Covid-19 effects and wealth and real estate trends across Africa

For some time, Africa has been seen as a growth continent for business and real estate. This is driven predominantly by a new generation of middle class wealth and many African economies offering excellent investment and growth potential.

Seeff takes a look at the latest wealth and real estate trends across Africa.

The first source of information is the AfrAsia Bank Africa Wealth Report for 2021. According to the report private wealth in Africa is expected to rise by 30%, reaching USD 2.6 trillion by 2030.

According to the report, South Africa continues to top the list of private wealth followed by Egypt, Nigeria, Morocco and Kenya. These five countries apparently hold over 50% of Africa's total wealth.

South Africa is still home to more than double the number of dollar millionaires (HNWIs) compared to any other country on the African Continent. Egypt, however, has the most billionaires on the continent.

For some time, wealth has been rising in Mauritius as the country looks to attract investment and wealthy property buyers to the island. Mauritius is now regarded as the wealthiest country on a per capita basis in Africa with wealth exceeding USD 30,000 per person. The island was officially classified as a high-income country by the World Bank in July 2020.

The COVID-19 pandemic has had a severe impact on the continent with private wealth decreasing by about 9% according to the AfrAsia Bank report. The decline is attributed to salary cuts and job losses in the travel, hospitality, manufacturing and real estate sectors, closure of local businesses, weakening of the residential property market and rising household debt.

Nonetheless, the bank is of the view that wealth will rise by 30% over the next decade, driven by strong growth in the billionaire and centi-millionaire's segments in fast growing economies such as Ethiopia, Mauritius, Rwanda, Kenya and Uganda.

According to the Knight Frank Africa Wealth Report, their assessment of HNWI (high net-worth individuals) with a net worth of USD 500,000 (about ZAR 8 million based on the current exchange rate) is also expected to grow over the next decade.

The report notes that Africa continues to be best placed for economic and wealth growth while presenting a significant scope for expansion in investment markets. They expect around a 29% growth in the HNWI population in Africa over the next five years, depending on the post-Covid economic recovery.

While they identify at least twenty countries where private wealth will grow these are predominantly north of the Sahara (including Egypt, Algeria, Morocco and Tunisia) and the East Africa growth region.

Their top five growth regions rank as Egypt with an expected 56% growth followed by Tanzania (44%), Nigeria (41%), Ivory Coast (40%) and Angola (37%). From a SADC perspective, the highest growth is expected in Angola (37%) followed by South Africa (17%), Botswana (16%) and Zambia (13%).

From a city perspective, the wealthiest on the African Continent is still regarded as Johannesburg, followed by Cairo, Cape Town, Lagos and Nairobi.

According to the report, real estate investments continues to rank as the top asset class, accounting for around 30% of individual asset portfolios. This includes investment in apartments (being the highest in terms of private capital investments) followed by offices, retail, industrial and logistics, hotels, senior housing and lastly residential condos.