A new Knight Frank industrial report has revealed that industrial real estate across Africa are commanding 12% yield on average compared to 9% for retail and offices and a 6% return for residential real estate.
The notable growth of industrial assets across Africa has been attributed to Government industrialization policies, infrastructure development and e-commerce. Knight Frank further noted that increased competition for international investment has sparked a wave of new industrial policies. This has subsequently led to a boom in the creation of special economic zones (SEZs) across Africa.
Overall, prime industrial rents have continued to portray a mixed performance. At Ksh. 1,110 (USD 10 per square metre) and Ksh. 1,087.80 (USD 9.80), Kinshasa and Dakar rank as the most expensive cities for prime warehouses in Africa, while Blantyre Ksh. 277.50 (USD 2.50 per square metre) is the cheapest. Luanda, on the other hand, experienced the most substantial fall in average warehouse lease rates, which currently stand at Ksh. 610.50 (USD 5.50 psm), down from Ksh. 1,665 (USD 15 psm) at the end of 2019.
Prime rents have also remained stable in some of the cities such as Cairo, Algiers and Maputo.
Tilda Mwai, Senior Analyst- Africa, Knight Frank said, “Appetite for industrial stock across Africa remains strong, with investors attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanization levels. With limited stock options, developers have had to act fast and plug this gap. Still markets like Nigeria present developers with an opportunity, recording the highest deficit of 1,000,000 sqm.”
Agility Logistics Parks’ Senior Director of Strategic Planning, Ronald Philip had this to say on the report by Knight Frank, “Grade A warehousing can be a silver bullet solution for FDI to come back in a nimbler and asset-light mode, where they lease instead of needing or wanting to build and own their own facilities in Africa, with all the attendant risks and delays.”