This archive report was first published on 20 October 2021.
As of 2021, industrial assets in Africa have become a sought-after investment opportunity, with yields averaging 12% compared to 9% for retail and offices, and 6% for residential, according to a Knight Frank report.
Government industrialisation policies, infrastructure development, and e-commerce have emerged as the primary drivers of growth for the industrial sector across the continent. This has led to a surge in the creation of special economic zones (SEZs) and a boom in industrial stock.
Ms Tilda Mwai, a senior analyst for Africa at Knight Frank, notes that investors are 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 quickly to meet demand, with Nigeria presenting an opportunity for developers, recording the highest deficit of 1,000,000 sqm.
Prime industrial rents have shown mixed performance, with Kinshasa and Dakar ranking as the most expensive cities for prime warehouses in Africa, while Blantyre is the cheapest. Luanda, on the other hand, experienced a significant fall in average warehouse lease rates, from $15 psm in 2019 to $5.50 psm in 2021.
Agility Logistics Parks' Senior Director of Strategic Planning, Mr Ronald Philip, suggests that Grade A warehousing can be a solution for foreign direct investment (FDI) to return to Africa in a nimbler and asset-light mode, where they lease instead of building their own facilities.
Occupier requirements across major markets are increasing, with overall requirements ranging between 5,000 and 10,000 square-feet size brackets. The flight to quality is evident, with occupiers only keen to take up the best space in most cities, resulting in a distinct two-tier market across major industrial markets.
