Chinese firms power Africa's real estate growth
NAIROBI - Chinese firms are having a positive impact on Africa's real estate sector, a global real estate consultant said on Wednesday.
Peter Welborn, chairman of Knight Frank Africa, a UK-based independent global property consultancy, told Xinhua in Nairobi that Chinese investors come with knowledge and experience of working in developing countries.
"Chinese have introduced building standards that are gradually improving the quality of commercial and residential facilities in the continent," Welborn said on the sidelines of the East Africa Property Summit.
Welborn noted that Chinese investors undertake feasibility studies to understand risks before investing in real estate projects. "As a result, they tend to have a high success rate when investing in the real estate sector," he added.
Welborn noted that Chinese investors normally have access to affordable finance to undertake real estate projects. "They are therefore able to transfer the savings to buyers of real estate property through lower prices," he added.
According to Knight Frank, Chinese appetite for African real estate is likely to increase even further in the next five years.
Welborn noted that the Chinese entered Africa in recent decades to conduct large infrastructure projects but are now becoming large players in the real estate sector.
He said that the infrastructure has opened up areas that were previously considered to be remote.
"The infrastructure has resulted in the development of a number of satellite towns around major cities because the roads and railways have reduced distance," he added.
East Africa's largest economy Kenya is likely to emerge as a hub for real estate developments in Sub-Saharan Africa. According to the Knight Frank Africa Report 2017, Kenya's capital Nairobi has the greatest volume of modern retail floor space in Sub Saharan Africa aside from South Africa.
"In addition plans have already being completed to build the tallest building in Africa in Nairobi," says the report.
The study indicates that approximately 300,000 square meters of commercial office space were delivered to the Nairobi market in 2016, compared with an average of 150,000 square meters annually in recent years.
The findings note that the take-up of new prime offices in Nairobi remains steady with the city emerging as the preferred location for global corporates looking to establish regional hubs to serve East Africa's 160 million population.
The report shows that Africa's prime real estate markets have posted mixed performance over the last two years.
"In general commodities-importing economies performed better compared to commodities-exporting nations," says the research.
The reports also shows that the majority of the 35 cities in 30 countries analyzed have recorded declines in prime rents across offices, retail, industrial segments since 2015.
Presently, large volumes of modern retail space remain in the pipeline across Sub Saharan Africa.
The study further shows that developers are also beginning to target secondary cities in order to gain first mover advantage in these locations.
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