in order to hedge against projects across Africa, but pure-play significantly to Sub-Saharan Africa’s grade stock and the opacity of the has ever been raised for a private real investments, selling its interests in assets a weak rand and a sluggish domestic property investment involving Chinese investment stock over the next five years, markets outside of South Africa. Interest estate fund focused on Sub-Saharan including the Accra Mall, Nairobi Business economy. This has also led to South firms is much less common. Notable increasing the availability of assets that in the sector remains heightened, despite Africa outside South Africa, and it included Park and Ikeja City Mall. African investors directing significant large-scale urban development projects meet international institutional investors’ the weakening of some Sub-Saharan a commitment from the Government of When Actis launched its first Sub-Saharan volumes of capital to Central and Eastern involving Chinese investors include requirements. However, global investors economies over the last two years. Singapore Investment Corporation (GIC). Africa fund over a decade ago, it was a Europe, attracted by the relatively high Shanghai Zendai’s Modderfontein New seeking to enter African markets may feel that it is prudent to initially follow the path pioneer entering a market largely untapped yields on offer in this region. During 2016, City, near Johannesburg. Additionally, taken by GIC and Grosvenor by investing by global property funds. However, its third South African investors including Hyprop, China’s state-owned AVIC has made a FIGURE 7 in funds created by established investors Africa prime office yields fund will enter a significantly more crowded Redefine and Tower acquired US$2.1 substantial investment in the mixed-use within the region, rather than making marketplace as a series of property billion of property in CEE markets. Two Rivers development in Nairobi. investment vehicles have emerged in direct property investments. When raising recent years targeting Sub-Saharan real Significant demand for African real estate Recent transactional evidence indicates capital, the new wave of Sub-Saharan stems from Middle Eastern investors, who that yields within the 7-9% range are property funds will seek to tap into the ADDIS ABABA 6.00% estate. Many of these are South African- generally have a preference for large-scale typical for investment-grade assets in the burgeoning demand from international HARARE 8.00% controlled funds, albeit often registered or development projects rather than direct most attractive Sub-Saharan markets. investors seeking to gain exposure to NAIROBI 8.00% listed offshore in Mauritius. property investment. Middle Eastern- While there are few other regions of the Sub-Saharan Africa. GABORONE 8.25% A prominent example is RMB Westport, CASABLANCA 8.50% which was created in 2008 as a joint JOHANNESBURG 8.50% venture between Rand Merchant Bank Selected Sub-Saharan Africa investment transactions, 2015-16 PORT LOUIS 8.50% and the Westport Property Group. Its WINDHOEK 8.50% current development projects include Date Property Location Sector Seller Buyer Estimated Reported ABIDJAN 9.00% the Wings Office Complex in Lagos and price yield (US$ million) ACCRA 9.00% Muxima Shopping Centre in Luanda. RMB 9.00% Westport’s second fund, which has a target Q4 2015 Ikeja City Mall Lagos, Nigeria Retail Actis/RMB Hyprop (75%)/ 91.0 >8.00% Westport/Paragon Attacq (25%) DAR ES SALAAM 9.00% of raising US$450 million, has attracted commitments from both GIC and the UK Q2 2015 Two Rivers Development Nairobi, Kenya Mixed Use Centum Aviation 70.0 N/A LAGOS 9.00% (39% stake) Industry investor Grosvenor. ABUJA 9.50% Corporation of China (AVIC) BLANTYRE 9.75% Other real estate investment vehicles to have been launched in the last two Q4 2015 East Park Mall, Acacia Lusaka & Ndola, Retail/Office Casilli Group SA Corporate 49.6 8.68% 10.00% years include a pan-African joint venture Office Park & Jacaranda Zambia Mall (50% stakes) DAKAR 10.00% created by Growthpoint and Investec, Q3 2015 Wings Oando Development Lagos, Nigeria Office RMB Westport Pivotal 49.0 N/A DOUALA 10.00% which has the target of raising US$500 (37.1% stake) million. Momentum Global Investment KAMPALA 10.00% Q2 2015 Vodacom Building Maputo, Mozambique Office Sociedade De Delta (now 46.0 6.63% Management and Eris Property Group have LUSAKA 10.00% Construçoes Mara Delta) also formed a joint venture, the US$250 Catemba MAPUTO 10.00% million Momentum Africa Real Estate Fund, Q4 2016 Cosmopolitan Mall Lusaka, Zambia Retail Rockcastle Mara Delta 37.1 7.75% CAIRO 10.50% which has allocated capital to development (50% stake) TUNIS 10.50% projects in Ghana and Nigeria. Q4 2015 Bagatelle – Mall of Mauritius Bagatelle, Mauritius Retail Atterbury Ascencia 28.9 c.7.00% (34.9% stake) KIGALI 11.00% The Anglo-South African group Old Mutual signalled its intention to expand its African Q4 2015 Makuba Mall & Kafubu Mall Kitwe & Ndola, Zambia Retail Rockcastle Delta (now 21.6 7.75% (50% stakes) Mara Delta) KINSHASA 12.00% footprint by announcing a partnership Q4 2015 Greenspan Mall Nairobi, Kenya Mixed Use Greenspan Stanlib Kenya 20.0 8.10% with the Nigerian Sovereign Investment LUANDA 14.00% Mall Limited Fahari I-REIT Authority in the second half of 2016. This Q1 2016 Barclays House Ebene, Mauritius Office Jade Group Delta (now 13.4 8.30% venture aims to raise US$500 million for a Mara Delta) real estate fund, in addition to a US$200 Source: Knight Frank Research million agriculture investment vehicle. Source: Knight Frank Research/Real Capital Analytics/Company reports and financial statements

8 9 AFRICA REPORT 2017/18 RESEARCH

SECTOR FOCUS: RETAIL SELECTED SHOPPING MALL OPENINGS Sub-Saharan Africa’s modern retail stock continues to 2015-Q1 2017 grow in size and quality. The development of The retail property sector has been a Garden City Mall (33,500 sq m) in 2015, major focus for development activity followed by the opening of The Hub modern shopping within Africa over the last decade, (30,000 sq m) in the affluent suburb of malls is changing the causing the shopping mall concept to Karen in 2016. The 67,000 sq m Two take root in increasingly wide range Rivers Mall, which is now the largest in urban landscapes of of major African cities. Development Kenya, opened in February 2017. Sub-Saharan Africa has been driven by the growth of the continent’s consumer markets and the Elsewhere, developers including 20,000 15,000 14,000 12,000 sq m sq m sq m sq m expansion of domestic and international Atterbury, Novare, Resilient and RMB retailers, particularly the leading South Westport have all delivered modern mall PLAYCE MARCORY ACHIMOTA RETAIL CENTRE DELTA MALL ONITSHA MALL Abidjan, Cote d’Ivoire Accra, Ghana Warri, Nigeria Onitsha, Nigeria African supermarket chains such as projects over the last two years, adding to the retail stock of countries including Opening date Q4 2015 Opening date Q4 2015 Opening date Q2 2015 Opening date Q2 2016 Shoprite, Pick n Pay and Game. Developer/investor Developer/investor Developer/investor Developer/investor Ghana and Nigeria. The positive growth CFAO Atterbury/Delico Resilient Africa African Capital Alliance South Africa is by far the largest and outlook for Côte d’Ivoire and Senegal has Anchor tenants Anchor tenants Anchor tenants Anchor tenants Shoprite, Palace Shoprite Shoprite most mature retail market in the Sub- caused these countries to also attract Carrefour Saharan region, with approximately 23 increased interest, having previously million sq m of shopping centre floor seen relatively limited modern retail space, compared with only about 3 development.0 Of particular note, CFAO million sq m in the whole of the rest of has opened PlaYce Marcory in Abidjan as Sub-Saharan Africa. The South African 00 the first of a series of Carrefour-anchored market continued to grow in 2016, malls that are20 planned for West and most notably through the completion Central Africa. of Atterbury’s 131,000 sq m Mall of 200 25,000 22,000 22,000 Africa, the largest single-phase mall Large volumes of modern retail space sq m sq m sq m 10 development ever in Sub-Saharan Africa. remain in the pipeline across Sub- JABI LAKE MALL NOVARE LEKKI MALL XYAMI SHOPPING NOVA VIDA Abuja, Nigeria Lagos, Nigeria Luanda, Angola Saharan Africa,100 although the weakening Outside of South Africa, the Kenyan Opening date Q2 2015 Opening date Q3 2016 Opening date Q4 2015 of the oil-driven economies has led to capital Nairobi has the greatest volume 0 Developer/investor Developer/investor Developer/investor of modern retail floor space in Sub- the postponement or scaling down of Actis/Laurus/Duval Properties Novare/Urshday Zahara Imobiliária some projects0 in these countries. With Anchor tenants Anchor tenants Anchor tenants Saharan Africa, and it continues to be a Shoprite, Game Shoprite, Game Kero development hotspot. The city saw the most of the region’s major capital cities completion of the first phase of Actis’ now having at least one modern mall, developers have increasingly targeted secondary cities in order to gain first- FIGURE 8 mover advantage in these locations. Completed shopping centre space in Sub-Saharan African cities There are also signs that pragmatic

500,000 developers are now concentrating on the delivery of well-located small and 450,000 00000 medium-sized convenience shopping 400,000 0000 centres rather than regional mega-malls. 350,000 00000 131,000 67,000 33,500 30,000 26,000 sq m sq m sq m sq m sq m 300,000 0000As the sector grows and competition

250,000 00000between retail schemes intensifies, MALL OF AFRICA TWO RIVERS MALL GARDEN CITY MALL (PHASE ONE) THE HUB KAREN COSMOPOLI TAN MALL 20000developers will seek to differentiate their Guateng, South Africa Nairobi, Kenya Nairobi, Kenya Nairobi, Kenya Lusaka, Zambia 200,000 200000malls by offering access to international Opening date Q2 2016 Opening date Q1 2017 Opening date Q2 2015 Opening date Q1 2016 Opening date Q1 2016 150,000 Developer/investor Developer/investor Developer/investor Developer/investor Developer/investor 10000brands, leisure facilities and upscale 100,000 Attacq/Atterbury Centum/Athena Properties Actis/Aspire/Mentor Management Azalea Holdings Rockcastle 100000consumer experiences. Selecting the Anchor tenants Anchor tenants Anchor tenants Anchor tenants Anchor tenants 50,000 Edgars, Woolworths, Game, Carrefour, LC Waikiki Game, Nakumatt Carrefour Shoprite, Game right0000 micro-locations for development 0 Checkers Hyper will be0 crucial to the success of new LAGOS ACCRA ABUJA NAIROBI HARARE LUSAKA LUANDA KIGALI DAKAR KAMPALA ABIDJAN MAPUTO centres, particularly in cities that already WINDHOEKGABORONE LILONGWEKINSHASA ADDIS ABABA have successful existing malls. Modern DAR ES SALAAM mall development will play a major role in Source: Knight Frank Research Graph excludes South African cities shaping the future landscapes of Africa’s Floor space estimates include schemes with a minimum gross leasable area (GLA) of 5,000 sq m growing cities.

10 11 AFRICA REPORT 2017/18 RESEARCH

SECTOR FOCUS: SELECTED LOGISTICS LOGISTICS DEVELOPMENT PROJECTS The logistics property sector has emerged as a growing focus for new development. Africa Logistics Properties Over the last decade, modern ports are also hotspots for logistics Tunisia Nairobi, Kenya commercial property development within developers, as Africa’s reliance on sea Morocco Sub-Saharan Africa has largely been transport for international trade means Africa Logistics Properties (ALP) is an concentrated on the retail and office that its ports are crucial locations in firms’ investment vehicle backed by the East Algeria African group Maris. ALP is seeking sectors, with logistics development logistics networks. Dubai’s DP World Libya to raise US$65-70 million, including a being more limited. However, there is Egypt is notably active in the development proposed investment from the World a growing recognition that the region’s and operation of ports and associated Bank’s International Finance Corporation key cities are undersupplied for modern logistics property in Africa. arm, to develop logistics parks on sites logistics space. Development activity around Nairobi. is burgeoning, supported by demand The future of African logistics property for high quality space from retailers and markets will be shaped by the impact Mauritania consumer goods manufacturers seeking of disruptive technologies. Drones, CoastDryport to expand their African operations and for example, have the potential to Mali Niger Soga, Tanzania improve distribution networks and help logistics operators overcome Sudan supply chains. the deficiencies of African transport The US-based BlackIvy Group has plans Senegal to build a dry port and intermodal logistics infrastructure, by enabling the movement Chad New developments opened in 2016 park at the village of Soga, west of Dar es of goods to locations without reliable Burkina included York Commercial Park in the Faso Salaam. The 500 acre site will be served road networks. A system described Guinea Zambian capital Lusaka and the Agility Benin by two dedicated rail lines. as the world’s first commercial drone Ghana Distribution Park at the Port of Tema in Nigeria delivery service was launched in Rwanda Cte Ethiopia Ghana. Both projects offer built-to-suit d’Ivoire South Sudan by the US company Zipline in 2016. Central Kigali Logistics Platform units of a quality previously unavailable African Republic Kigali, Rwanda in these markets. The Ghanaian project The rise of online retailing will also shape Cameroon is the first of a number of logistics parks logistics property markets going forward. Somalia DP World has been granted a concession that the Kuwaiti developer Agility plans While small by global standards, Africa’s to develop and operate a new logistics Republic centre in Kigali. The first phase will be to build across Africa, with Angola, online retail sector has started to grow of the Uganda Côte d’Ivoire, Mozambique, Nigeria and Gabon Congo built on 90,000 sq m of land and will at a fast pace, driven primarily by the Democratic comprise a 12,000 sq m container yard Tanzania among its target markets. increased penetration of smart mobile Republic Rwanda Kenya of the Congo and a 19,600 sq m warehousing facility. Several major logistics and industrial devices. Pioneering online retailers parks are in the pipeline as part of such as Nigeria’s Jumia and Konga wider urban developments such as are building distribution networks that Tatu Industrial Park Tanzania Rendeavour’s Tatu City near Nairobi and will require increasingly sophisticated Nairobi, Kenya Roma Park in Lusaka. The areas around logistics properties. Dakar Free Zone Dakar, Senegal Part of the Tatu City urban development Angola project, Tatu Industrial Park comprises DP World has agreed with the Senegalese Malawi 450 acres of serviced land suitable for government to develop a logistics Zambia light industrial, warehouse and logistics free zone at the new Blaise Diagne uses. Unilever has signed an agreement International Airport on the outskirts of to acquire 70 acres of land at the park. Senegal. The group already operates the Mozambique Madagascar Port of Dakar Container Terminal. Zimbabwe Namibia York Commercial Park Lusaka, Zambia Agility Distribution Park Botswana Tema, Accra, Ghana Actis, in conjunction with the South African developer Improvon, is developing In October 2016, Agility opened the a modern logistics park in the south first phase of a logistics park built on a of Lusaka. The park’s first phase was 45 acre site at Tema Free Zone, east completed in early 2016. of Accra. When fully built, the park is expected to have 100,000 sq m of South Africa warehouse space. Port of Cape Town

12 13 Tunisia Morocco

Algeria Western Libya Egypt Sahara

Mauritania

Mali Senegal Niger Eritrea Gambia Guinea Chad Sudan Bissau Guinea Somalia Sierra BeninAFRICA REPORT 2017/18 RESEARCH Leone Ivory Togo Nigeria Ethiopia Liberia Coast Ghana Central Africa Republic Camaroon

ALGERIA Equatorial ANGOLAUganda Guinea Kenya Gabon Congo Rwanda Oran Key facts Key facts Algiers Democratic Constantine Tunisia Population 39.7 million Population 25.0 million Republic of the Congo Tanzania Major cities: Major cities: Morocco Algiers 2.6 million Luanda 5.5 million Oran 0.9 million Huambo 1.3 million Luanda Constantine 0.5 million Official languages Portuguese Official languages Arabic Libya Total area 1,246,700 sq km ANGOLA TotalEgypt area 2,381,741 sq km GDP growth (2016) 0.0% Huambo Malawi Western GDP growth (2016) 3.6% Zambia Sahara Key export Petroleum Key export Petroleum Currency Kwanza (AOA) Currency Algerian Dinar (DZD) EIU country risk D Mauritania EIU country risk D rating (E=most risky) Zimbabwe rating (E=most risky) World Bank Doing 182 Mali World Bank Doing 156 Business rank Namibia Mauritius Niger Business rank (out of 190 countries) Botswana Office market Industrial market (out of 190 countries) Eritrea Office market Industrial market Senegal Sudan The traditional office locations in Algiers of Algeria’s oil-dependent economyChad is Falling oil prices have had a dramatic Luanda’s main industrial and Gambia Hydra and the city centre generally remain currently depressed and attempts to Luanda prime rents and yields impact on Angola’s oil-dependent warehousing locations are in and around the prime areas for local businesses. diversify the economic base have had Algiers prime rents and yields Djibouti economy and the real estate sector. the port area and Viana to the east of Guinea Benin Prime rents Prime BissauHowever,Guinea international corporate occupiers only limited success. It is anticipated that Office demand in Luanda has virtually the city. Historically, it has been very Prime rents Prime yields South Africa with larger requirementsCôte have tendedTogo to shift theNigeria government will increase taxes and ground to a halt and supply has difficult to find good quality warehousing Sierra d’Ivoire Ethiopiayields eastwardsLeone towards the airport and the new subsidised fuel prices in 2017, targeting Offices US$80/sq m/month 14% increased, causing vacancy rates for new in Luanda, but the drop in demand from South Sudan commercial districts of and businesses more than individuals.Central This African Offices US$30/sq m/month 10% Retail US$60/sq m/month 12% buildings to rise above 20%, with further the oil sector and an increase in supply Liberia Ghana Republic Alger Medina. Banking, in particular, is will negativelyCamer impactoon Algeria’s appeal as Retail US$33/sq m/month 9% Industrial US$10/sq m/month 14% increases expected in 2017. Luanda still has caused the market to become more largely no longer headquartered in the city a manufacturing location and discourage Industrial US$9.50/sq m/month 13% Residential US$15,000/month* 11% has the highest office rents in Africa, but balanced. Rents and values have fallen Somalia centre, with Natixis, BNP Paribas, Citi and internationalEquatorial investment, which is already Residential UgandaUS$4,500/month* 7.5% Source: Knight Frank LLP Grade A rents have almost halved in the by 30-50% in the last couple of years. In Guinea *4 bedroom executive house – prime location the short-term, the market is expected HSBC all now out to the east. Trust Bank and deterred by restrictions on foreign Source: Knight Frank LLP Kenya last three years. The market has also Al Baraka Bank also have new headquarters ownership. There areCongo several major *4 bedroom executive house – prime location been affected by recently-introduced to remain stable, but values should Gabon under construction in Bab Ezzouar. The industrial zones around Algiers includingDemocratic legislation prohibiting real estate rents increase once the economy recovers office market has been subdued over the Rouïba, , and DarRepublic El Rwanda from being set in, or linked to, a foreign and government initiatives to promote Contacts last year as a result of economic uncertainty Beïda/; these are all practicallyof the Congo Burundi currency. This has badly impacted diversified industries have an effect. Contact Peter Welborn, Managing Director, Africa and many of the largest construction projects full and it is difficult to find good quality landlords who have typically borrowed Peter Welborn, Managing Director, Africa +44 20 7861 1200 have made slow progress. However, prime real estate. There is a pharmaceutical/ in US dollars but are now receiving their +44 20 7861 1200Tanzania [email protected] Residential market rents have been stable, as the availability of biotechnology cluster at Sidi Abdallah, revenues in kwanza. [email protected] Tim Ware, Managing Director, Zambia As is the case in other real estate space suitable for international occupiers 30 km south west of Algiers, where Sanofi +260 211 250 538/250 683 sectors, high-end residential apartments remains limited. is building a factory. +260 211 255 992-3 Retail market and villas in Luanda are the most [email protected] The retail sector in Luanda remains at expensive in Africa, despite a 30-50% Retail market Residential marketAngola a nascent stage of development, with fall in prices in recent years. Unlike other Malawi The informal retail sector is still predominant The prime residential area of Algiers is Zambia the majority of activity being either sectors, residential values were already in Algeria, but a series of modern retail Hydra, which is also the main area of informal trading or in standalone units. in decline before the drop in oil prices, developments have emerged over the last the city for the diplomatic sector. The International retailers, who were looking due to increased levels of new supply in decade. The first of these was Sidar’s Al upmarket housing market has slowed in Mozambique at the market in 2013-14, have all but 2013-14. The prime residential market is Qods in Chéraga, which has since been the last two years and rents have fallen, Zimbabwe disappeared. However, local investors dominated by the expatriate community, Madagascar joined by SCCA’s Centre Commercial Bab with the potential for furtherNamibia decreases have promoted the expansion of the who generally look to rent rather than Ezzouar, Arcofina’s Ardis-Medina Center due to the depressed economic Mauritius mall operator Xyami, which is rolling buy. A four-bedroom villa on one of and Chaïbi/Asicom’s City Center. These conditions. Lease renewals are beingBotswana out retail centres in Luanda and other the most sought-after compounds in shopping centres are all performing well in agreed without review or at discounts to Angolan cities. There are currently Talatona can still fetch US$15,000 terms of occupancy and footfall, although previous levels. The Finance Act 2017 has fourteen shopping centres in Greater per month, but in 2014 the same villa Algeria’s current economic challenges are raised taxes on landlords’ rental incomes, Luanda, mainly concentrated in the would have achieved US$25,000 per likely to slow further development. Carrefour impacting the attractiveness of residential downtown and Talatona, where many month. Despite the weaker rental South Africa has recently re-entered Algeria but the investment. There is strong potential expatriates live. There has been a lack of market, yields have actually hardened requirement to form a joint venture with demand for affordable housing and open market transactions, but anecdotal slightly, as investors have bought real local partners is an inhibitor to the market government initiatives have attempted to evidence suggests that rents have fallen estate to hedge against inflation and the Bab Ezzouar Mall, Algiers BESA Headquarters, Luanda entry of other international retailers. encourage investment in this sector. by around 50% since 2014. devaluation of the kwanza.

14 15 Tunisia Morocco

Algeria Libya Egypt Western Sahara

Mauritania

Mali Niger Eritrea Senegal Sudan Chad Gambia

Guinea Djibouti Tunisia Bissau Guinea Benin Morocco Côte Nigeria Sierra d’Ivoire Togo Leone Ethiopia Ghana Central African South Sudan Liberia Republic Cameroon Algeria Libya Somalia Equatorial Uganda Egypt Guinea Kenya Western Congo Sahara Gabon Democratic Republic Rwanda of the Congo Burundi

Tanzania Mauritania AFRICA REPORT 2017/18 RESEARCH

Mali Niger

Eritrea Angola Senegal Sudan BOTSWANA Malawi CAMEROONChad Zambia Gambia

Key facts Key facts Djibouti Guinea Mozambique Benin Population Bissau2.3 million Guinea Population 23.3 million Zimbabwe Major cities: Major cities: Namibia Madagascar Côte Togo Nigeria Francistown Gaborone 0.2 million Yaoundéd’Ivoir e 3.1 million Francistown 0.1 million Sierra Douala 2.9 million Ethiopia Mauritius Leone Official languages English Official languages French, English South Sudan BOTSWANA Total area 581,730 sq km Total area 475,440 sq km Central African Liberia Ghana Republic Gaborone GDP growth (2016) 3.1% GDP growth (2016) 4.8% Key export Diamonds Key export Petroleum CAMEROON Currency Pula (BWP) Currency Central African Douala EIU country risk B CFA Franc (XAF) Yaoundé Democratic Republic South Africa Somalia rating (E=most risky) EIU country risk D of the Congo Uganda World Bank Doing 71 rating (E=most risky) Business rank World Bank Doing 166 Congo Kenya (out of 190 countries) Business rank Equatorial Guinea Office market Industrial market industrial centre. However, there is also (out of 190 countries) Office market Gabon significant development activity further Office supply continues to outstrip Demand for industrial space is focused on Cameroon has some significant south around Kribi, where a new deep- demand in Gaborone and this imbalance units of less than 500 sq m, as tenants have advantages, having a good education is likely to worsen for secondary space. Gaborone prime rents and yields Cameroon prime rents and yields started to use newly built business space system that produces high quality water port is under construction. The With several large CBD office towers due as cheaper quasi-offices or showrooms. country is rich in natural resources with Prime rents Prime employees and being both English and for completion in 2017 and government DOUALA The lack of strict planning controls within yields French speaking. However, a challenging significant industrial-scale agriculture departments set on moving to new CBD Prime rents Prime Burundi industrial areas has enabled this trend. For yields business environment has held back the including rubber, palm oil and coffee. The buildings, older and poorly located offices Offices US$11.50/sq m/month 8.25% new warehouses under 200 sq m, rents development of its office market. There stability of the local currency, which is will be left empty with little expectation Retail US$26.50/sq m/month 7.5% Offices US$26/sq m/month 10% are now as high as 50 pula/sq m/month, are hardly any good quality office buildings pegged to the Euro, is an advantage, as that they will be taken up by the private Retail US$46.50/sq m/month 8.75% Tanzania close to half the level of fully-fledged offices. Industrial US$4.75/sq m/month 9% and rents are flat. Douala is the main is Cameroon’s geographical position and sector. Fairgrounds Office Park remains Demand for larger space is dominated by Residential US$1,900/month* 6% Industrial US$4.50/sq m/month 12% commercial city, while the capital Yaoundé the potential to sell into the landlocked the decentralised location of choice, quasi-retailers seeking prominent properties Source: Knight Frank LLP Residential US$2,800/month* 7.5% has a much smaller corporate market which countries of Chad and the Central African with rents around 20% lower than in the *4 bedroom executive house – prime location with good visitor parking. With Botswana generally accommodates businesses that Republic. However, road networks are CBD. Despite the perceived oversupply, YAOUNDÉ reaching 50 years of independence in 2016, need access to government departments. relatively poor, which creates distribution several occupiers with requirements for Prime rents Prime many 50-year Fixed Period State Grant Office development has tended to be by 500-1,000 sq m are unable to secure yields challenges, and there are persistent delays (FPSG) leases are nearing expiration and local individuals and businesses and is appropriate accommodation in the new Contacts and other issues associated with moving industrial property owners are anxious to Offices US$22/sq m/month 10% below the standards required by global CBD buildings, and many high-rise Curtis Matobolo, Managing Director products through the port. see how the state treats requests to renew +267 395 3950 Retail US$22/sq m/month 9% corporate occupiers. towers with smaller floor plates do not Angola FPSG leases. [email protected] Industrial US$2/sq m/month 15% suit corporate occupiers. Residential market Malawi David Watson, Director Residential US$2,800/month* 7.5% Retail market Almost half of Cameroon’s population Zambia Residential market +267 395 3950 Source: Knight Frank LLP There are only a small number of Retail market [email protected] lives in informal dwellings, and there is a Gaborone has a diminishing supply of *4 bedroom executive house – prime location international retailers present in Cameroon The retail sector continues to see new housing supply deficit estimated to be the low-to-middle income housing, with most and most of these, such as Casino and development, but demand for space has equivalent of 100,000 units per year. This people on average incomes finding it difficult City Sport, are operated as franchises. Until waned, with few new market entrants Contact will be compounded in future years as the to locate affordable housing or finance their recently, there were no malls in Cameroon Mozambique and existing businesses contracting in middle class swells and due to diaspora own self-build homes. The drift to smaller Peter Welborn, Managing Director, Africa but Douala has lately seen the opening response to weak consumer spending. demand. It is very difficult to get financing and cheaper properties has been reinforced +44 20 7861 1200 of L’Atrium, anchored by Spar, and Kadji Zimbabwe Historically, mall developers have [email protected] Square, which has a Super U hypermarket. unless you are a government employee, targeted South African chains, who were by an increased number of single-family Madagascar The largest retail spaces in Yaoundé are withNamibia funding mainly available through the able to obtain exemptions to legislation households due to growing student and mostly supermarkets or general stores government agency, Credit Foncier de that limits the granting of certain trading elderly populations. Many residential buy-to- such as Casino, Mahima and DOVV. CFAO/ Cameroun. With supply lagging demand, licenses to local businesses. However, let investors are struggling to find tenants, Mauritius house prices are increasing, particularly a hardening of the government’s stance particularly as expatriate workers have found Carrefour have targeted both cities, and are Botswana at the mid-to-top end of the market where meant that South African retailers were it difficult to renew work permits. Demand most likely to open first in Douala, possibly unable to obtain exemptions throughout for multi-residential housing has increased as a standalone supermarket rather than a financing is a less important consideration. 2016. If this situation persists, it will and developers are increasingly tailoring mall-with-supermarket format. The best residential zones in Douala are deter the development of new malls and schemes to the demands of average local Akwa, Bonapriso and Bonamoussadi. landlords will have to target Botswana- buyers and tenants. Sales at the high end Industrial market In Yaoundé, the prime areas are mainly based tenants, who generally occupy of the market are far less frequent and likely As the location of Cameroon’s main around Centre Ville, Quartier du Lac and Zambezi Towers, Gaborone New office development, Yaoundé smaller shops of less than 200 sq m. to stay muted for some time. port, Douala is the country’s principal Bastos/Golf. South Africa

16 17 Tunisia Morocco

Algeria Mediterranean Sea AFRICA REPORT 2017/18 RESEARCH Libya Egypt Tunisia Morocco Western Sahara

Algeria Western Libya Egypt Mauritania Sahara CHAD CÔTE D’IVOIRE

Key facts Key facts Mauritania Eritrea Senegal Niger Sudan Population 14.0 million Population 22.7 million Chad Mali Major cities: Major cities: Mali Senegal Abidjan 4.9 million Niger EritrN’Djamenaea 1.3 million Gambia Moundou 0.1 million Bouaké 0.8 million Guinea Djibouti Yamoussoukro 0.3 million Bissau Guinea Benin Guinea CHAD Sudan Official languages French, Arabic Bissau Official languages French Total area 1,284,000 sq km CÔTE Nigeria Guinea N’Djamena Total area 322,463 sq km Sierra Togo GDP growth (2016) -1.1% Leone D’IVOIRE Benin Somalia GDP growth (2016) 8.0% Sierra Key export Petroleum Bouaké Central African South Sudan Ethiopia Leone Moundou Key export Cocoa Liberia Ghana Ivory Togo Nigeria EthiopiaCurrency Central African CFA Yamoussoukro Liberia Coast South Sudan Franc (XAF) Currency West African CFA Ghana Franc (XOF) Abidjan Cameroon Republic Central African EIU country risk D Republic rating (E=most risky) EIU country risk C rating (E=most risky) Somalia Cameroon World Bank Doing 180 Equatorial Uganda Business rank World Bank Doing 142 Office market Industrial market Office market Industrial market Kenya Equatorial Uganda (out of 190 countries) Business rank Guinea Congo Recent construction activity in N’Djamena Chad is consistently ranked as one of the Kenya (out of 190 countries) The leasing of Green Buro in Cocody Much of Abidjan’s industrial activity is Guinea most challenging countries in the world Gabon has largely related toGabon hotels andCongo ministries, Ambassades in early 2016, to tenants located in areas to the south of the lagoon Democratic rather than commercial offices. There is in which to do business. As a landlocked including GE, Pfizer and ExxonMobil, near the port, such as Vridi, Zones 3 and 4, Rwanda country with a relativelyRwanda small and low- N’Djamena prime rents and yields Abidjan prime rents and yields a large area of the city which has been Zaire established a new benchmark for prime and Koumassi. These traditional industrial Republic Burundi designated as the Cité Internationale des income population, Chad is not a target rents in Abidjan of XOF17,000/sq m/ areas are essentially at full capacity. Affaires, but it is unclear if this will present market for international manufacturers, Prime rents Prime Prime rents Prime month. This confirmed Abidjan as the Occupiers are either in legacy real estate and activity mainly involves local yields yields opportunities to corporate occupiers and, market with the fastest rental growth in or need fast access to the port for import/ of the Congo businesses involved with agri-processing.Tanzania if it does, this will not happen for several Offices US$55/sq m/month 10% Offices US$32/sq m/month 9% Africa over recent years. Several new office export activity. To the north of the lagoon, Tanzania In N’Djamena, industrial activity is mostly years. The city’s office market is basic, Retail US$46.50/sq m/month 9.5% Retail US$46.50/sq m/month 8.75% developments have been announced by the most important industrial zone is concentrated around Farcha where some and purpose-built offices are generally not international developers, notably Actis’ Yopougon, where the majority of of the oil companies have bases. There is Industrial US$3.75/sq m/month 13% Industrial US$6.50/sq m/month 12% businesses are larger users processing suitable for international companies. As significant oil activity in the south and west Residential US$4,600/month* 8% Residential US$3,700/month* 8% Renaissance Plaza project in Plateau, but a result, such operations often work out no significant new supply will come to the local products. International companies of the country, where ExxonMobil has large Source: Knight Frank LLP Source: Knight Frank LLP of hotels and apartments where rents can market until at least 2018, putting further in this location include Nestlé and Cargill. Angola operations. However, the government has *4 bedroom executive house – prime location *4 bedroom executive house – prime location be very high at XAF30,000/sq m/month- a history of tense relations with foreignMalawi upward pressure on rents. Development Further north, Heineken and CFAO are plus. However, the local rate for offices is Zambia building a new brewery on the road to Angola oil companies and it recently imposed tends to be focused on Plateau, which is Malawi around one-third, or less, of this. The US on ExxonMobil a fine equivalent to seven the established CBD where skyscraper Yamoussoukro, which will open in 2017 Zambia Embassy’s relocation to Dembé/Chagoua times the country’s GDP for the alleged Contact Contact construction is permitted, but many and give some critical mass to the proposed is likely to spur the movement of other non-payment of taxes. MozambiquePeter Welborn, Managing Director, Africa Peter Welborn, Managing Director, Africa international companies prefer Marcory PPP-funded PK24 industrial zone. administrative functions to this area of +44 20 7861 1200 +44 20 7861 1200 and Cocody. Zimbabwe [email protected] the city. Namibia Residential market Madagascar [email protected] Residential market Mozambique N’Djamena saw a surge in the Retail market Upmarket residential development tends Retail market Mauritius to focus on Zone 4/Bietry to the south, Zimbabwe developmentBotswana of high-end villas and hotels The opening of CFAO/Carrefour’s PlaYce Madagascar There are no international retailers in in the run-up to the 2015 African Union Marcory in December 2015 gave Abidjan and Cocody and the Rivieras to the north. Namibia N’Djamena, and the formal retail market summit, including a 60-villa compound at its first investment-grade mall, along with Recent years have seen the development largely comprises small supermarkets Sabangali, and a residential development a variety of new and mainly-French retail of a significant volume of luxury apartment Mauritius buildings, and this trend is continuing. selling imported products. Supermarket alongside the Ledger Plaza hotel. However, brands. The same group is developing a Botswana the summit was cancelled due to the The market was boosted by the return of brands include Modern Market, second mall to the north of the lagoon, country’s economic crisis and, since the African Development Bank to Abidjan Alimentation Générale and Alimentation known as PlaYce Palmeraie, which is then,South construction Africa activity has almost in 2014, but with the bank now starting a La Tchadienne. The most significant progressing quickly and will open in 2017. entirely halted. At the top end of the process of “decentralisation”, high-end retail and commercial street in the city is The nearby Abidjan Mall opened in August market, property is generally developed residential demand may be negatively Avenue Charles de Gaulle. In early 2016, for owner-occupation or for leasing to 2016, adding further to the recent rapid impacted. Increased development N’Djamena’s first mall opened opposite expatriates. The expatriate leasing market growth of Abidjan’s mall sector, which is outside of Abidjan is being encouraged South Africa the Cité Internationale des Affaires, is currently dominated by the diplomatic now significantly ahead of other markets by improvements to roads and other anchored by a 2,600 sq m Modern sector as oil companies have downsized in Francophone Africa. In the immediate infrastructure. Most of this is at the affordable Market. However, this is still a fairly basic operations. Prime residential rents are future, any further construction activity is end of the market, with small plots being development by international standards, around XAF1.75-2.5 million/month, which likely to comprise the upgrading of older bought for the construction of owner- being essentially ground floor space is slightly down on a year ago, and the centres and new development in more occupied housing, but there has also been New housing next to Ledger Plaza, N’Djamena PlaYce Marcory, Abidjan under apartments. market is generally stagnant. peripheral locations such as Yopougon. a significant amount of speculative activity.

18 19 Tunisia Morocco

Algeria Libya Egypt Western Sahara

Mauritania

Mali AFRICA REPORT 2017/18 RESEARCH Niger Sudan Eritrea Senegal Chad Gambia Guinea Djibouti Guinea Benin Bissau Côte Togo Nigeria Sierra DEMOCRATICCentral African REPUBLICEthiopia OF THE CONGO EGYPT d’Ivoire Republic South Sudan LeoneLiberia Ghana Tunisia Cameroon Key facts Morocco Key facts Alexandria Uganda Somalia Equatorial DEMOCRATIC Population 77.3 million Population 91.5 million Cairo Guinea Republic Kenya Giza of the REPUBLIC OF Major cities: Major cities: Gabon Congo THE CONGO Kinshasa 11.6 million Cairo 18.8 million Rwanda Lubumbashi 2.1 million AlexandriaAlgeria 4.8 million Mbuji-Mayi 2.0 million Giza 3.6 million Burundi Western Kananga 1.2 million Official languages Arabic Libya EGYPT Kinshasa Kananga Sahara Mbuji-Mayi Tanzania Official languages French Total area 1,001,450 sq km Total area 2,344,858 sq km GDP growth (2016) 3.8% GDP growth (2016) 3.9% Key export Petroleum Lubumbashi Key export Copper Currency Egyptian Pound Mauritania (EGP) Angola Currency Congolese Franc (CDF) EIU country risk C EIU country risk D Malirating (E=most risky) Zambia Malawi rating (E=most risky) World Bank Doing 122 Senegal the currency devaluation will have on Office market Industrial market World Bank Doing 177 Business rank Office market Mozambique Niger consumer spending. No newEritr mallsea were Office development accelerated after the Historically, prime industrial property Business rankGambia (out of 190 countries) A major issue affecting all property market Zimbabwe delivered to the Cairo market in 2016, presidential elections in 2011,Namibia but market has been located in the city centre and Madagascar(out of 190 countries) sectors is the floating of the Egyptian activity has more recently slowed due to Guinea Chad Sudanand the opening of the massive Mall of Gombe, resulting in relatively high rents. Mauritius pound, which happened in November uncertainty caused by the postponement BotswanaHowever, more recent development 2016 and led to a sharp devaluation Egypt (165,000 sq m GLA) was put back of the next elections from 2016 to 2017. has generally occurred in the east of the Kinshasa primeBissau rentsGuinea and yields Cairo prime rents and yields against the US dollar. As a result, where to 2017. Prime rents for small retail units New occupiers entering the Kinshasa city, in areas between the port and the rents are payable by local companies can be in excess of US$100/sq m/month, Prime rents Prime BeninPrime rents Prime Somalia market are rare, resulting in weak demand international airport. Industrial property Sierra at a dollar equivalent rate, they have but rates for larger units are typically in the for the space that is currently available. yields yields is clustered around the Route des Poids effectively doubled in local currency order of US$50-70/sq m/month. The prime area for offices is in the north of Ivory Togo Nigeria Ethiopia SouthLourds, Africa particularly in Kingabwa and Offices US$25/sq m/monthLeone 12% Offices US$35/sq m/month 10.5% terms. Some landlords have been forced the city, with many of the most prominent Limete. Medium and large industrial Retail US$25/sq m/month Liberia12% GhanaRetail US$70/sq m/month 8.5% to cap the rate at which their rents are Industrial market buildings being along Boulevard du properties are generally owner-occupied, Coast Industrial US$15/sq m/month 15% Industrial US$3.50/sq m/month 12% converted to the local currency and it is The Industrial Development Authority 30 Juin. International companies with there is little speculative development, and Central Africa Republic Residential US$10,000/month* 12% Residential US$3,500/month* 7.5% likely to be some time before the market continues to control and promote new a presence include Ericsson, Orange, the leasing market mostly comprises basic Citibank, Elf, Vodacom, Nestlé and Source: Knight Frank LLP Source: Knight Frank LLP Camaroonstabilises. Cairo’s main office areas are industrial activity in Egypt. It owns second-hand units. Industrial rents in the Alcatel-Lucent. Most of these have offices *4 bedroom executive house – prime location *4 bedroom executive house – prime location Downtown and New Cairo to the east newer areas drop by as much as 50% significant areas of land which are in Gombe, which is regarded as the most of the city. The latter offers commercial compared with the city centre. Much of Equatorial available forUganda sale or lease. Land in secure area. Office buildings in Kinshasa and residential accommodation in a less the centrally-located industrial space can outlying areas such as Upper Egypt may are generally of a poor standard and many congested environment than the city Kenya be expected to be gradually converted to Contact Contact Guinea even be offered free, while in other areas lack air conditioning or elevators. centreCongo and a number of major companies office or residential use. Tim Ware, Managing Director, Zambia Peter Welborn, Managing Director, AfricaGabon land is available at discounted rates. and bank headquarters are now located +260 211 250 538/250 683 +44 20 7861 1200 Rents for industrial buildings are in the +260 211 255 992-3 [email protected] in this area. The government appears to Rwanda Retail market region of US$2/sq m/month, and for Residential market [email protected] be pressing ahead withZair planse to create The Kinshasa retail market has shown warehousing are in the range of With security concerns becoming more a new administrative capital to the east limited progress in recent years. The US$3-3.50/sq m/month. 10,000 sq m Le Premier Shopping Mall acute, residential values have risen of New Cairo which may cause a further dramatically in the parts of Kinshasa opened on Avenue de la Justice in shift in focus away from the city centre. Tanzania 2016, while Conimmo has plans to build regarded as being safe. There has Prime city centre office rents are in the Residential market the 32,000 sq m City Mall in Gombe. been a significant volume of apartment region of US$30-35/sq m/month, and Developers have reported good take-up However, the massive and unfinished development, but the availability of drop to around US$25/sq m/month in New of residential units in high quality new standalone houses in good, secure Gare Centrale mixed-use development Cairo, albeit prime schemes such as Cairo developments, although to some extent locations remains limited. The best provides a reminder of the difficulties Festival City quote higher rates. this reflects the release of a decreased residential areas are generally in the of developing in Kinshasa. Shoprite number of units to the market. High- is the only major international retailer north of the city and include Gombe, ANGOLA Retail Market end residential development is primarily in Kinshasa, having a supermarket on Kintambo, Binza, Lingwala and Barumbu. focused on 6th of October City and New Avenue de l’OUA. Rents for ground A number of relatively small developments The floating of the local currency has Malawi floor retail space are at a similar level to targeting expatriates have been completed caused additional issues for retailers, as ZambiaCairo. The devaluation of the Egyptian office rents, highlighting the immaturity of in recent years, and these have been they have not just seen rents rise in local pound will create issues in this sector as the sector as a higher value is attached successfully leased. Prime rents are in the currency terms, but the cost of imported developers face increased costs in local to ground floor retail units in more region of US$10,000/month, but drop off goods has also increased. There is currency terms and, as a result, may seek Immeuble Tilapia, Kinshasa Maadi Technology Park, Cairo advanced markets. dramatically outside of the safe areas. further uncertainty over the impact that to increase local currency prices. Zimbabwe

20 21 Namibia Mauritius Botswana

South Africa Tunisia

Morocco

ALGERIA Libya Egypt Western Sahara Tunisia Morocco Mauritania

Algeria Mali AFRICA REPORT 2017/18 RESEARCH Niger Libya Egypt Western Sudan Eritrea Senegal Chad Sahara Gambia Mauritania ETHIOPIA Guinea EQUATORIAL GUINEA Djibouti Guinea Mali Niger Bissau Côte Benin Sierra Key facts Key facts Eritrea Senegal Ethiopia Sudan Togo Chad d’Ivoire Population 0.8 million Population 99.4 million Leone Gambia South Sudan Ghana Major cities: Major cities: Liberia Central African Djibouti Nigeria Republic GuineaMalabo 0.2 million Addis Ababa 3.2 million Guinea Benin Dire Dawa 0.4 million Cameroon Official languages Spanish, French Addis Bissau Côte Togo OfficialNigeria languages Amharic Ababa Dire Dawa Malabo Total area Sierra 28,051 sq km Total area 1,104,300 sq km GDP growth (2016) -9.9% d’Ivoire Somalia ETHIOPIA Leone Uganda GDP growth (2016) 6.5%Central African South Sudan EQUATORIAL Key export LiberiaPetroleum Ghana KenyaKey export Coffee GUINEA Republic of Currency Central African CFA Cameroon Republic the Congo Franc (XAF) Currency Birr (ETB) Gabon Somalia EIU country risk D EIU countryEquatorial risk C Uganda rating (E=most risky) rating (E=most risky) Democratic Rwanda Kenya RepublicWorld Bank Doing 178 World BankGuinea Doing 159Congo of theBusiness Congo rank Burundi Business rankGabon (out of 190 countries) (out of 190 countries) Democratic Office market Industrial market Office marketRwanda Industrial market Office demand in Equatorial Guinea has Equatorial Guinea was one of the RepublicAs a location for internationalBurundi companies, There is a growing market for consumer historically been primarily driven by the fastest-growing economies in the world Malabo prime rents and yields Tanzania Addis Ababa prime rents and yields Ethiopia is restricted by its investment products in Ethiopia which has encouraged construction and energy sectors. The in the first decade of the 2000s, with its of thecode, Congo which prohibits foreign investment the market entry in recent years of firms country has a history of big “statement” success resting on a string of oil and gas Prime rents Prime Prime rents Prime in the banking, telecoms andT financialanzania such Diageo, Heineken, SAB Miller, Duet infrastructure projects such as the discoveries. Almost all industrial activity yields yields services sectors. Nonetheless, office Group, Tiger Brands and Unilever. However, Malabo II urban corridor and the Sipopo relates to the oil and gas sector and, to demand is relatively strong in Addis the manufacturing real estate market is not Offices US$37/sq m/month 11% Offices US$25/sq m/month 6% well developed. The most developed areas luxury resort, and work has begun on a lesser extent, agriculture and timber. Ababa and buildings generally have Retail US$37/sq m/month 11% Retail US$33/sq m/month 6% and locations with future growth potential the construction of a new capital city at Industrial activity is focused around KM5, high occupancy rates. Most offices Industrial US$11/sq m/month 14% Industrial US$7.50/sq m/month 10% are generally found within 100 km of Addis Oyala on the mainland. The construction a purpose-built transit-port for oil-related are in mixed-use buildings, few of Ababa, to the south of the city and along industry has been hit by reduced cargo, and the massive liquefied natural Residential US$6,500/month* 9% Residential US$6,000/month*Angola 8% which would meet the quality or Angola the new Addis Ababa-Djibouti railway. The Source: Knight Frank LLP Source: Knight Frank LLP Malawi government spending resulting from lower gas (LNG) facility at Punta Europa. There healthZambia and safety standards required *4 bedroom executive house – prime location Malawi *4 bedroom executive house – prime location only two major new industrial parks are at oil revenues. The oil and gas sector has has been a drive to relocate some oil Zambia by international corporate occupiers. Bole Lemi, which is mainly used for clothing also contracted, generating muted office and gas activity across Bioko Island to The traditional locations for upscale production, and Dukem/EIZ. While it is demand. However, the market’s few major Lonrho’s Luba Freeport, where there has offices in Addis Ababa are in BoleMozambique possible to construct on a standalone basis, office landlords are debt-free and able to been significant purpose-built construction Road, Bole Medhanealem/Cameroon this generally has to be in locations without cope with vacancies, so rents are likely and real estate speculation. Contact Contact Street, KazanchisZimbabwe and La Gare/Mexico. good infrastructure and requiring land to decrease less rapidly than would be Mozambique Namibia Investment yields can be very low as there Madagascar Peter Welborn, Managing Director, Africa purchases from multiple parties. However, expected in other markets with similar Residential market Peter Welborn, Managing Director, Africa is strong demand from wealthy locals who Heineken has successfully achieved this at +44 20 7861 1200 Zimbabwe +44 20 7861 1200 Mauritius supply/demand dynamics. Equatorial Guinea hasNamibia the highest GDP [email protected] [email protected] Botswanaare subject to restrictions on the transfer Akaki Kality. per capita in Africa, but its wealth belongs of money outside Ethiopia and have few Retail market to a very small section of the population. Mauritiusalternative investments available. Residential market The retail market in Equatorial Guinea is Wealthy individuals have channelled a The best locations in Addis Ababa for limited in size, reflecting the country’s significant amount of capital into residential Botswana Retail market high-end apartments are in Bole and small population, much of whom live real estate development and there are The Ethiopian retail market has significant Kazanchis. Old Airport is also a good in extreme poverty with wealth being some good quality apartment blocks to Southgrowth Africa potential but its development is residential area, which mainly comprises concentrated in the hands of a very the west and centre of Malabo. The oil and fundamentally restricted by the fact that villas. The market has been buoyant, with small minority. There are medium-sized gas sector drives expatriate demand, and foreign investment is not permitted in this high-end apartments mainly being sold supermarkets alongside local markets recent falls in oil prices have thus had a sector. Modern retailing in Addis Ababa off-plan and during their construction and street trading. Supermarkets used significant impact on activity. There does, is still in the early stages of development periods. Most schemes have been on a by expatriates in Malabo include EGTC, though, remain a reasonable market for South Africa compared with other countries in the relatively small scale, but there are now Martínez Hermanos, Supermercado Santy serviced apartments and compounds region. The most prominent supermarkets, also some decentralised mega-schemes and Supermercado Muankaban. These catering for oil workers in transit to and such as Shoa and Bambis, are local such as Poli Lotus and Royal Garden. While stores are well stocked with international from offshore operations. There has companies operating from medium-sized availability is likely to increase and the goods but are very expensive, as almost been some mass house building at stores. Addis Ababa has several small and market is expected to slow a little, a flight to everything has to be imported. There are developments such as Buena Esperanza medium-sized malls, including Zefmesh quality is anticipated and the prime market plans for the construction of larger retail on the outskirts of Malabo, but it is Grand Mall, Medhanealem Mall and will remain strong. At the top end of the developments including the 12,000 sq m debatable if this is truly affordable to Friendship City Centre, which all generally apartment market, purchases are mainly Ibis Hotel, Malabo II Zefmesh Grand Mall, Addis Ababa Sipopo Mall. most locals. operate at around 100% occupancy. made for investment.

22 23 Tunisia Morocco

Tunisia Algeria Morocco Libya Egypt Western Sahara ALGERIA Libya Egypt Western Sahara

Mauritania Mauritania

Mali Niger AFRICA REPORT 2017/18 RESEARCH Eritrea Senegal Sudan Chad Gambia Senegal Eritrea Sudan Guinea Djibouti Benin Chad Bissau Guinea GABON Niger GHANA Côte Togo Nigeria Gambia Mali Sierra d’Ivoire Ethiopia Leone South Sudan Key facts Liberia Ghana Central African Key facts Djibouti Republic Guinea Population 1.7 million BissauPopulation 27.4 million Benin Cameroon Major cities: Major cities: Guinea Somalia Accra 2.3 million GHANA Nigeria Equatorial LibrevilleUganda 0.7 million Côte Guinea Port-Gentil 0.1 million Kumasi Sierra2.1 million Kenya Sekondi-Takoradi 0.6 million d’Ivoire Republic Official languages French Leone Togo Libreville Official languages English of the Total area 267,667 sq km Port-Gentil Congo Total area 238,533 sq km Ethiopia GABON Democratic Republic GDP growth (2016) 3.2% Central African South Sudan Rwanda GDP growth (2016) 3.3% of the Congo Key export Petroleum Kumasi Republic Burundi Key export Petroleum Currency Central African CFA Liberia Currency Cedi (GHC) Accra Franc (XAF) Cameroon Sekondi-Takoradi EIU country risk C EIU country risk C rating (E=mostTanzania risky) rating (E=most risky) Angola World Bank Doing 108 World Bank Doing 164 Somalia Business rank Business rank Office market Industrial market (out of 190 countries) (out of 190 countries) Office market Industrial market Equatorial Uganda Across all sectors, the property market in With the industrial market being impacted The recent downturn in the Ghanaian The industrial property market hasGuinea Kenya Gabon has been affected by economic by the slowdown in oil-related activity, Libreville prime rents and yields Accra prime rents and yields economy has reduced office space faced challenges stemming from power demand in Accra. Several new office and political uncertainty over the last future growth may depend on the success supply issues, taxation changes, high properties have been completed in the 12 months. Declining oil reserves and of the government’s drive to expand MalawiPrime rents Prime Prime rents Prime borrowing costs and the collapse of the Zambia yields yields CBD and Airport Area, with the largest cedi. There has been some rationing depressed oil prices have led to reduced non-oil industries. However, the business new office building to enter the market in of power which has resulted in several government spending and an increased environment in Gabon is challenging and Offices US$35/sq m/month 9% Offices US$35/sq m/month 9% Democratic 2016 being Dream Realty’s The Octagon businesses having to stop production Gabon Republic focus on the non-oil economy. The results the government’s diversification strategy Retail US$45/sq m/month 9% Retail US$40/sq m/month 8.75% (36,000 sq m). A number of the new Rwanda and lay off staff to reduce costs. The of the Congo of presidential elections in August 2016 has so far been based on the granting of Industrial US$10/sq m/month 12% developments due in the medium-term Industrial MozambiqueUS$8/sq m/month 14% key industrial locations in Accra include were disputed leading to political unrest. are for owner-occupation, but these will specific incentives to foreign investors. Residential US$6,000/month* 8% Residential US$4,500/month* 8% North Industrial Area, South Industrial Burundi Office rents in Libreville are currently Zimbabwe still result in the release of a significant Congo There is a special economic zone at Nkok, Madagascar Area, Spintex Road and Tema, while coming under downward pressure, primarily Namibia Source: Knight Frank LLP amount of second-hand space. Asking about 30 km east of Libreville, which was Source: Knight Frank LLP Kpone and Accra-Aflao Road are due to significant volumes of new space *4 bedroom executive house – prime location *4 bedroom executive house – prime location rents remain relatively high but are coming established as a partnership between Mauritius emerging submarkets where land is being either recently completed or close to under downward pressure due to rising the government and theBotswan Singaporeana readily available. Demand for space has completion in and around the city centre. vacancy rates and the limited number of agri-business Olam. Much of the country’s tenants seeking space. The Accra market eased in recent years and there is some Tanzania These new developments have mostly been oil-related industry is based in the city of is expected to remain balanced in the vacancy, with more development to built by Lebanese or Chinese developers Contact Contact Port-Gentil, which is currently only tenant’s favour for the next few years. come at Rendeavour’s Appolonia project and investors, and are entering the market Peter Welborn, Managing Director, Africa accessible via air and sea. However, Peter Welborn, Managing Director, Africa and LMI Holdings’ Dawa Industrial City. when demand for new space is subdued. +44 20 7861 1200 +44 20 7861 1200 the first road link to the city, involving [email protected] [email protected] Retail market Retail Market the construction of severalSouth bridges,Africa While the Ghanaian retail market is still Residential market is being built by the China Road predominantly informal, there are some Ghanaian housing has traditionally taken While the retail market in Gabon remains and Bridge Corporation. major malls, particularly in Accra. A the form of low-rise accommodation dominated by small-scale and informal number of international retailers, largely but in larger cities such as Accra, where retailing, more modern and larger scale Residential market from South Africa, have a presence in the land prices have increased substantially operations have steadily been introduced market. Accra’s first Grade A shopping in recent years, there are an increasing As with the office sector, the prime centre was the 20,000 sq m Accra Mall, to the country. There are few international number of townhouses and apartment Angola residential market is seeing new which is now ten years old. Subsequent retailers in Libreville although a franchise blocks. The trend to construct apartment developments coming on line at a time openings have included West Hills Mall of the French supermarket Géant Casino buildings has been driven by the mid-to- Malawi when demand is limited. Properties that (27,000 sq m) and The Junction Shopping Zambia operates at Centre Commercial Mbolo. high income groups in Ghana, with this Centre (11,500 sq m), while pipeline The main market in Libreville, Marché would have previously been expected to projects include Actis/Mabani’s mixed-use type of property being seen as a good de Mont-Bouët, is due to be replaced re-lease easily once being vacated are The Exchange. There are concerns that investment vehicle. The economic boom now becoming much harder to lease and by the Grand Marché de Libreville which the Accra retail market is close to reaching earlier in the decade encouraged high landlords are experiencing void periods. will provide better quality market stalls saturation point, and new developments levels of development, and the market alongside more modern retail units, There is a shortfall of lower income will be entering a challenging economic now suffers from oversupply. Prices but work on the new facility has not yet housing, which the government has environment. In the short-to-medium term, are generally falling, but good quality Mozambique commenced. Gabon is among eight attempted to address by developing new retail development is likely to focus product priced at a level that provides African countries identified as targets for units, but the number of units completed on secondary cities such as Takoradi developers with a reasonable profit Abayak Buildings, Malabo Immeuble Premium, Libreville UNStanbic Building, Heights, Accra Accra Zimbabwe development by CFAO/Carrefour. to date is well behind initial targets. and Kumasi. margin will still sell well. Namibia Madagascar

24 25 Mauritius Botswana

South Africa DEMOCRATIC REPUBLIC OF THE CONGO

Morocco Tunisia

Algeria Western Libya Egypt Sahara

Mauritania Mali Senegal Niger Eritrea Gambia Mediterranean Sea Guinea Chad Sudan Tunisia Morocco BissauGuinea Sierra Benin Somalia Togo Nigeria Leone Ivory Ethiopia Algeria Ghana Western Libya Egypt Liberia Coast Central Africa Sahara Cameroon Republic

Equatorial Uganda Mauritania Kenya Guinea Gabon Congo Mali RwandaAFRICA REPORT 2017/18 RESEARCH Senegal Niger Eritrea Gambia Democratic Republic Guinea Chad Sudan of the Congo Tanzania BissauGuinea KENYA MADAGASCAR Sierra Ghana Benin Somalia Ivory Togo Nigeria South Atlantic Ocean Leone LiberiaCoast Ethiopia Key facts Key facts South Sudan Angola Central Africa Malawi Population 46.0 million Population 24.2 millionZambia Cameroon Republic Major cities: Major cities: Mozambique Nairobi 3.9 million Antananarivo 2.6 million Mombasa 1.1 million Equatorial Uganda Official languages French, Malagasy Kisumu 1.0 million Total area 587,041 sq km MADAGASCAR KENYA Official languages English, Kiswahili Guinea Kisumu GDP growth (2016) 4.1% Zimbabwe Antananarivo Gabon Congo Total area 580,367 sq km Key exportNamibia Nickel Rwanda Nairobi GDP growth (2016) 6.0% Currency Malagasy Ariary Mauritius Key export Tea (MGA) Mombasa Botswana Currency Kenyan Shilling EIU country risk C (KES) rating (E=most risky) Tanzania EIU country risk C World Bank Doing 167 rating (E=most risky) Business rank World Bank Doing 92 (out of 190 countries) Zara, manufacture clothing in Madagascar, Office market Industrial market Business rank Office market and this could open up opportunities for Most of the stock in the established (out of 190 countries) South Africa The office market in Madagascar South Atlantic Ocean Approximately 300,000 sq m of international retailers to enter the market. Indian Ocean deteriorated after the coup in 2009, but commercial office space was delivered industrial zones of Nairobi and other The island’s location and history would Antananarivo prime rents greater stability followed the presidential to the Nairobi market in 2016, compared major Kenyan cities remains outdated suggest that these would most probably Angola Nairobi prime rents and yields and yields elections of 2013, leading to a period with an average of 150,000 sq m in and of poor quality, and industrial areas come from South Africa or France. Malawi of steady growth. The preferred office recent years.Zambia The high levels of new suffer from heavy traffic congestion. Prime rents Prime Prime rents Prime locations for multinationals are the areas supply have negatively affected rental Modern well-configured logistics space yields yields Industrial market to the north of the city centre such as levels and occupancy rates. This is currently scarce in spite of growing The main industrial areas are located Offices US$16/sq m/month 8% Offices US$15/sq m/month 14% Andraharo, Tana Waterfront, Ivandry situation has been exacerbated further demand for high specification facilities, in the south of Antananarivo. There is a Mozambique Retail US$48/sq m/month 8% Retail US$15/sq m/month 13% and Ankorondrano. The last of these is by external events that have caused and this has led to some occupiers mixed-use area to the south of the city Zimbabwe Industrial US$4.70/sq m/month 8.5% Industrial US$4.50/sq m/month 18% home to Antananarivo’s tallest building, some multinationals, particularly in the developing their own space. Rising centre which mainly contains lower quality Madagascar Residential US$4,100/month* 5% the 33-storey Tour Orange, which was Namibia demand in this sector has prompted the Residential US$1,250/month* 12% buildings, Madagascan businesses and oil industry, to downsize their operations completed in 2013. The areas to the emergence of several master planned Source: Knight Frank LLP Source: Knight Frank LLP airline companies. As it forms the main in Kenya. The take-up of new prime Mauritius*4 bedroom executive house – prime location *4 bedroom executive house – prime location north are favoured over the city centre, industrial parks, particularly on the arterial route south of the city, the road Botswanaoffices in Nairobi remains steady, as congestion and a lack of car parking outskirts of Nairobi where developers are in this area can become very congested. however, with the city continuing to make it unattractive to most companies. taking advantage of new infrastructure About 5 km to the south of the city be the preferred location for global However, the majority of government developments, but construction is yet to centre, the Zone Industrielle Forello corporates looking to establish regional Contact Contact and banking occupiers remain in the commence on a large scale. is the location of some of the heavier Ben Woodhams, Managing Director city centre. hubs serving East Africa’s 150 million- Peter Welborn, Managing Director, Africa industries. Nearby is the Zone Industrielle +254 20 4239000 plus population. +44 20 7861 1200 Filatex Ankadimbahoaka, which is one of Residential market [email protected] [email protected] Retail market Madagascar’s first free zones. There is also South Africa The residential sector remained stable Retail market The retail sector is largely informal, and a small amount of light industrial activity throughout 2016, due to steady Approximately 100,000 sq m of formal Antananarivo is home to markets including just south of the airport. macroeconomic conditions and minimal retail space was delivered to the market the Andravoahangy craft market, the Petite impact from external shocks. Luxury Vitesse food market and the Analakely Residential market in 2016, up from about 50,000 sq m in home sales prices increased marginally, covered market. The areas around The relatively low household income in 2015. As a result of this new supply, it but prime rental prices declined as a Avenue de L’Independence are the main Madagascar means that most people has taken longer for space to be let and result of a slight oversupply, which was focus for retail activity. As a relatively cannot afford to purchase housing. The prime rents have stagnated. Retailers partly attributable to the exodus of a poor country, Madagascar offers limited development that does take place is from outside Africa are taking a growing large number of expatriates following opportunities for formal retailing, although generally focused on the prime end of the interest in Kenya, with the most high the downsizing of Kenya’s oil extraction there are supermarket chains including market and the expatriate sector. These profile recent market entrant being the industry. The Kenyan government Shoprite, Jumbo Score and Leader Price. parts of the market were badly affected French supermarket chain Carrefour, estimates that there is a shortage of The most modern shopping centre in by the political instability up until 2013 which has stores at both The Hub approximately 200,000 units per annum Antananarivo is the Shoprite-anchored La but have since shown signs of recovery. and Two Rivers Mall. However, the and is addressing the situation through City which opened in Ivandry in 2012, while Most high-end residential areas are in and sudden rise in supply has stretched the measures such as slum upgrading development projects include Filatex’s around Ivandry to the north of the city capacity of local retailers to occupy the and the provision of tax incentives Alhambra Gallery. Many international centre, where many of the embassies Abayak Buildings, Malabo Britam Tower (under construction), Nairobi Antananarivo new space. for major developers. brands, including Gap, Ralph Lauren and are located.

26 27 Tunisia Morocco

Algeria Libya Egypt Western Sahara

Mauritania

Mali Niger

Eritrea Senegal Sudan Chad Gambia

Djibouti Guinea Bissau Guinea Benin

Côte Togo Nigeria d’Ivoire Sierra Ethiopia Leone

Central African South Sudan Liberia Ghana Republic

Cameroon

Somalia Uganda

Equatorial Guinea Kenya Congo Gabon

Rwanda AFRICA REPORT 2017/18 RESEARCH

Burundi Tunisia Morocco MALI MALAWI Algeria Libya Egypt Western Democratic Tanzania Key facts Key facts Sahara Republic of the Congo Population 17.2 million Population 17.6 million Major cities: Major cities: Mauritania Blantyre 1.1 million Bamako 2.5 million Lilongwe 1.1 million Official languages French MALI Niger Mozambique Official languages English Total area 1,240,192 sq km Sudan Eritrea Lilongwe Total area 118,484 sq km GDP growth (2016) 5.3% Senegal Chad Angola Bamako Zambia GDP growth (2016) 2.7% Key export Cotton MALAWI Key export Tobacco Djibouti Currency West African CFA Guinea Guinea Benin Currency Malawian Kwacha Franc (XOF) Bissau Blantyre Côte Togo Nigeria (MWK) EIU country risk C Sierra Ethiopia Leone d’Ivoire Zimbabwe EIU country risk D rating (E=most risky) Central African South Sudan rating (E=most risky) World Bank Doing 141 Liberia Ghana MadagascarWorld Bank Doing 133 Business rank Cameroon Republic Business rank (out of 190 countries) international manufacturers in the city. Somalia Office market Generally, the traditional high street (out of 190 countries) Office market Equatorial Uganda Namibia retailers continue to thrive. The main industrial zone is to the east The rental market has seen rising In the five years since the coup d’état Kenya of the commercial centre,Guinea and the Congo of 2012, the Bamako office market has demand for small office space, but Bamako prime rents and yields availability of good quality storageGabon and Industrial market Malawi prime rents and yields struggled to grow and the supply of quality Democratic there has been a decrease in demand Mauritius logistics warehousing is minimal. As Rwanda Electricity blackouts and water LILONGWE Prime rents Prime offices remains very limited. The initial for larger offices. There is a general much as 80% of the Malian workforce Republic Burundi Botswana Prime rents Prime yields improvements in the economic, political move towards modular office space shortages have worsened to the is employed in agriculture, with cotton yields and security environment immediately after of the Congo that allows occupiers to downsize extent that industrial production is Offices US$19/sq m/month 12% the coup d’état were short lived. There are being one of the country’s largest Tanzania or increase space as the need now estimated to be at less than 50% Offices US$11/sq m/month 12% Retail US$19/sq m/month 12% significant risks to the outlook, most notably exports. Mining is also an important arises. Annual rental escalations of of its capacity. However, demand for Retail US$18/sq m/month 10% Industrial US$5/sq m/month 16% Mali’s fragile security situation. Setbacks to sector, and both areas have potential Industrial US$5/sq m/month 12.5% 20% or more are common, in line warehouses continues to be relatively Residential US$1,000/month* 10% the country’s improving security, especially for growth should political stability be Residential US$2,500/month* 8% with Malawi’s high inflation rate. strong, and is dominated by industrial Source: Knight Frank LLP in Bamako, may dampen any economic achieved. If the market stabilises, there Lilongwe city centre has a shortage users requiring logistics and storage *4 bedroom executive house – prime location recovery and further stifle office demand should be opportunities for logistics Angola Malawi of high quality office space and no space. Warehousing rents have thus BLANTYRE and new supply. What little demand there companies and developers, particularly Zambia Prime rents Prime construction has taken place in recent where they hold land in inner city zones, South Africa maintained comparatively high levels. yields is for offices comes from the banking, as the continued expansion of Bamako years as a lack of infrastructure inhibits Investment transactions in this sector Contact telecommunications, government and NGO the development of vacant sites in Offices US$5.50/sq m/month 9.75% sectors. Prime rents are currently stable is resulting in higher land values in Mozambique are negligible. Peter Welborn, Managing Director, Africa Retail US$9/sq m/month 8.5% central areas. central areas. However, five new office +44 20 7861 1200 at US$19/sq m/month, but rental levels Zimbabwe Namibia Madagascar buildings are under construction and Residential market Industrial US$4/sq m/month 10% [email protected] fall away dramatically outside the CBD to will be ready for occupation within Residential US$2,500/month* 8% around US$6/sq m/month. Residential market Mauritius Although there is still a disparity Botswana two years, in parts of the city where Source: Knight Frank LLP The high-end residential market has between the cities of Blantyre and infrastructure is in place. Office *4 bedroom executive house – prime location Retail market been hit hard over the last two years. Lilongwe in terms of both rental and development and sales in Blantyre The continued high security risk has The continued security woes have led to market values, this gap is being lower demand from NGOs and company are both at a standstill due to the high Contact hindered the development of the Bamako reduced by the indexation of rents retail market. Mali has fallen well behind executives, resulting in a significant cost of finance. Don Whayo, Managing Director South Africa downturn in rental levels. Property to the US dollar, especially for high +265 1 823 577 other West African countries such as Côte Retail market quality properties. Lilongwe now has a [email protected] d’Ivoire, Ghana and Senegal, where modern owners have had to compete to attract surplus of representational residential retail malls have been developed in recent interest from the diminishing number of Demand for high quality retail space is properties, for which rents are quoted years. Retail activity in Bamako continues occupiers in the market for high quality tapering off due to the low purchasing to be generally informal and based around in dollars, due to a reduction in demand residences. There is stronger demand power of consumers. The Gateway street trading, with the Marché Rose and for lower value housing, particularly from the international donor and Mall in Lilongwe opened in December Street Market in the city centre being key because Bamako is growing at a fast business communities. Other tenants 2014 but it is not yet fully occupied. locations. The most modern retail provision pace as many rural Malians are choosing are moving into smaller and less The mall was developed by MPICO is to the west at ACI 2000, where there are to move to the relative safety of the Limited and is anchored by Shoprite. expensive accommodation in medium also a number of showrooms. city. This increased demand for houses Lilongwe now has two large modern density areas where rents are quoted is largely being satisfied by the public shopping malls and Blantyre has in the local currency. Residential sales Industrial market sector, with government-built housing one, although several smaller malls have slowed down due to the difficult The industrial market continues to be units significantly outnumbering those Abayak Buildings, Malabo The Gateway Mall, Lilongwe BCEAO Tower, Bamako have appeared in the past two years. economic environment. based around local tradesmen, with no built by private developers.

28 29 Mediterranean Sea Morocco Tunisia

Algeria Western Libya Egypt Sahara

Mauritania

Mali Senegal Niger Eritrea Gambia Guinea Chad Sudan BissauGuinea Sierra Benin Somalia Togo Nigeria Leone Ivory Ethiopia Liberia Ghana Coast Central Africa Republic Cameroon

Equatorial Uganda Guinea Kenya Gabon Congo Rwanda

Democratic Republic of the Congo Tanzania AFRICA REPORT 2017/18 RESEARCH

South Atlantic TOceanunisia MAURITANIAMorocco MAURITIUS Angola Malawi Algeria Key facts ZambiaKey facts

Population Libya 4.1 million Egypt Population 1.3 million Western Major cities: Sahara Major cities: Nouakchott 1.0 million Port Louis 0.2 million Official languages Arabic Official languages English Madagascar Total area 1,030,700 sq km Total Zimbabwearea 2,040 sq km GDP growth (2016) 3.2% GDP growth (2016) 3.5% Namibia Port Louis MAURITANIA Key export Iron ore Key export Textiles Nouakchott Mali CurrencyNiger Ouguiya (MRO) Currency Mauritian Rupee MAURITIUS (MUR) EIU country risk D Botswana EIU countryEritrea risk B Senegal rating (E=most risky) Sudan Chad rating (E=most risky) The Gambia World Bank Doing 160 Business rank World Bank Doing 49 (out of 190 countries) Business rank Djibouti Guinea Benin (out of 190 countries) Office market Guinea Industrial market Office market facilities is relatively low. Most of the Côte existing stock is either owner-occupied Aside from theBissau diplomatic sector, the oil Mauritania’s reputationTogo for having anNigeria The traditional CBD of Port Louis centres Sierra Ethiopia or leased in small units. The Mauritian and mining industry has historically been opaque tax and import/export regime on locations such as the Waterfront, Edith d’Ivoire Nouakchott prime rents and yields Port Louis prime rents and yields government continues to promote industries the main source of internationalLeone demand has inhibited the entry of international Central African SouthSouth Sudan Africa Cavell Street, Pope Hennessy Street, La Liberia away from traditional sectors such as in the Nouakchott office market. However, Ghana Prime rents Prime Prime rents Prime Chaussée and Royal Road. The Waterfront, businesses. The country is commodity- fishing, sugar cane, mining and cement the market is currently quiet with oil and Camer oon Republic yields yields which includes Barkly Wharf, commands rich being Africa’s second largest production. It has further developed mining companies putting expansion the highest office rents, at nearly double the exporter of iron ore and with good Offices US$12/sq m/month 11% Offices US$15/sq m/month 8.5% warehousing and freeport facilities plans on hold and cutting costs due to low Somalia level of other parts of the CBD. Mauritius’ reserves of oil. However, the collapse EquatorialRetail US$14/sq m/month 10% UgandaRetail US$45/sq m/month 7.5% around Port Louis and the airport. Private commodity prices. Glencore abandoned its second major office location is the relatively of global commodity prices has caused Industrial US$2/sq m/month 15% IndustrialKenya US$8/sq m/month 10% developers have taken advantage of land Askaf iron ore project in 2015 while Kinross Guinea new Cyber City business park at Ebene, these sectors to contract. In Nouakchott, ResidentialCongo US$2,000/month* 7.5% Residential US$3,500/month* 4% released around Riche Terre to construct has scaled back its plans for the Tasiast Gabon about 10 km to the south east of Port the main industrial zone closest to the warehousing, although to date most of this gold mine. Some international businesses Democratic Source: Knight Frank LLP Louis. Office rents in this location are at city is at El Mina, which mainly comprises Source: Knight Frank LLP Rwanda *4 bedroom executive house – prime location has been offered on a build-to-suit basis. operating in Mauritania, including Kinross, similar levels to the CBD, but in newer local businesses operating out of older, *4 bedroom executive house – prime location have based themselves offshore in the Republic Burundi buildings with better parking availability. Prices have shown little movement over the owner-occupied facilities. Further out Canary Islands. It is difficult to find good The government is following the lead of last couple of years. of the city, there is heavier industry of the Congo quality offices in Nouakchott, and Al the private sector, by relocating many of including cement production, at the Tanzania Khaima City Center remains arguably Contact Contact its downtown offices to Ebene. This may Residential market Zone Industrielle du Wharf and Port de the city’s best commercial building, Peter Welborn, Managing Director, Africa Ben Woodhams, Managing Director, Kenya cause supply to increase in Port Louis, while The residential real estate market in l’Amitié. Assisted by the World Bank, a +44 20 7861 1200 approximately ten years after completion. +254 20 4239000 availability falls in Ebene, pushing rents in Mauritius continues to attract high levels free zone has been created at the port in [email protected] [email protected] the two locations in opposite directions. of investment, although foreign ownership Nouadhibou. Retail market is restricted to government-approved Retail market developments. High-end developers As a sparsely-populated country of around Residential market Angola four million people, Mauritania is not an Malawi Mauritius has a well-developed retail targeting wealthy foreign buyers need to obvious target for international retailers. The ambitious Ribat Al Bahr urban Zambia market, which includes both small local ensure that their schemes are approved However, a large ATAC supermarket, development project north of Nouakchott, strip malls and larger regional malls. These under the Property Development Scheme a brand of the French retail group Auchan, which was first announced in 2010 include Grand Baie La Croisette, Cascavelle (PDS), which has replaced the previous Real opened in 2015 operating under franchise. as capable of housing 50,000 people, Mozambique Shopping Mall, Trianon Shopping Park and Estate Scheme (RES) and Integrated Resort The main shopping malls in Nouakchott remains unbuilt. Nonetheless, future Zimbabwe Phoenix Les Halles. The largest shopping Scheme (IRS). Mauritian nationals are well are at the Al Khaima Center and development at the top end of the Namibia Madagascar mall is the Bagatelle Mall of Mauritius, which served by multiple developments across Mauricenter, but these are relatively small market is likely to be concentrated is located south of Port Louis on the M1 the island and many of the former sugar and basic. Other supermarkets around on areas to the north of the city. The Mauritiusnear Ebene and is anchored by Monoprix, plantations offer large tracts of land for the city include Sky Rim and Salam. upmarket expatriate housing area of Botswana Intermart, Woolworths and Food Lovers master planned residential schemes. The large supermarket unit fronting the Tevrah Zeina is located in the north of Market. Since opening in 2011, it has been An increase in supply, combined with a Ribat Al Bahr development to the north Nouakchott and, beyond this, there is expanded from 130 to 155 stores, and it also slower global economy, has caused the of the city has never opened for business. an area of former green belt land where includes a hotel and cinema. market to see little growth in rents or prices The prime high street retail location is the development has been encouraged in over the last few years. However, the open, Industrial market Avenue du General de Gaulle, while the part by the opening of the new University South Africa stable, low-tax environment means that largest market for local shopping is the of Science, Technology and Medicine and Due to the nature of the Mauritian economy, the island continues to attract expatriates Abayak Buildings, Malabo Al Khaima City Center, Nouakchott Barkly Wharf, Port Louis busy Marché Capitale. Oumtounsy International Airport. demand for industrial and warehousing and investors.

30 31 Tunisia Morocco

Algeria Libya Egypt Western Sahara DEMOCRATIC REPUBLIC Mauritania Gabon OF THE Mali CONGO Niger Sudan Eritrea Senegal Chad Gambia Guinea Djibouti Guinea Benin Bissau Côte Togo Nigeria Sierra Ethiopia d’Ivoire Leone Central African South Sudan Liberia Ghana Cameroon Republic AFRICA REPORT 2017/18 RESEARCH Somalia Equatorial Uganda Kenya Guinea Congo Gabon Democratic Rwanda Republic Burundi of the Congo MOROCCO MOZAMBIQUETanzania

Tangier Key facts Key facts

Fès Population 34.4 million Population 28.0 million Angola Casablanca Rabat Tunisia Zambia Malawi Major cities: Major cities: Casablanca 3.5 million Maputo 1.2 million MOROCCO Fès 1.2 million Official languages Portuguese Rabat 2.0 million Marrakech Total area 799,380 sq km Official languages Arabic, Berber Zimbabwe GDP growth (2016) 4.5% Namibia MOZAMBIQUE Total area 446,550 sq km Algeria Key export Aluminium GDP growth (2016) 1.8% Mauritius Currency Metical (MZM) Botswana Madagascar Western Key export Libya Insulated wire Sahara EIU country risk C Currency Moroccan Dirham Egyptrating (E=most risky) Maputo (MAD) Mauritania World Bank Doing 137 South Africa EIU country risk C Business rank rating (E=most risky) (out of 190 countries) Office market Industrial market World Bank Doing 68 Business rank Office market Industrial market Casablanca is Morocco’s main business Morocco’s relatively diversified economic (out of 190 countries) The new Downtown area of Maputo The discovery of natural gas off the location and its largest office market. The base and advantageous geographic Maputo prime rents and yields is now seen as the city’s CBD and is coast of Mozambique has yet to have principal office districts are downtown, location make it well-positioned to the main focus for office development. its anticipated positive impact on the Sidi Maârouf and areas around the port become a major manufacturing centre for Prime rents Prime Demand for space has been negatively industrial sector. Over the medium- Morocco prime rents and yields yields including the massive Casablanca Marina exporting to Europe and the rest of Africa. impacted by the recent downturn in the term, revenues from the production of The governmentMali has been successful development. An important emerging CASABLANCA Offices US$27.50/sq m/month 10% economy, which deepened in 2016 when liquefied natural gas (LNG) should start area is Casablanca Finance City (CFC), in attracting foreign investment and Niger Prime rents Prime Retail US$28/sq m/month 10% the IMF withdrew aid to Mozambique to flow to the government, although on the site of the former Casa-Anfa interest has been encouraged by a yields Industrial US$5.50/sq m/monthEritr ea 13% following the discovery of approximately plans to process the gas offshore may airport. Although there have been delays new investment law introduced in Sudan Senegal Offices US$20.50/sq m/month 8.5% US$1.4 billion of previously undisclosed mean that limited additional demand to its physical construction, international 2016 creating free zones across the Chad Residential US$5,500/month* 7% Retail US$25/sq m/month 8.25% government debt. Low occupier demand is generated for industrial property. Gambiabusinesses such as Ford, AIG and BNP country. Currently, industrial activity Source: Knight Frank LLP *4 bedroom executive house – prime location combined with increased supply has led Historically, industrial rents in Maputo Paribas have been attracted by the is concentrated in the Casablanca- Industrial US$5.50/sq m/month 12% to prime rents slipping from US$37.50/ have been relatively high, reflecting the incentives offered to companies granted Tangier axis, particularly in the regions Residential US$5,000/month* 8% Djibouti Guinea sq m/month in 2015 to the current level fact that many of the traditional industrial CFC status. Office developmentsGuinea in the of Casablanca-SettatBenin and Rabat-Salé- Bissau of US$27.50/sq m/month. Prime rents are areas are in central locations or near the capital Rabat are generally Grade B low-rise Kénitra, and around the port of Tanger- RABAT Contacts Côte Prime rents Prime expected to remain around this level over port, but rents have fallen over the last buildings with little street setback. Office Med. About 30T ogokm from the port, RenaultNigeria Sierra d’Ivoire yields Ben Woodhams, Managing Director, Kenya the medium-term. two years. The decline in the economy areas in Rabat include the city centre, has the largest car factory in Africa. Ethiopia Leone +254 20 4239000 and delays to LNG production have also Agdal and Hay Ryad, where a notable A new port is under construction at Offices US$17/sq m/month 9% [email protected] South Sudan depressed the industrial markets in the current development is Foncière Chellah’s Safi on the Atlantic coast, which will Retail US$22/sq m/monthCentral 8.5% African Retail market Liberia Ghana Republic Peter Welborn, Managing Director, Africa port cities of Nacala and Pemba. Mahaj Ryad Center. provide a major new coal terminal and Industrial US$5/sq m/month 13% +44 20 7861 1200 Despite economic headwinds, phosphate hub. ResidentialCamer oonUS$4,500/month* 8% [email protected] Mozambique’s retail sector has continued to show steady growth over the last two Residential market Retail market Source: Knight Frank LLP There was practically no modern retail Residential market *4 bedroom executive house – prime location years,Somalia driven by the expansion of the The residential market has been heavily space in the country until the opening of the Figures from the Bank Al-Maghrib Equatorial Uganda middle class coupled with an historic impacted by the economic downturn. Guinea under-provision of formal retail space. In The rental apartment sector has been Morocco Mall (70,000 sq m) in 2011, and and Moroccan Land Registry show a Kenya Contact 2016, the Portuguese retail group Sonae most affected due to a significant AnfaPlace Shopping Center (31,000 sq m) in significant increase in the number of Congo 2013. A significant number of international residential transactions in 2016. This was Peter Welborn, Managing Director, Africa in partnership with private fund Satya reduction in expatriate demand as +44 20Gabon 7861 1200 brands have since entered the market, driven by a rise in activity at the low-to- Capital bought the Extra supermarket a result of companies cutting their [email protected] Democratic including H&M, McDonald’s and Marks & mid end of the market, supported by Republic Rwanda chain, which had been owned by South overheads. Rents for mid-to-high end Spencer. IKEA opened its first Moroccan the increased availability of mortgage of the Congo Africa’s Pick n Pay until 2013. Pipeline apartments have fallen by more than store in 2016, at Zenata on the outskirts finance. The government has attempted Burundi developments include Novare Matola 40% and are unlikely to recover in of Casablanca. The development pipeline to stimulate the construction of social Mall (19,500 sq m, phase one) and the medium-term as there is a large includes Aksal’s planned Mall of Rabat housing by providing tax breaks and Marginal Mall (30,500 sq m) which will volume of new units due to come to the at Wessal Bouregreg. To support further cheap land to developers. Despite this, Tanzania expand the site of the existing Game market. Rental villas at the top end of the retail development, the European Bank Morocco has a shortfall of housing and store on Avenida da Marginal into a market have been less severely affected for Reconstruction and Development has there are several master planned new fully-fledged shopping centre. Demand and currently lease for US$4,500-5,500/ invested €45 million in Vecteur LV, the real cities at varying stages of development for retail space is stable and well-located month, although rents drop to around estate vehicle of Label’Vie, which operates including Zenata Eco-City, Victoria City at units are usually readily leased at prime 35-45% of this level on the local Abayak Buildings, Malabo Maroc Telecom Headquarters, Rabat Edificio 24, Maputo the Carrefour franchise in Morocco. Bouskoura and Tamesna near Rabat. rents in the region of US$28/sq m/month. mass market.

Angola 32 33 Malawi Zambia

Mozambique Zimbabwe Namibia Madagascar

Mauritius Botswana

South Africa Mediterranean Sea Morocco Tunisia

Algeria Western Libya Egypt Sahara

Mauritania Mali Senegal Niger Eritrea Gambia Guinea Chad Sudan BissauGuinea Sierra Benin Somalia Togo Nigeria Leone Ivory Ethiopia Liberia Ghana Coast Central Africa Mediterranean Sea Tunisia Cameroon Republic Morocco

Equatorial Uganda Kenya Guinea Gabon Congo Rwanda Western Libya Egypt Algeria Democratic Republic Sahara AFRICA REPORT 2017/18 RESEARCH of the Congo Tanzania Mauritania

Indian Ocean NAMIBIA Senegal Mali NIGERIA Angola Niger Eritrea Malawi Gambia Zambia Key facts Key factsGuinea Sudan Bissau Chad Mozambique Population 2.5 million Population 182.2Guinea million Kano Zimbabwe Major cities: Major cities: Somalia Lagos 13.1 million Benin NAMIBIA MadagascarWindhoek 0.3 million Sierra Abuja Abuja 2.4 million Official languages English Togo Ethiopia Mauritius Official languages EnglishLeone NIGERIA Swakopmund Botswana Total area 824,292 sq km Ibadan Total area 923,768Liberia sq km Ghana Benin Walvis Bay GDP growth (2016) 4.2% Windhoek City Central African GDP growth (2016) -1.7% Lagos Key export Diamonds Warri Republic Key export Petroleum Currency Namibian Dollar Cameroon (NAD) Currency Naira (NGN) Port Harcourt EIU country risk B EIU country risk D rating (E=most risky) rating (E=most risky) Equatorial Uganda South Africa Guinea World Bank Doing 108 World Bank Doing 169 Kenya Business rank Business rank (out of 190 countries) (out of 190 countries) Gabon Office market Industrial market Office market Industrial market Rwanda Windhoek is a relatively small office Windhoek has well-established industrial There is an oversupply of recently- The industrial sector has been hard hit by Nigeria prime rents and yields market with steady demand for space. zones at the Northern Industrial Area, Windhoek prime rents and yields constructed good quality office space in the rapid depreciation of theDemocratic naira. Several Republic There is an ongoing shift in activity away Southern Industrial Area, Prosperita both Lagos and Abuja. Grade A rents have multinationals have to some extent ABUJA Prime rents Prime fallen in recent years, but there is pent-up retrenched on previous growth plans, from the CBD towards less central areas, and Lafrenz. Development is also taking Prime rents Prime Tanzania yields of the Congo where more modern offices with better place at Shali Industrial Estate, north yields demand partly resulting from companies’ postponed capital projects or sought delayed decision-making, and this finally parking are available. Popular non-CBD of Windhoek. Logistics is identified as Offices US$14/sq m/month 8.5% Offices US$33/sq m/month 9.5% to sublease warehousing space. Major appears to be strengthening activity in office locations include Mandume Park a priority sector by the government’s Retail US$25/sq m/month 7.75% Retail US$58/sq m/month 9% industrial development is almost entirely Lagos. Two recently-completed projects restricted to the south west of Nigeria in in the south of the city. Office rents have Fourth National Development Plan Industrial US$6/sq m/month 10% Industrial US$12/sq m/month 12% shown steady growth in recent years, (NDP4), and the country’s geographical are RMB Westport’s Wings Office Complex and around Lagos and neighbouring Ogun Residential US$2,900/month* 6% Residential US$6,500/month* 7% Indian Ocean but continued new development may location gives it the potential to be a (26,000 sq m) where Ericsson has acquired State. There are plans for the expansion of Source: Knight Frank LLP space and Heritage Place (16,000 sq m). lead to downward pressure, especially trade gateway for neighbouring countries *4 bedroom executive house – prime location LAGOS the market-leading Agbara Estate, while Prime rents Prime Angola for space in older buildings. In the office including landlocked Botswana, Zambia Additionally, the first office building at the Lekki Free Trade Zone’s viability as an yields huge Eko Atlantic development is now Malawi investment market, demand from South and Zimbabwe. The Namibian authorities industrial location should be enhanced by Zambia Offices US$67/sq m/month 9% complete and available for lease, having African investors has helped to drive yield are keen for Walvis Bay to become the the development of a new gas pipeline. Retail US$83/sq m/month 8.5% been purpose-built for the now-defunct compression and capital value growth. preferred port location on the west coast Contact Rendeavour has recently acquired a site of Industrial US$10/sq m/month 12% Afren oil company. Within Abuja, the recent of Africa serving the Southern African Curtis Matobolo, approximately 10,000 hectares in the free Managing Director, Botswana completion of the World Trade Center office Development Community area, and a Residential US$6,000/month* 8% trade zone. Mozambique Retail market +267 395 3950 tower has added to the supply surplus. port expansion is currently under [email protected] Source: Knight Frank LLP Despite having a relatively small *4 bedroom executive house – prime location Zimbabwe construction by China Harbour and Residential market population of just over 300,000, Peter Welborn, Managing Director, Africa Retail market Namibia Madagascar Engineering Company. +44 20 7861 1200 There is a surplus of high-end residential Windhoek has a significant volume of The slowdown in the Nigerian economy [email protected] Contacts space in Lagos, as a result of over- Mauritius modern mall space. The largest shopping has not detracted from the huge Residential market Peter Welborn, Managing Director, Africa construction in the previous developmentBotswana centres are Grove Mall (52,000 sq m), opportunities that its burgeoning middle Maerua Mall (51,000 sq m) and Wernhil Figures from FNB Namibia suggest that +44 20 7861 1200 cycle. The traditional high-end residential [email protected] class are creating for retail development. Park (38,000 sq m). With Windhoek being average house prices in Namibia have Nigeria has continued to transition from areas of Ikoyi, Victoria Island and Albert Orizu, Senior Partner well-supplied for retail space, developers more than doubled since 2010, but there informal market trading to more modern Banana Island have also seen increased +234 80 2224 1450 have been encouraged to build large- are signs that the market is now cooling competition from Lekki to the east. [email protected] retail formats. Major developments planned scale malls in other towns; for example, with demand impacted by weakening or underway include the Eko Mall within Although Lekki remains heavily congested, Safari Development’s Platz Am Meer economic growth. At the prime end of Eko Atlantic which would potentially be the master planned communities such as (27,000 sq m) opened in Swakopmund the market, the most desirable locations largest in West Africa, and Actis’ proposed Victoria Garden City have grown rapidly.South Africa in 2016, while Atterbury’s Dunes Mall in Windhoek include the suburbs of Twin Lakes Mall (50,000 sq m). The latter is Within the luxury sector, Eko Atlantic had (25,000 sq m) in Walvis Bay is due for Eros, Ludwigsdorf and Klein Windhoek. rumoured to have Carrefour as its anchor its first residents in 2016, at the Eko Pearl completion in 2017. Demand for larger High sales prices and rents are also tenant, thus breaking Shoprite’s near- Towers, while the World Trade Center retail units primarily stems from South commanded by luxury housing in the monopoly on the anchoring of Nigeria’s residential tower in Abuja also began to African chains such as Spar, Pick n Pay, coastal resort of Swakopmund. Namibia modern malls. Developers have also be occupied. Despite the slowdown in Edgars and Foschini, while the most has a shortage of affordable housing and targeted second-tier cities, with locations the sector, a significant number of luxury prominent Namibian-owned supermarket serviced land, which is exacerbated by such as Onitsha, Ibadan and Warri seeing developments are planned, including Abayak Buildings, Malabo Bank of Namibia Building, Windhoek Heritage Place, Lagos operator is Woermann Brock. high levels of rural-to-urban migration. recent mall developments. Gracefield Island and Orange Island.

34 35 Tunisia

Morocco

Algeria Libya

Egypt

Western Sahara

Mauritania

Mali

Niger

Eritrea Sudan Senegal

Chad

Gambia

Djibouti Guinea Bissau Benin Guinea

Côte d’Ivoire Togo Nigeria Sierra Central African Republic Ethiopia Leone Tunisia Morocco

Liberia Ghana

South Sudan Algeria Libya Cameroon Egypt

Western Sahara

Somalia

Equatorial AFRICA REPORT 2017/18 RESEARCH Guinea

Kenya RWANDA SENEGAL Congo

Key facts Key facts Mauritania Uganda Gabon Niger Population 11.6 million Population 15.1 milion Major cities: Major cities: Kigali 1.3 million Dakar 3.5 million Eritrea RWANDA Official languages Kinyarwanda, Official languages French Dakar SENEGAL Sudan Kigali French, English Total area 196,722 sq km Chad Democratic Total area 26,338 sq km Mali Republic GDP growth (2016) 6.6% The of the Congo GDP growth (2016) 6.0% Key export Gold Gambia Key export Tin ore Currency West African CFA Currency Rwandan Franc Franc (XOF) Burundi Guinea Djibouti (RWF) EIU country risk C Bissau Tanzania EIU country risk C rating (E=most risky) Guinea Benin rating (E=most risky) World Bank Doing 147 World Bank Doing 56 Business rank Business rank (out of 190 countries) Office market large Francophone West African marketsCôte Togo Nigeria CHIC Complex and M-Peace Plaza, and d’Ivoire Office market (out of 190 countries) Sierraof Côte d’Ivoire and Cameroon. consumer habits are starting to change. In Dakar, businesses tend to prefer Ethiopia The supply of office space in Kigali has either Plateau or the areas to the north Leone outstripped demand for the last few years. Industrial market Industrial market Kigali prime rents and yields Dakar prime rents and yields at Les Almadies and Point E. In general, Over 50,000 sq m of new office space office market activity has shown a shift ComparedLiberia with many other West African Rwanda has only a small industrial base, Central African South Sudan came to the market in the past year, with Prime rents Prime Prime rents Prime northwards, particularly when involving cities, the industrial market in Dakar is but the government has ambitions to turn Republic an additional 70,000 sq m in the pipeline for yields yields international companies. However, fairly stagnant. Over the past five years, Ghana it into a regional centre for trade, logistics the next two years. The take-up of space demand is relatively flat, and international there has been little interest in Dakar from and manufacturing. A major part of these Offices US$20/sq m/month 11% Offices US$19/sq m/month 10% is relatively slow, and the excess supply requirements tend to be small, typically international manufacturers and many plans is the Kigali Logistics Platform, a dry Retail US$25/sq m/month 10% Retail US$26/sq m/month 9.5% Cameroon is putting downward pressure on prime 400 sq m. Larger requirements generally of the international businesses that are port which is due to be developed on a site Industrial US$6/sq m/month 13% Industrial US$4.50/sq m/month 12% rents. Kigali City Council is currently leading come from the banking and telecoms in the city have been scaling back their at Masaka near Kigali. DP World has been Residential US$3,000/month* 9% Residential US$2,800/month* 7% sectors. Supply and demand are relatively an urban regeneration drive in the CBD operations. Small-scale local industrial granted a 25-year concession to develop Source: Knight Frank LLP Source: Knight Frank LLP balanced, resulting in almost no rental whereby old and low density structures are activity is found throughout Dakar, but the Somalia and operate the facility. The government *4 bedroom executive house – prime location *4 bedroom executive house – prime location growth for the last decade. However, being demolished to make way for modern, prime area for bigger businesses is the has also signed a deal with Alpha Logistics this now makes Dakar appear relatively Equatorial Uganda high density commercial developments. port. Most industrial property is owner- Guinea for the construction of a modern bonded inexpensive and in a similar position to As part of this strategy, tenants currently warehouse at Petit Barrière, on the border that which the Ivorian capital Abidjan was occupied and there is practically no renting residential properties for office use Contact Contact Kenya with DR Congo. in two years ago before its recent rapid speculative development in this sector. are being encouraged to relocate to newly Judy Rugasira Kyanda, Managing Director Peter Welborn, Managing Director, Africa +256 414 341 391 +44 20 7861 1200 growth. There are ambitious plans for the Congo constructed offices. This will generate Residential market [email protected] [email protected] development of a new city at Diamniadio, Residential market demand for some of the space currently on 30 km east of Dakar, and this is likely to There has been an increase in the number Residential development in Dakar is Gabon the market and in the pipeline. become an increased focus for activity of apartments and houses coming on to generally on a small scale, typically Democratic across all property market sectors. Republic the rental market, and demand for such up to 20 units. There is a market for Rwanda Retail market well-priced apartments in small blocks of the Congo accommodation is strong. Increased Retail market The retail industry in Rwanda is currently interest in residential rental accommodation and developments such as O2 and The Dakar retail market is relatively dominated by local retailers, with a small has been observed from the expatriate Ocean Drive have performed well. A Burundi undersupplied, with only two major number of regional chains from Kenya community, with Gacuriro and Kagugu being key to the success of schemes is the upscale developments, Sea Plaza and and South Africa having a presence, most particularly popular due to their affordable willingness of owners to lease, as well as Dakar City. These malls are both anchored notably Nakumatt and Mr Price. Retail rents and modern housing stock. In the sell, units. Progress at the larger-scale by Casino and between them offer a total businesses in Kigali are generally found in residential sales market, the majority of Waterfront development has continued of around 20,000 sq m GLA. International Angola destination locations that are not necessarily to be relatively slow, and no further enquiries stem from indigenous Rwandans brands in the Dakar market include convenient for the majority of consumers. similarly-sized schemes are likely to be Tanzania seeking houses in the US$50,000-100,000 Benetton, Mango and Guess. There are These environments tend to lack aesthetic range, in locations such as Nyamirambo, small supermarkets throughout the city, commenced until it is completed and appeal, public access and leisure and Gisozi, Kibagabaga and Kagugu. The primeMalawi the most ubiquitous being those of the sold. Away from the seafront, the market entertainment facilities that would increase residential pipeline in Kigali is active with Spanish group, Citydia. Additionally, is comparatively buoyant, although prices dwellZambia times and revenues. However, Kigali’s a number of developments scheduled for the city has some boutique shopping, drop from up to CFA1,500,000/sq m retail landscape is evolving with the advent completion in 2017 including Ridgeview historically centred on Rue Jules Ferry in to around CFA500,000-650,000/sq m of developments such as Union Trade Court, Karibu Homes and Serene Crest Plateau. Retail rents are relatively flat and at developments such as Mixta/ARM’s AbayakCentenary Buildings, House, MalaboKigali Larubibi apartments, Kigali Focus One office building, Dakar Centre, Kigali City Tower, MTN Centre, Apartments. have fallen well behind those of the other Residence de la Paix.

36 37

Angola

Malawi Zambia

Mozambique

Zimbabwe Mozambique

Zimbabwe Madagascar Namibia Namibia Madagascar

Mauritius Botswana Mauritius

Botswana

South Africa

South Africa Mediterranean Sea Tunisia Morocco

Algeria Western Libya Egypt Sahara

Mauritania

Mali Senegal Niger Eritrea Gambia Tunisia Guinea Chad Sudan Morocco Bissau Guinea Somalia Sierra Benin Leone Algeria Ivory Togo Nigeria Ethiopia Libya Liberia Coast Ghana Egypt Central Africa Western Republic Sahara Cameroon

Equatorial Uganda Guinea Kenya Mauritania Gabon Congo Mali Sudan Rwanda Niger Eritrea Democratic Republic Senegal of the Congo Chad Tanzania Gambia AFRICA REPORT 2017/18 RESEARCH Djibouti Guinea Benin Bissau Guinea Côte Togo Nigeria Sierra d’Ivoire Ethiopia Leone Angola Central African South Sudan Zambia Malawi Liberia Ghana Republic SOUTH AFRICA Cameroon TANZANIA Somalia Mozambique Equatorial Uganda Guinea Zimbabwe MadagascarKey facts Key facts Congo Kenya Gabon Namibia Mauritius Population 54.5 million Population 53.5 million Rwanda Botswana Democratic Major cities: Major cities: Burundi Johannesburg 9.4 million Republic Mwanza Pretoria Dar es Salaam 5.1 million of the Congo Arusha Cape Town 3.7 million Mwanza 0.8 million Durban 2.9 million Johannesburg Arusha 0.4 million Dodoma Zanzibar Ekurhuleni Official languages 11 official languages Dodoma 0.4 million TANZANIA Dar es Salaam Total area 1,219,090 sq km Official languages Kiswahili, English SOUTH GDP growth (2016) 0.1% Total area 947,300 sq km Durban Key export Gold GDP growth (2016) 7.2% AFRICA Currency Rand (ZAR) Key export Gold Cape Town EIU country risk C rating (E=most risky) Currency TanzanianAngola Shilling Malawi (TZS) Zambia World Bank Doing 74 Business rank EIU country risk C (out of 190 countries) rating (E=most risky) Office market Cotton On and Forever 21 have expanded World Bank Doing 132 Office market MozambiqueIndustrial market their South African presence in recent Business rank Despite relatively weak economic growth Dar es Salaam is the commercial capital of The prime industrial areas of Dar es Salaam years, providing increased competition to (out of 190 countries) Zimbabwe in 2016, South African office markets South Africa prime rents and yields Tanzania and its CBD remains at the heart of are located on NyerereMadagascar Road and Mandela domestic retailers. Namibia recorded above-inflation rental growth office market activity. Significant new office Road, and have good transport links to and vacancy rates were broadly stable. In CAPE TOWN development projects within the CBD include the harbour, international airport and the Mauritius Industrial market Prime rents Prime Dar es Salaam prime rents Botswana Johannesburg, vacancy rates are relatively yields Mzizima Towers and the Tanzania Ports interior of the country. There are secondary high in the CBD and new development The South African industrial market is and yields Authority HQ building. There are also office industrial locations in Chan’gombe, Offices US$18/sq m/month 9% is largely focused on the Sandton and experiencing an ongoing shift in activity development projects outside the city centre, Mikocheni, Mwenge and Ubungo. The Retail US$60/sq m/month 7.75% Prime rents Prime Rosebank nodes, particularly in locations away from heavy manufacturing towards particularly along Ali Hassan Mwinyi Road port of Dar es Salaam is a gateway for yields within easy reach of stations on the warehousing and distribution, and Industrial US$5/sq m/month 9% and Bagamoyo Road. Such developments goods destined for landlocked countries Gautrain rapid rail line. The largest projects developers are focused on the delivery Residential US$5,000/month* 5% Offices US$21/sq m/month 9% include Jangid Plaza, Fakyat Tower, including Malawi, Zambia, Rwanda and of high quality logistics space. In Gauteng, South Africa in the pipeline are office buildings under JOHANNESBURG Retail US$16/sq m/month 10% Morocco Square and Paloma Park. Despite Burundi, therefore logistics companies have construction for Discovery (87,000 sq development activity is largely concentrated Prime rents Prime Industrial US$6/sq m/month 10% the increase in supply, office rents remain significant demand for warehousing space towards the north and east of Johannesburg yields m) and Sasol (67,000 sq m). In Cape Residential US$4,500/month* 6% relatively high and vacancy rates are low. for goods in transit. As part of a government in locations such as the Lords View Offices US$17/sq m/month 8.5% initiative to focus on industrialisation, Town, vacancy rates are low at the V&A Source: Knight Frank LLP Waterfront and offices in this location Industrial Park, while the Waterfall City Retail US$60/sq m/month 8% *4 bedroom executive house – prime location Retail market public corporations such as pension funds command a premium over the CBD. The project also includes substantial logistics Industrial US$5/sq m/month 9% The retail market in Tanzania has steadily have been instructed to invest in industrial Century City node remains an important property elements. Over the longer term, the Residential US$4,500/month* 5.5% grown over a long period, largely through activities, and this is expected to stir up the focus for new development in Cape Town. Ekurhuleni Aerotropolis project around OR Source: Knight Frank LLP small-scale retail outlets operated from market for industrial premises. Office investment volumes were moderate Tambo International Airport may prove to *4 bedroom executive house – prime location Contact residential buildings and small downtown be an important catalyst for industrial in 2016, with many South African investors Ahaad Meskiri, Managing Director specialist shops in National Housing Residential market property development. preferring to pursue overseas opportunities Contacts +255 22 211 3300 Corporation buildings. Such outlets compete Dar es Salaam’s high-end residential market as a hedge against the weak rand. [email protected] Tony Galetti, CEO with ad-hoc street trading known locally is concentrated to the north of Salender Residential market +27 21 418 6308 as “Wamachinga”, which can sometimes Bridge, across the entire Msasani Peninsula Retail market South African house price growth slowed [email protected] be found on a massive scale in areas and extending northwards to Mbezi and The Mall of Africa (131,000 sq m) opened in 2016, reflecting the more subdued Martin Fitchet, Director such as Kariakoo and Manzese. There beyond. The most exclusive residential in 2016 as part of the ambitious Waterfall economic backdrop. However, the major +27 31 303 8722 are a number of large-scale modern retail area is Oyster Bay at the southern base of [email protected] City development, located between coastal cities of Cape Town, Port Elizabeth malls located in areas such as the city the peninsula. At this end of the market, Susan Turner, Director and Durban outperformed inland markets. centre, Oyster Bay, Msasani, Mbezi Beach demand is dominated by diplomats, Johannesburg and Pretoria. A significant +27 21 671 9120 volume of additional new retail space is This trend was driven in part by demand [email protected] and Mikocheni, and several larger retail government executives and high net-worth in the pipeline, which will add to South from domestic buyers relocating to the schemes are planned. Rock City Mall, in individuals. The middle market is much Africa’s existing mall stock of more than coast from inland cities for lifestyle reasons, the city of Mwanza, is also now operational. less well-defined, with pockets of middle- 23 million sq m. Although there are some with locations in Cape Town and along the However, some large retailers have closed income housing spread fairly evenly across concerns of retail oversupply, the sector Western Cape coast generally attracting their Tanzanian operations, including the the city. Within central Dar es Salaam, has generally performed well. The next few the strongest interest. The housing Kenyan supermarket chain Uchumi and the Upanga neighbourhood is a well- years may see a shift in developers’ focus market should be boosted by a moderate South Africa’s Shoprite. The Kenyan retailer established residential area offering good towards smaller neighbourhood shopping improvement in economic growth in 2017, Nakumatt, which took over Shoprite stores quality accommodation mainly in apartment centres, rather than large regional malls. although a cut in interest rates appears in Tanzania, is reported to be struggling in blocks, and it is the preferred location for Abayak Buildings, Malabo 15 Alice Lane Towers, Sandton, Johannesburg PSPF Twin Towers, Dar es Salaam International brands such as H&M, Zara, unlikely in the immediate term. the country. the Asian community.

38 39 Tunisia

Morocco

Algeria Libya

Egypt

Western Sahara

Mauritania

Mali Sudan Niger

Eritrea Senegal Chad Gambia

Djibouti Guinea Bissau Guinea Benin

Côte Nigeria d’Ivoire Togo Ethiopia Sierra AFRICA REPORT 2017/18 RESEARCH Leone Central African Republic South Sudan LiberiaTUNISIA Ghana UGANDA Cameroon

Key facts Key facts Tunis Gulu Population 39.0 million TUNISIA Population Equatorial11.2 million Democratic Somalia Major cities: Guinea Major cities: Republic UGANDA Tunis 2.0 million Kampala 1.9 million of the Congo Official languages Arabic Official languages English Kenya Morocco Total area 163,610 sq km Total area 241,038 sq km Kampala GDP growth (2016) 1.5% GDP growth (2016) 4.9% Key export InsulatedGabon wire Key export Coffee Currency Tunisian Dinar (TND) Currency Ugandan Shilling Algeria (UGX) Rwanda Libya EIU country risk C rating (E=most risky) EIU country risk C rating (E=most risky) World Bank Doing Egypt77 Western Business rank World Bank Doing 115 Burundi (out of 190 countries) Congo Business rank (out of 190 countries) Sahara Office Market Industrial market Office market CBD following the recent trend for retail activity to drift towards suburban locations. Office market activity in Tunis is generally Tunisia has traditionally been seen as Demand for office space in Kampala focused on a few key districts of the a low-cost manufacturing location for Tunis prime rents and yields Kampala prime rents and yields picked up in the second half of 2016, Industrial market city. Belvédère and Montplaisir in the mainly French and Italian companies, particularly for Grade A/AB offices. Mauritania The traditional industrial areas in the downtown area are mainly home to although local manufacturing has grown Prime rents Prime Prime rents Prime However, Kampala remains a tenant’s Kampala CBD and its outskirts, such as due to increased infrastructure spending yields yields market against the backdrop of rising government departments, banks, medical Banda, Ntinda, Nakawa and Kyambogo, Mali and restrictions on foreign companies vacancy rates in the Grade B/C segment. centres and small Grade B offices. Offices US$10/sq m/monthSudan 10.5% Offices US$17/sq m/month 10% sawTanzania subdued leasing activity in 2016 operatingNiger in Tunisia. Limited industrial Demand for better quality space largely Planned commercial districts such as Retail US$26/sq m/month 9.5% Retail US$25/sq m/month 12% and occupancy rates are fairly low. The stems from multinational companies and Urbain Nord and Les Berges du Lac I and property development and moderate Industrial US$5.50/sq m/month 14% EritreaIndustrial US$6/sq m/month 13% supply of space outstrips demand, and a Senegal occupier demand have kept the market government organisations seeking modern, II are to the north east of the downtown ChadResidential US$4,000/month* 7.5% Residential US$5,000/month* 8% slowdown in trade has reduced the need for balanced in recent years. The majority of energy-efficient buildings with ample Gambia area and offer modern buildings in secure Source: Knight Frank LLP Source: Knight Frank LLP warehousing for goods and commodities properties are either owner-occupied or parking away from the congested CBD. pleasant environments close to the city *4 bedroom executive house – prime location *4 bedroom executive house – prime location exported to neighbouring countries. centre and airport. Construction activity small units serving the local market. Most Djibouti Oil and gas companies have increased However, demand has increased for Guinea their operations in Uganda following the Guineahas slowed noticeably over recent yearsBenin industrial zones are to the south and west relatively large warehouses in areas along of Tunis, including Mghira where a large issuance of production licences in 2016, due to limited occupier demand, a lack the Entebbe-Kampala highway, where Bissau Côte Togo labourNigeria pool and modern warehousing and are considering increasing their office interest stems from logistics and transport Sierra of bank liquidity and concerns about the attracts local and multinational occupiers. EthiopiaAngola space. This is likely to positively impact companies and UN agencies, due to the economy. Although rents have remained Contact Contact d’Ivoire Newer industrial zones are being demand for prime offices in the medium- proximity to Entebbe International Airport. stable through this period, the lack of Peter Welborn, ManagingSouth Director, AfricaSudan Judy Rugasira Kyanda, Managing Director Malawi Leone developed in locations close to the cityCentral African to-long term. Liberianew supply has causedGhana vacancy rates to +44 20 7861 1200 +256 414 341 391 Zambia including Manouba and Zaghouan. [email protected] Residential market fall, and rents are expected to rise in the [email protected] Cameroon Republic Retail market The residential lettings market was relatively near future. Residential market slow in 2016, although activity increased Somalia The retail sector had an unsettled 2016, Retail market The primeEquatorial residential areas in Tunis are Uganda with several leading retailers running into slightly in the final quarter. Demand for generally located to the north and east difficulties. However, increased footfall prime rental accommodation mainly There has been limited new retail of the city centre and include Les Berges Kenya was recorded in a number of leading came from those working in the oil and Guinea gas, diplomatic and corporate sectors. development in Tunis, with the exception du Lac I and II, Carthage, NotreCongo Dame malls and many shops continued to trade ResidentialMozambique sales activity was dominated of the Tunisia Mall in Les Berges du Lac and La Marsa. TheGabon residential market well, particularly international-branded by the transaction of properties in non- II which opened in 2015. This 80-unit showed strong growth between 2010 and Rwanda stores targeting middle-to-upper income Democratic performing loan portfolios of various banks. centre features several foreign brands 2015, with demand boosted by a lack of consumers. A significant new shopping Zimbabwe Increased demand has been registered in including Massimo Dutti, Zara, Mango alternative investment opportunities for Burundi centre is the Imperial Mall, which opened and Pull & Bear. An extension known as Republic prime locations, with apartments attracting Tunisians and by Libyans leaving their in Entebbe in December 2016. The stronger interest than standalone houses, Madagascar Tunisia Mall 2 is under construction and Namibia own country’s troubles. More recently, development pipeline includes the Arena partly because they are perceived as being will be connected to the original centre activity has slowed due largely to of the Congo Mall, a 15,000 sq m centre on Nsambya more secure. Prime residential development by a tunnel. Despite difficult economic restrictions on borrowing and an easing Tanzania Road in Kampala, which is currently in the activity has increased and is mostly focused conditions and inflationary pressures, of demand from foreign investors. Prices final pre-letting stage with earthworks due on rental properties with two-to-four Mauritius retail market sentiment is generally for high-end residential property have held to commence in H1 2017. Leasing has also en-suite bedrooms. The prime locations Botswana positive and chains such as Carrefour up more strongly than the wider market, commenced on the proposed 42,000 sq m for development are Kololo, Nakasero, Market, Monoprix and MG Maxi have partly because wealthier buyers are less Kingdom Kampala development, and this Bugolobi and Naguru, which are all in close Abayak Buildings, Malabo Tunisia Mall, Tunis Mirembe Business Centre, Kampala continued to expand across Tunisia. sensitive to borrowing restrictions. has the potential to revitalise the Kampala proximity to the CBD. Angola Zambia Malawi 40 41

Mozambique Zimbabwe Namibia Madagascar South Africa Mauritius Botswana

South Africa Morocco Tunisia

Algeria Morocco Western LibyaEgypt Tunisia Sahara

Algeria Mauritania Western Libya Egypt Sahara

Senegal Mali Niger Eritrea Gambia Mauritania Guinea Chad Sudan

Bissau Guinea Senegal Mali Niger Eritrea Benin Somalia Gambia Sierra Togo Nigeria Guinea Chad Sudan Leone Ivory Ethiopia Liberia Ghana Coast BissauGuinea Central Africa Benin Somalia Republic Sierra Cameroon Togo Nigeria Leone Ivory Ethiopia Liberia Ghana Coast Central Africa Equatorial Uganda Guinea Kenya Cameroon Republic Gabon Congo AFRICA REPORT 2017/18 RESEARCHRwanda Equatorial Uganda Kenya Democratic Republic Guinea Congo Gabon of the Congo Tanzania Rwanda ZAMBIA ZIMBABWE Democratic Republic of the Congo

Tanzania Key facts Key facts Angola Malawi Population 16.2 million Population 15.6 million Major cities: Major cities: Lusaka 2.2 million Harare 1.5 million Zambia Angola Kitwe Ndola 0.5 million Bulawayo 0.7 million Harare Mozambique Ndola Malawi Kitwe 0.5 million Official languages 16 official languages ZAMBIA Official languages English Total area 390,757 sq km ZIMBABWE Madagascar Lusaka Total area 752,618 sq km GDP growth (2016) -0.3% Namibia Bulawayo GDP growth (2016) 3.0% Mozambique Key export Gold Mauritius Key export Copper Currency Zimbabwe Bond Botswana Zambian Kwacha Notes (from 2016). Namibia Zimbabwe MadagascarCurrency (ZMK) Other major Botswana currencies accepted EIU country risk MauritiusC rating (E=most risky) EIU country risk D rating (E=most risky) South Africa World Bank Doing 98 Office market Industrial market Business rank World Bank Doing 161 Office market on to their retail investments, with Riverside (out of 190 countries) Business rank Walk being the only suburban shopping Lusaka is a growing commercial hub The logistics and industrial sector is Zimbabwe is suffering from economic and (out of 190 countries) mall that has been sold since 2015. with office space demand primarily one of the most consistent-performing liquidity challenges which have stagnated stemming from the financial and property market sectors in Lusaka, with office market activity. Supply is higher communication sectors. An oversupply than demand and tenants are voluntarily Industrial market South Africastrong demand for warehouse space of Grade A space has placed downward supported by the growth of the retail, Lusaka prime rents and yields Harare prime rents and yields surrendering space. Office buildings The continued decline of the economy has pressure on rents, as well as providing food and beverage and agricultural in the Harare CBD have void rates in led to several manufacturing companies more choice for occupiers. The economy Prime rents Prime Prime rents Prime excess of 50%, making them unattractive industries. While warehouses with yields yields closing operations. Very little foreign direct was relatively sluggish in 2016, largely low quality specifications still attract investments. Suburban offices have investment has come into the country as a Offices US$20/sq m/month 10% Offices US$10/sq m/month 8% due to low copper prices, but a return good demand, in the long run pressure become more sought-after investments, result of the government’s indigenisation to better economic growth is expected on Lusaka’s transport infrastructure Retail US$40/sq m/month 8.5% Retail US$25/sq m/month 7% due to their lower void rates, but there policies, the high cost of capital and from the second half of 2017, which combined with the demand for Industrial US$6/sq m/month 12% Industrial US$3/sq m/month 12% continues to be few sales transactions. socio-political instability. This has led should result in increased demand. The increasingly sophisticated logistics Residential US$3,500/month* 10% Residential US$2,000/month* 8% To reduce vacancy levels, some CBD to an oversupply and underutilisation of prime location is the emerging Great properties will result in a shift away from Source: Knight Frank LLP Source: Knight Frank LLP landlords are converting office space to industrial space. The sector is therefore East Road/Thabo Mbeki Road node in *4 bedroom executive house – prime location *4 bedroom executive house – prime location the existing industrial area to emerging shops, while others are partitioning floors characterised by high vacancy rates, the immediate vicinity of the East Park hubs elsewhere around the city. into smaller suites. Given the challenging declining rents and the voluntary surrender Mall and Arcades Shopping Centre. market, no new multistorey buildings have of leased space by tenants. A number Residential market Contact Contact been constructed in the last twenty years. of investors in this sector are looking to Retail market disinvest, but there is little or no demand Market activity has slowed across all Tim Ware, Managing Director Amos Mazarire, Senior Partner Over 90% of Zambia’s modern except from a few owner-occupiers. sections of the residential market, but +260 211 250 538/250 683 +263 4 793 841/9 Retail market shopping mall space is in either Lusaka +260 211 255 992-3 there remains a mismatch between [email protected] or the towns of the Copperbelt, with [email protected] Demand for retail space remains high. demand and supply at the top end Residential market approximately 250,000 sq m of existing However, empty units in the CBD have of the Lusaka rental market due to retail space in these locations. As a become visible and vacant space is Residential market transactions are being a shortage of well-designed modern result there are opportunities to develop taking long to lease. Retailers face stiff slowed down by the lack of mortgage formal retail centres in expanding towns properties in the best locations. Self- competition from street vendors who finance to assist buyers. Most transactions around the rest of the country. The build projects dominate the housing sell their goods on shop pavements. The are therefore on a cash basis, and the recently opened Kafue Shopping Mall, supply across the market, as a result of construction of new suburban shopping majority of the population does not have anchored by Pick n Pay, highlights the high interest rates. Zambia has one of malls such as the Mall of Zimbabwe the necessary funds to be able to buy demand for niche malls in other towns, the most developed commercial farming and the Gunhill Mall has been shelved property. Low disposable incomes and from both shoppers and retailers. sectors in Africa, with increasing in light of the country’s poor economic poor liquidity have depressed rental levels Competition for customers and retailers interest from private individuals, outlook. Nonetheless, demand for prime and reduced property prices. Therefore, no is expected to intensify between the investment consortiums and funds. suburban retail space remains buoyant major speculative housing developments shopping malls in Lusaka, however The sophistication of Zambian farming and there are high occupancy rates in this have been built in recent times, and the few Zambia’s fast-developing property comes as a surprise to most outsiders, sector. Prime rents are currently higher attempts to construct such projects have market is proving to be a resilient and as many businesses have yields, for suburban retail space, at US$25/sq failed. The limited available new stock has risk-tolerant long-term investment agronomy and technology on a par with m/month, compared with US$20/sq m/ mainly come from self-build projects and PWC Office Park, Lusaka Joina City, Harare destination. European operations. month in the CBD. Investors are holding housing cooperatives.

42 43 AFRICA REPORT 2017/18 RESEARCH

AFRICA COMMERCIAL OCCUPIER GUIDE

Angola Botswana Egypt Ghana Kenya Malawi Nigeria Rwanda South Africa

LEASE TERMS Rents quoted US$/sq m/month Pula/sq m/month EGP/sq m/month US$/sq m/month KSh/sq ft/month or MWK/sq m/month US$/sq m/annum or Naira/ US$/sq m/month Rand/sq m/month US$/sq ft/month sq m/annum Typical lease 1-3 years 1-5 years 1-5 years 2-5 years 6 years 1-3 years 2-5 years 1-5 years 3-5 years lengths Frequency of Monthly to annually in Monthly in advance Quarterly in advance Usually paid quarterly or Quarterly in advance Quarterly in advance Quarterly in advance (now the Monthly to quarterly in advance Monthly in advance rent payments advance biannually in advance norm, although historically rents were paid 2-3 years in advance) Basis of rent None Pre-agreed escalation, Pre-agreed escalation, Periodic rent reviews at an Fixed rental increases, typically Annual rent reviews based Periodic rent reviews based on Pre-agreed escalation, typically Fixed annual escalation, reviews typically 6-10% per annum typically 5-10% per annum agreed annual percentage, 7.5% per annum if rents are on open market rents open market rents 5-10% per annum typically 7-9% typically 5-10% paid in KSh or 5% if paid in US$ Break options Can be exercised by either Uncommon, but can be Can be exercised by either Can be exercised by either Break clauses are not common Can be exercised by either Break clauses are not common, Break clauses are not common No break options party. Typical notice period is exercised by either party when party. Typical notice period is party. Typical notice period is party. Typical notice period is except in longer leases 3 months in place. Typical notice period 3 months 3 months 3 months is 3 months Ability to Subletting permissable, with Subletting permissable, with Subletting permissable, with Subletting permissable, with Subletting not permitted Subletting permissable, with Subletting permissable, with Subletting not permitted Subletting permissable, with assign lease landlord’s consent landlord’s consent landlord’s consent landlord’s consent landlord’s consent landlord’s consent landlord’s consent

OCCUPATIONAL COSTS Service Paid by tenant. Typically Paid by tenant. Typically Paid by tenant. Typically Paid by tenant. Typically Paid by tenant. Typically 20- Paid by tenant based Paid by tenant. Typically Paid by tenant, typically 10-15% Paid by tenant. Covers all charges 10-15% of net rents 10-15% of net rents 8-15% of net rents 10-15% of net rents 25% of gross rents on actual bills received 20-30% of net rents of rents landlord expenses except for services property rates, which are not recoverable. Utilities Tenant pays for all utilities Tenant pays for all utilities Tenant pays for all utilities Tenant pays for electricity. Tenant pays for electricity. Paid by tenant through Tenant pays for utilities, either Tenant pays for electricity. Tenant pays for all consumed. Communal consumed. Communal consumed. Communal Landlord pays for water, Landlord pays for water, service charge via service charge or on a Landlord pays for water, consumables including water, consumption is recovered consumption is recovered consumption is recovered recovering cost via service recovering cost via metered basis recovering cost via electricity and sewerage/waste through service charge through service charge through service charge charge service charge service charge Relevant local No VAT on rents. Urban VAT of 12% payable by VAT introduced in Egypt in No VAT on rents. Rent tax of VAT of 16% payable on VAT of 16.5% payable VAT of 5% payable on VAT of 18% payable on rents VAT of 14% payable on rents taxes payable Property Tax applies to registered bodies. Withholding 2016, but the lease of land and 8% payable by tenant rents, service charges and on rents commercial rents. Withholding commerical rents, at an tax of 5% paid by tenant on buildings is exempt parking fees tax of 10% payable by tenant effective rate of 15% rents above P36,000 per annum Internal Tenant responsible Tenant responsible Tenant responsible Tenant responsible Tenant responsible Tenant responsible Tenant responsible Tenant responsible Tenant responsible repairs External Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible repairs and repairs to common parts Building Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible Landlord responsible insurance Restoration Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore Varies by lease agreement. premises to original state, premises to original state, premises to original state, premises to original state, premises to original state, premises to original state, premises to original state, premises to original state, Fair wear and tear will apply in subject to reasonable wear subject to reasonable wear subject to reasonable wear subject to reasonable wear and subject to reasonable wear and subject to reasonable wear subject to reasonable wear subject to reasonable wear most, but not all, cases and tear and tear and tear tear. Typically let as shell & core tear. Typically let as shell & core and tear and tear and tear

TRANSACTION COSTS Agency fees: Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord. Typically Paid by landlord. Typically Paid by landlord or tenant. Paid by the landlord, typically Paid by landlord. Typically new lease Typically one month’s rent Typically one month’s rent Typically one month’s rent Typically one month’s rent 4-8.3% of annual rent 5-10% of annual rent Typically 5-10% of the total rent one month's rent 15-20% of the annual rent, depending on lease length Agency fees: Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord or tenant. Paid by landlord. Typically Paid by landlord. Typically Paid by landlord or tenant. Paid by the landlord, typically Paid by landlord. Typically renewal Typically one month’s rent Typically 2-3% of annual rent Typically one month's rent Typically one month’s rent 2.5% of annual rent 5-10% of annual rent Typically 5-10% of the total rent one month's rent 10-15% of the annual rent, depending on lease length Agency fees: Typically one Typically one Typically one month’s rent Typically 50-100% of one No subleasing N/A Typically 5-10% of the total rent No subleasing Paid by existing tenant. sublease month’s rent month’s rent month’s rent Typically 15-19% of annual rent, depending on lease length Legal fees Payable by tenant on Payable by landlord or tenant Payable by tenant on Landlord and tenant pay their Payable by tenant, on a sliding Payable by tenant, based on a Payable by tenant, tarriffs vary Landlord and tenant pay their Landlord and tenant pay their attorney scale on attorney scale attorney scale own costs scale depending on rents prescribed scale of fees by lawyer own fees own costs Is stamp duty Yes. Tenant pays No No Yes. Tenant pays Yes. Tenant pays. It is calculated Yes. Stamp duty of Yes. Rates vary No No payable on as 2% of combined total of the 3% payable where lease by state leases? average rent over the 6 years is registered plus the service charge for 1 year

44 45 KNIGHT FRANK IN AFRICA

Tanzania Uganda Zambia Zimbabwe

LEASE TERMS TUNISIA Rents quoted US$/sq m/month, but US$/sq m/month US$/sq m/month US$/sq/month government organisations MOROCCO are now asking to charge in TShs

ALGERIA LIBYA Typical lease 1-5 years 2-5 years 2-5 years 1-3 years EGYPT lengths Frequency of rent Quarterly in advance Usually paid quarterly or Monthly or quarterly Monthly in advance payments biannually in advance in advance (retail mall WESTERN tenants pay monthly) SAHARA Basis of rent Annual escalations are not Periodic rent reviews at an Fixed annual rental Annual rent reviews based reviews a norm agreed annual percentage, escalations, typically on open MALI typically 3.5-10% 3-5% market rents MAURITANIA SUDAN ERITREA CABO NIGER Break options Can be exercised by either Can be exercised by either Can be exercised by either Can be exercised by either VERDE DJIBOUTI by either party. Legal party. Typical notice period party. Typical notice period party. Typical notice period notice period is 3 months is 6 months is 3 months is 6 months SENEGAL CHAD THE GAMBIA Ability to assign Subletting permissable, Subletting not permitted Subletting permissable, Subletting permissable, BURKINA FASO lease with landlord’s consent with landlord’s consent with landlord’s consent GUINEA ETHIOPIA BISSAU GUINEA BENIN GHANA 187 SOUTH SOMALIA OCCUPATIONAL SUDAN SIERRA COSTS LEONE CÔTE NIGERIA CENTRAL AFRICAN D’IVOIRE REPUBLIC Service charges Paid by tenant. Typically Paid by tenant. Typically Paid by tenant. Typically Paid by tenant. Typically LIBERIA TOGO CAMEROON 131 US$2-3/sq m/month 15-40% of net rents 10-15% of net rents 75-100% of net rents 51 EQUATORIAL GUINEA Utilities Tenant pays for electricity. Tenant pays for electricity. Tenant pays for electricity. Tenant pays for all utilities 150 UGANDA Water paid for through Landlord pays for water, Landlord pays for water, including electricity and KENYA service charge recovering cost via service recovering cost via service water SÃO TOMÉ & GABON PRINCIPE 5 RWANDA charge charge BURUNDI Relevant local taxes VAT of 18% payable on VAT of 18% payable on VAT of 16% on VAT of 15% payable on SEYCHELLES DEMOCRATIC REPUBLIC payable rents. Withholding tax of rents commercial rents. rents OF THE CONGO 30 10% on rents Withholding tax of 10% payable by tenant TANZANIA REPUBLIC OF Internal repairs Tenant responsible Tenant responsible Tenant responsible Tenant responsible THE CONGO COMOROS External repairs and Landlord responsible Landlord responsible Landlord responsible Landlord responsible MALAWI repairs to common ZAMBIA parts ANGOLA 28 Building insurance Landlord responsible Landlord responsible Landlord responsible Landlord responsible 27 Restoration Tenants required to restore Tenants required to restore Tenants required to restore Tenants required to restore ZIMBABWE premises to original state premises to original state, premises to original state, premises to original state, MOZAMBIQUE MAURITIUS subject to reasonable subject to reasonable subject to reasonable 65 wear and tear wear and tear wear and tear NAMIBIA 24 MADAGASCAR TRANSACTION BOTSWANA COSTS Agency fees: new Paid by landlord. Typically Paid by landlord. Typically Paid by landlord. Typically Paid by landlord. Typically KEY SWAZILAND lease one month's rent or one equivalent to one or one 10% of SOUTH between 0-5% of annual month’s rent and a half month's gross annual rent COUNTRIES WITH KNIGHT FRANK OFFICES AFRICA rent rent COUNTRIES WHERE KNIGHT FRANK HAS WORKED Agency fees: Paid by landlord. Typically Paid by landlord. Typically Paid by landlord. Typically Paid by landlord. Typically IN THE LAST TWO YEARS 126 renewal between 0-2% of annual one 2.5-5% of annual rent 10% of 23 EMPLOYEE NUMBERS rent month’s rent annual rent Agency fees: Typically up to one No subleasing Paid by existing tenant. Typically 50-100% of one sublease month's rent Typically equivalent to one month’s rent month's gross rent Legal fees Landlord and tenant pay Landlord and tenant pay Either paid by landlord, or Payable by tenant, tarriffs their own costs their own costs shared between landlord vary by lawyer and tenant. Fees by negotiation FULL CONSULTANCY AND VALUATION SERVICES Is stamp duty Yes. Tenant pays at 1% of No No. A lease registration Stamp duty payable when payable on leases? first year's annual rent fee is payable based on a leases are registered, PROVIDED ACROSS 49 OF THE 54 AFRICAN COUNTRIES statutory scale. Typically based on a statutory scale landlord pays CONTACT: [email protected]

Source: Knight Frank Research

46 COMMERCIAL BRIEFING For the latest news, views and analysis of the commercial property market, visit knightfrankblog.com/commercial-briefing/

KNIGHT FRANK AFRICA Peter Welborn Managing Director, Africa +44 20 7861 1200 [email protected]

INTERNATIONAL RESEARCH Matthew Colbourne Associate, International Research +44 20 7861 1238 [email protected]

Knight Frank gratefully acknowledges the assistance of EMC Real Estate in preparing research for parts of this report.

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