The cost of renting a house in Nigeria and Ghana is higher than doing so in Kenya, according to a report by Knight Frank.
The Africa Report 2017 on real estate markets in the continent describes how the real estate sector is continuing to develop, despite recent challenges in Africa’s commodity-driven economies.
The rental rates were considered from a 4 bedroom executive house in a prime location. Even though Nigeria and Ghana have slightly expensive rates, their prime yields were better at 8% each compared to Kenya’s 5%.
Here are the prime rents for the three countries:
Prime rents: $4,100
Prime yield: 5%
Kenya’s residential sector remained stable throughout 2016, due to steady macroeconomic conditions and minimal impact from external shocks.
Luxury home sales prices increased marginally, but prime rental prices declined as a result of a slight oversupply, which was partly attributable to the exodus of a large number of expatriates following the downsizing of Kenya’s oil extraction industry.
The Kenyan government estimates that there is a shortage of approximately 200,000 units per annum and is addressing the situation through measures such as slum upgrading and the provision of tax incentives for major developer
Prime rents: $4,500 per month.
Prime yield: 8%
Cities such as Accra have experienced a sharp increase in number of townhouses and apartment blocks. This despite the prices of land increasing substantially over the years.
The trend to construct apartment buildings has been driven by the mid-to high income groups in Ghana, with this type of property being seen as a good investment vehicle. The economic boom earlier in the decade encouraged high levels of development, and the market now suffers from oversupply.
Prices are generally falling, but good quality product priced at a level that provides developers with a reasonable profit margin will still sell well.
Prime rents: $6,000 per month
Prime yield: 8%
A 4 bedroom semi-detached house in Lekki, Nigeria. (Courtesy)
Knight Frank notes that that there has been a high-end residential space in Lagos due to over-construction in the previous development cycle.
There is a surplus of high-end residential space in Lagos, as a result of over-construction in the previous development cycle. The traditional high-end residential areas of Ikoyi, Victoria Island and Banana Island have also seen increased competition from Lekki to the east.
Although Lekki remains heavily congested, master planned communities such as Victoria Garden City have grown rapidly. Despite the slowdown in the sector, a significant number of luxury developments are planned, including Gracefield Island and Orange Island.