African Real Estate: A Scary Reputation but a Good Market

Mention Africa and watch people cringe. The news coverage on the continent is disproportionately about turmoil caused by diseases, vicious wars and dictatorships. Troubled countries abound: Zimbabwe, Sudan and Somalia are all making news for the wrong reasons. Natural disasters such as floods and famines continuously assault Ethiopia, among other countries. Elections can end in violence even in established democracies such as Kenya.
Recently however, there is good economic news trickling from the region. Bold investors keen on finding the next big real estate market are taking note. Some are jumping in, betting on the arrival of better times to the continent.
Regional snapshot
There are 53 countries in Africa. The continent covers an area of more than 11.6 million square miles. The term Sub-Saharan Africa refers to all countries that are located to the south of the Sahara desert, in part or in full, and roughly covers an area of 24.2 million square meters. There are 47 countries in Sub-Saharan Africa, with an estimated total population of 782 million people.

Doing business in Africa is no longer the daunting task that it was a decade ago, according to the World Bank. Some countries are ahead of the pack in reforming their business atmosphere. Kenya and Ghana, for example, were in Bank’s 2008 list of top 10 reformers that have made considerable progress in readying themselves for investors.



Although economies of countries that have natural resources such as oil and minerals are growing at a faster rate, those who don’t are finding ways to make money in the global market, according to a Boston Globe article published at the end of 2007. Countries such as Ghana, Kenya and Senegal are trying to build an outsourcing industry by putting themselves in a position to compete with India and other nations in the call center and document processing business. Madagascar and Lesotho have thriving textile industries and are exporting to the U.S. under favorable trade agreements, including the African Growth and Opportunity Act. Stock markets in the continent, while tiny in size when compared to those of other developing regions, are still expanding at an impressive rate.
Perhaps unsurprisingly, these positive African trends are going unnoticed. After all, only countries Zimbabwe, which has a severe inflation problem that continues to grow at an alarming rate, and Somalia, which has not had a functional central government since 1991, make many headlines. However, some early bird investors are paying attention and putting their money in places that have turned a corner but are still thought of as risky because of the continent’s bad reputation.