Northcourt: Infrastructure investment driving property value in West Africa

The West African real estate market is facing some challenges, but infrastructure investments across the region are gradually contributing to the growth of property value. According to Ayo Ibaru, Chief Operating Officer and Director of Real Estate Research at Northcourt, the emphasis on infrastructure in both Anglophone and Francophone countries is a key driver in the market's development. A recent report from Northcourt looked at an index framework by Kristen Leiser and Alexander Groh from ESA Business School in 2011, which assessed the investment attractiveness for institutional investors across 66 different countries. The framework considered six key pillars, including economic activity, investor protection, administrative burdens, and the depth of capital markets. This analysis provided a robust framework for ranking countries in the region based on where institutional investors should allocate their funds. The top-ranked countries for real estate investment in West Africa include Nigeria, Ghana, and Ivory Coast, with other promising players like Cabo Verde excelling in investor protection and Ivory Coast keeping inflation rates low to attract long-term investments. The political stability in countries like Liberia also signals to foreign investors that the environment is safe for investment. Urbanization is another key factor driving the demand for real estate assets in the region. With a population of over 400 million and a median age of 18.2 years, there is a growing pressure on land for conversion to residential and retail spaces. Major cities like Lagos, Abuja, and Dakar are experiencing increased demand for real estate, with Dakar attracting international organizations like the World Bank and development finance institutions, leading to improved infrastructure development. A key consideration for investors in real estate is the exposure to currency risks. While Nigeria would have been a top choice due to its market size and potential, considerations around repatriating funds and the sophistication of capital markets play a significant role in where investors choose to allocate their resources. Countries like Ivory Coast, Cape Verde, and Senegal are seen as attractive destinations due to the level of investor protection they offer. As the year comes to a close, the real estate market in West Africa is expected to continue benefiting from infrastructure investments and urbanization trends. Political stability, economic reforms, and investor protection will be crucial in attracting both local and foreign investments to drive further growth in the region's property sector.