Malcolm Horne, CEO of Broll Property Group
The challenges faced by the commercial property market in South Africa are similar to those faced by other markets on the continent, notably Nigeria, notes Malcolm Horne, CEO of Broll Property Group.
Nigeria The ever-growing population, expected to double in less than three decades, will present many challenges and opportunities in various sectors in the years to come.
Despite economic challenges similar to those seen in many developing countries across the world following the Covid-19 pandemic, Nigeria’s construction market was still valued at over $135 billion in 2022. Many more Industries are also growing or showing great potential. It’s simply a matter of accessing the right markets at the right time.
Even with a slowing economy, rising fuel prices and the devaluation of the naira, Nigeria is showing signs of recovery. During a recent visit to Horne Country, he noted several opportunities in retail property despite many tenants being far from shopping centers.
A key trend spotted by Horne was the reluctance of businesses to sign long-term leases. “Instead, they are looking for flexible solutions, which has led to a dramatic decline in demand for traditional offices and an increased appetite for flexible coworking spaces.
“The office sector continued to see very few rental transactions this year. Similarly, in South Africa we are seeing the hybrid working model adopted during the Covid crisis being re-applied by a number of employers as a means of protecting employees from the impact of inflation and rising costs. fuel price.
According to Horne, although there was a decrease in unemployment according to official statistics, Nigeria was hot on the heels of South Africa in its high unemployment figures. Along with increasing instability and insecurity in many parts of northern Nigeria, crime has increased due to a difficult economic environment.
“Given the economic challenges facing Nigeria and South AfricaIn particular, these two countries are seeing a substantial increase in the loss of talented and highly skilled professionals to Europe, Canada and the United States. This leaves fewer qualified people to fill positions and reduces government tax revenues,” says Horne of the effects of the continuing economic downturn in these countries.
Other challenges currently facing the continent include vulnerable and fluctuating exchange rates, which are easily affected by politics – whether it be monetary decisions in Nigeria or the infrastructure and debt issues facing confronted the continent. Zambia And Ghana. Even geopolitical events, such as the war in Ukraine, can have major and lasting consequences on the economies of African countries.
According to Horne, over-reliance on transporting goods by road across the continent rather than by rail or sea is also a major challenge for many African countries. “Just look at the increase Transport and logistics costs in South Africa due to the collapse of the rail network Infrastructure. The impact of changes in fuel prices is felt directly and immediately by all consumers.
But with every challenge comes an opportunity. “Population growth means more opportunities in educationhousing and health care. I am surprised by the number of Nigerian and Ghanaian families who choose to send their children to school in the UK and the US. As this becomes increasingly unaffordable, there is a real opportunity for private education providers across the continent,” adds Horne.
“Historically, there has also been a preference for healthcare abroad, but with fluctuations in exchange rates, more and more citizens are seeking private medical care in the country. We are also seeing interest in the manufacturing sector, although it is not widespread. Falling currency and rising cost of imports led to faster movements consumer goods (FMCG) companies looking to convert to manufacturing and assembly in the country.
Horne highlighted other untapped opportunities in Nigeria, South Africa and other African markets, such as affordable housing with accessible and decent housing. retail and educational establishments nearby. Even the use of vacant office spaces in prime nodes such as Sandton, commonly known as the richest square kilometer in Africa, to be redeveloped into affordable housing, allowing people to live closer to where they work , presents many opportunities.
“Another opportunity to consider is specialist residential developments such as retirement homes. The brain drain has left a number of older middle-class people without anyone to care for them,” he notes, adding that the rapidly growing health care and pharmaceutical sectors offer new opportunities. opportunities. The pharmaceutical industry requires specialized manufacturing and storage facilities that require a constant and consistent power supply.
Another opportunity lies in data centers, which are in high demand in South Africa and across the continent as the world moves towards a more connected and automated world. “Currently the biggest challenge to this opportunity in South Africa, for example, is the unreliability of the country’s electricity supply,” adds Horne.
