This week at EMEAlive 2020, CoreNet Global’s virtual Global Summit, an expert panel discussed the present state and future of corporate real estate in Sub-Saharan Africa.
Gloria Mamwa, MCR, SLCR, Regional Head, Property, Africa and Middle East for Standard Chartered Bank moderated the panel that included Gikonyo Gitonga, Managing Director, Asia Real Estate Limited; Jonathan Turner, Managing Director Advisory & Transaction Services, Africa, CBRE Excellerate and John Wentzel, PhD, Chief Executive Officer, Tsebo Holdings SA.
Sub-Saharan Africa is made up of 49 countries and 24.7 million square kilometers. It is home to 870 million people.
Mamwa said press reports prior to the pandemic indicate that commercial real estate development in the region had been booming, with rapid urbanization and a steadily growing middle class. Demand was increasing for new and modern offices, with Ghana, Nigeria and Kenya among the most active countries. A report from PWC said that the real estate investment industry will find itself at the center of rapid change.
And then of course the pandemic struck.
While the coronavirus has not resulted in death rates as high as other parts of the world, many parts of Sub-Saharan Africa were still less prepared. Wentzel pointed out that a transfer to work from home was not as easy as in other regions because of internet bandwidth, security and the fact that many homes do not lend themselves to working environments.
Gitonga said that “the office” for people in the region is critical for people to not just work, but to socialize, and that the crisis has brought to the surface the need for more urban infrastructure.
“The office is a special place for a lot of people, people will go back,” he said. He pointed out that a large majority of the population is under age 35.
Moving forward, Turner said, agility will be key, greater flexibility will be needed as many companies adopt hub and spoke portfolios and give the staff the choice where they work at any given time. Investors will lean toward non-traditional asset classes such as data centers, health care, and affordable housing.
“The thing about looking at Africa is that we have 49 countries, you can’t have one fit for all sizes and solutions, and they’re all going to be depending on what is driving the economy in each country. Those that depend on oil and tourism will suffer for two years. Those that depend on services will see some growth. They will all be dependent on how resilient the governments are in each country,” Gitonga said.
He added that Trading blocs African Continental Free Trade Area, the U.S. Kenya free trade agreement, and other trading blocs will ensure the growth of the logistics industry and may result in operations locating to the region from other regions such as Asia.
The lesson for corporate occupiers, or end-users, in the short term is that they will depend more on a service-based model, Turner said. They will begin to work with service providers earlier in the process to gain local insight and expertise into newly important functions, such as cleaning, safety and hygiene.