During the height of the Covid-19 pandemic there was lot of talk around the end of the traditional office work. As the largest African bank by assets, operating in 20 African countries, Standard Bank’s data reveals that the real estate industry has been relatively resilient and performing well post the pandemic and the high interest rates and inflation across the continent which are now just stabilising.
According to the latest African Development Bank macroeconomic report, Africa will account for eleven of the world’s 20 fastest-growing economies in 2024. East Africa has long been touted as one of the fastest growing economic hubs in Africa, with the African Development Bank Group noting that the region is set to grow at a projected 5.1% in 2024 and 5.7% in 2025. In keeping with that forecast, Kenya stood out in terms of the property investment performance. Warehousing space catering for the agricultural sector in Côte d’Ivoire and Ghana has also performed well.
Niyi Adeleye, Standard Bank’s head of real estate finance for Africa says, “The pandemic did not have as significant an impact on demand for office properties in most of the African countries where we have a presence. Companies across the continent continue to encourage employees to collaborate more in the office with the flexibility of hybrid working model as the complexity of most of these operating environments typically necessitated higher levels of collaboration to manage the volatility, uncertainties and ambiguities of activities in emerging markets and evolving sectors.”
According to Standard Bank’s findings, office rentals have been more resilient because working from home is a less attractive proposition in many African countries. In addition to the above, this is also partly linked to connectivity challenges, office culture preferences and business infrastructure challenges.
Globally, companies like Amazon, IBM, JP Morgan Chase, Tesla, Zoom, Google, and others appears to have adopted a return to office mandate. As the need to maximise the use of commercial office space has grown.
In a similar manner, the retail sector has also achieved credible recovery with occupancy and foot traffic returning and exceeding pre-pandemic levels across a number of the key African jurisdictions. On the other hand, the industrial property market has been a beacon of stability in this tough economic environment.
“In accordance with global trends, we have seen a growing trend for companies to rent custom-built industrial space from professional developers. Property developers are also buying existing factory space from manufacturing companies and leasing it back to them in sale and lease back transactions, which allows manufacturers to free up capital to invest in their core business. The industrial opportunities provide significant scope for growth but tracks the level of macro-economic activities in the key markets,” adds Adeleye.
It is relevant to highlight that the recovery and stabilisation trends observed in many emerging African countries are despite the substantial macro-economic shocks that several of the key jurisdictions have endured in the last few years. The sector is not without its on-going challenges. However, it is that anticipated improvements in the evolving macro environments positions the sector’s activities for emergence.
For the third year running, Standard Bank won the Best Africa Real Estate Bank of the Year award at the 2024 African Property Investment Awards as well as Euromoney Best Bank in Africa for Real Estate further cementing the Group’s unrivalled capacity and expertise in addition to its robust footprint across the continent.