Top 3 opportunities and drivers in Africa’s construction industry

construction opportunities

Africa is growing and more opportunities are coming up for the construction related investors who are looking into the bigger picture.
As the growth of the continent’s economy increases there are key factors that are contributing to this robust case: rapid urbanization, strong current and projected economic growth, a rising middle class, regional integration and strengthened democracy, transparency, accountability and governance in many of Africa’s 54 nations. Each of these factors is driving opportunities on the continent
Urbanization and housing
By the year 2011 Africa had 51 cities which had more than two million inhabitants in each of them. Like cairo had over 10 million residents and its expected that by the year 2040 Africa is expected to have more than hindread cities meaning there will be more opportunities in the continent.
One of the highest projected city is Kinshasha where their population us expected to hit about 24 Million.
According to PIDA 2011 the pressure of having low housing in the cities is being felt and more governments are looking into awarding tenders to construction companies to build up modern housing that will accommodate the growing population.
So far there are countries who have set the pace to build new cities such as Kenya’s upcoming Tatu City, City of Light in Ghana and King City in Ghana that is expected to accommodate over 200,000 residents and each of them is approximately expected to cost about US$300 million.
The smart cities which are projected to be build in African countries are expected to relieve highly congested metropolises.
Currently in Africa the demand for housing is growing across all price points, for instance In Nairobi there is a demand for some 150,000 affordable new homes per annum at the lower end of the price spectrum, but with only some 30,000 units being built annually. Ghana, sits with a 1.6 million units housing deficit which is anticipated to grow to 3.6 million units by the year 2022 according to the Consumer Protection Agency of Ghana. While many countries in Africa have traditionally not had a developed mortgage market, this is changing as banks and specialised financial institutions are rolling out new programmes such as lower-income mortgages.

Growth of companies resulting to office shortages
As the continent records its growth there are more business opportunities rising and more companies are getting into the market and they obviously need well priced office space where they can be well exposed.
This has led to high office demand and resulting in office rentals in many parts of the continent that are high commensurate to the quality on offer.
Business activity emanating from the oil and gas industry has further pushed rentals higher, making for instance Luanda and Lagos some of the costliest cities in the world to live and operate in. In a 2012 cost of living survey, Luanda ranked as the second most expensive city in the world for expatriates. Lagos was ranked at number 39. To put this into context, Tokyo is the most expensive at number one, just one place ahead of Luanda, while Paris ranked 37, Stockholm 46 and Vienna 48. Luanda rentals can be in the range of US$150 per square metre per month and Lagos US$70.
Steady rise of middle class
According to World Bank most Africans live in the middle class and to have this in percentage the total population of Africans has been steadily growing.
1990 the continent had 110 million or rather 26% in the category of middle class and as years went by the category rose in numbers and in 1995 the continent had 153 million or 27% of the population in 1990 with a further surge to 196 million in 2000 and a dramatic increase to 313 million in 2010, equating to 34.3% of the population (African Development Bank, 2011).
The rise in absolute numbers, compared to the percentage rise, has been more dramatic and this is best explained by the increase in population, with Africa having hit the 1 billion population mark in 2010.
Using the statistics to illustrate the scale of the opportunity, Nigeria is comprised of 36 states under its federal government system. With a population of 160 million, and each person wants to empower himself and this is where the opportunity is in Africa to look at.