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Just like food, water and clothing, shelter is one of the most basic human needs everywhere in the world. It would be nearly impossible to survive on this earth without a roof over your head. Everybody needs a home – a place that provides protection from harm and the weather; a warm room to sleep and live in.

Despite the huge importance of shelter, Africa currently faces a serious housing crisis. The shortage of suitable accommodation is pushing up rent and property prices in several cities and towns across the continent, making it one of the hottest and most promising places in the world for real estate investment.

The boom in Africa’s real estate market is a juicy opportunity for entrepreneurs to exploit and become successful property owners.

This article explores the reasons for this boom, why you should invest in real estate and five great tips to help you succeed in this market. 

What Is Causing The Real Estate Boom In Africa?

It is our usual tradition here on Smallstarter Africa to not only share interesting business ideas and opportunities with you but to explore the reasons behind them. Knowing the reasons why the real estate market in Africa is booming makes you a more informed entrepreneur and allows you to take calculated risks and make better investment decisions.

Some of the factors behind this boom may be obvious to you, but it is very important that you look at them in the right context. Here they are…

#1 – Africa Is Experiencing a Huge Population Boom

The logic here is quite simple – the larger the population, the higher the demand for housing (shelter).

Africa’s population currently stands at over one billion and is expected to reach 2.4 billion in just 40 years. Over this period, our continent will experience the fastest population growth in any part of the world (including Asia).

The 10 countries on earth with the highest fertility rates are in Sub-Saharan Africa where the average woman gives birth to about five children in her lifetime.

In countries like Niger, the birth rate is as high as seven. (source: Population Reference Bureau).

Just to give you some perspective, according to a Reuter’s article published early this year, Nigeria (Africa’s most populated country) adds roughly 11,000 newborns to its population every day!

Over the coming years, millions of Africans will need shelter – a roof over their heads. This huge population boom is the strongest underlying reason for the huge demand for accommodation and real estate properties across Africa.

#2 – Millions of Africans are moving to the cities

A significant proportion of the demand for housing and real estate in Africa is concentrated in the cities.

According to a report by the International Housing Coalition, only about 80 million Africans lived in cities in 1983. Today, that number has risen to over 400 million. The size of Africa’s urban areas has been growing at nearly 5 percent for the past two decades.

Going by the current estimates, 300 million more Africans will become city people and urban dwellers by 2030.

A few reasons why Africa’s urban population is growing at such a high rate are its huge population boom, and fast growing economy which is attracting more people to the cities who are searching of job and business opportunities.

At the moment, a little over 50 African cities have a population equal to or more than one million people. At the current rate of migration, the number of cities with over one million people is expected to reach 65 by the year 2030.

Because more people are flocking to cities and towns in search of jobs and a better life, they are putting a lot of pressure on the inadequate accommodation in urban areas.

#3 – The Housing Problem is Too Big for the Governments

In many parts of the world, governments are responsible for providing basic and affordable housing and accommodation for its people. In Africa, however, the governments are not doing enough to solve the housing shortage problem.

In the continent’s most populated country for example, the World Bank estimates that over 16 million new houses need to be provided to solve Nigeria’s serious housing problem. The estimated cost of providing these homes stands at a whopping $350 billion! That’s too much for any one government to handle!

As a result of government’s inability to close the huge gap between supply and demand for housing in Africa, the pressure from the large existing demand is pushing up real estate prices across the continent.

As a result, private investors, entrepreneurs and ordinary people like you now have a role to play in solving the housing crisis.

#4 – Favourable Economic Growth

The recent (2013) report by the African Development Bank, OECD, UNDP and ECA reveals that Sub-Saharan African economies are among the fastest growing in the world. According to the report, “Africa’s economic growth was 4.2 percent in 2012 and is projected to reach 4.5 percent in 2013, and further to 5.2 percent in 2014.”

In times of economic boom, more people have the financial power to invest in real estate. Although there is still widespread poverty in many parts of Africa, the average income per person is growing in many countries.

In addition, the size of Africa’s large and growing middle class is a significant force behind the boom in the real estate market. The people in this category (now more than 300 million) are looking for real estate to live or invest in and have the money to pay.

 

Source: SmartStarter

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