African Housing Investment Landscape
Growing financial sector experience and increasingly sophisticated financial instruments are driving investor interest in African real estate. This includes new market opportunities related to a rising urban middle class, an increasingly localized construction material industry and innovations in housing finance such the emergence of Real Estate Investment Trusts and mortgage liquidity facilities across Africa.
However, a key barrier to this growth remains the chronic lack of rigorous data on the breadth and character of financial infrastructure investment. This is particularly true for the housing sector as stimulating targeted investments requires highly differentiated data that illustrates market segmentation. In providing market intelligence that makes the case for investment in underserved markets (segmenting and quantifying the demand side; and scoping, understanding and tracking the supply side), we can support a better policy environment & increased private sector activity in affordable housing markets. In this way, we catalyse scale interventions. Without this data, targeted interventions become challenging and result in unresponsive housing finance packages, the high occurrence of Non-performing loans (NPLs) and poor uptake of new residential developments.
Within this context, the need for more rigorous and nuanced data collection, analysis and interpretation is central to facilitating evidence-based decision making in the sector. In the current environment, there is little information on investment activities and trends. Specific information gaps that require urgent address include:
Market overview data: This includes data on who is investing in the housing delivery and financing value chains and at what level this investment takes place. It is important to understand the geographic distribution of this investment, the type of the capital used to invest and what the investment vehicles are. It is also crucial to relate this to reliable data on the investment environment and the ways it enables or stifles investor interest.
Market performance data: This needs to be segmented by target market, housing type or investment intervention and geography. Understanding the top performing investment instruments provides a roadmap for future investors to follow as they navigate the investment environment in Africa.
Competitive market horizon: In order to forecast the size, financial capacity, geographic reach and market share of participants in the housing and housing finance sectors, historical data on the mortgage, home equity, personal loan, consumer loan, microfinance and housing microfinance sectors is essential. In many African countries, this historical data is seriously lacking and presents a major barrier in modelling investment horizons.
This report series forms part of The Centre for Affordable Housing Finance’s “Investor Programme” which aims at plugging in some of the above-mentioned gaps, with the intention of identifying and championing increased investment in affordable housing across the African continent. The overall goal of this project is to quantify the breadth of investment activity with respect to housing and housing finance across Africa, and to establish a mechanism to track this on an ongoing basis. This project has collected data and highlights gaps and opportunities in the investment landscape. With the aim of stimulating greater investment in affordable housing and connecting investors with potential investments, the report profiles investors and investment instruments with the greatest impact on the housing finance market within Africa.