Real Estate, Africa's hidden strength

When talking about investments in Africa, real estate rarely dominates the conversation. Is it something we overlook? Do we take it for granted? And can it capture our imagination as much as tech does today?

Growing up, my mother never seemed to have extra money, yet somehow always found cash to build a house. Over the years, she sent funds here and there, and now, two decades later, she has completed three homes. Did she need three houses? Not necessarily. For her, these properties are her retirement fund. They’ve been generating income for years, but the cash stays home, covering ongoing expenses. Real estate investment isn’t new to her—she saw my grandfather build properties throughout his life. At his passing, he reportedly owned 90 houses, which, among his 31 children, meant each inherited around three.

Each time I return home, I stay in one of the houses my mother inherited. Though it’s an older building, it’s perfectly situated, just a short walk from the Bè market, in Lomé. This home, built fifty years ago, still provides value. Are there many investments out there still generating returns half a century later? It’s hard to think of any.

A growing investment landscape

The African real estate sector has expanded significantly, with an estimated influx of over $20 billion recently and further growth anticipated. Yet my mother’s contributions—and millions of others who send funds through remittances—often aren’t included in these numbers. Millions of dollars flow into African markets each month through remittance networks, digital apps, and informal systems, with around 25% of these funds invested productively rather than for consumption.

Most institutional and foreign investment in African real estate comes from Europe, North America, and the Middle East. Private equity, sovereign wealth funds, and diaspora remittances fund much real estate growth, especially in high-demand urban centres. And the African diaspora is a key driver, often investing in properties for family, retirement, or as a rental income source. Countries like Nigeria, Ghana, and Kenya are prime examples of diaspora remittances that shape the residential landscape and even venture into commercial real estate. African diaspora investments are a key driver of residential development, with many investing in properties for family, future retirement, or rental income.

Outside of the average Diasporan taking 20 years to build their retirement fund in the shape of a house, there are many opportunities outside this market segment.

Opportunities Beyond Traditional Homeownership

For the average diaspora investor, building a retirement fund through real estate is a familiar journey, but there are now faster, more varied pathways to property ownership:

Affordable Housing

Africa has a significant housing shortage, especially in affordable segments. Countries like Kenya and Nigeria have introduced incentives encouraging developers to address this gap, which is crucial as the continent’s population is projected to double by 2040.

Luxury and Hospitality Markets

In cities like Cape Town, Nairobi, and Marrakech, luxury real estate and hospitality properties enjoy high demand driven by tourism and business travel.

Logistics and Industrial Spaces

With e-commerce on the rise, the need for warehousing and logistics infrastructure is growing, especially in South Africa, Nigeria, and Egypt.

Fractional Ownership: An Accessible Path to Real Estate Investment

For those looking to avoid a decades-long wait, fractional ownership offers a way to climb the property ladder without sending money home monthly with hopes that it won’t be mismanaged.

Fractional ownership is a real estate investment model where multiple investors collectively own a property, each holding a “fraction” or share. This structure allows people to own high-value property by pooling resources, bypassing the need to finance the entire cost individually.

For example, 10 investors could purchase a $50,000 property, each contributing $5,000. These investors would then share in any rental income and property appreciation proportionally.

Pros of Fractional Ownership

• Affordability: Small investors, including young professionals, can enter the market with as little as $1,000.

• Shared Benefits: Investors earn a proportional rental income, benefit from appreciation, and can even resell their shares in secondary markets, providing liquidity.

• Equity Protection: Real estate often retains value even when not generating significant income, unlike more volatile assets like startups.

• Opportunities: Fractional ownership offers geographical diversification and lowers risk, attracting foreign investors who want exposure to African real estate without full financial or management involvement.

Challenges of Fractional Ownership

• Regulatory Concerns: Issues such as title ownership, regulatory clarity, and property management pose challenges. While frameworks for fractional ownership are still developing in Africa, countries like South Africa and Kenya are making strides.

Introducing Diaspora House: Real Estate Investment for a New Generation

You may wonder why my interest in real estate has suddenly spiked. Well, I’m now helping build a new community. Let me introduce you to Diaspora House.

Diaspora House is a real estate investment community focused on strategic investments in Africa and major diaspora cities. Our goal is to invest across the continent, and we are currently acquiring our first property in Nairobi. You can read the full memo here.

We manage the community entirely on WhatsApp, and as a reader, you can join the community here.

I hope you stay in a Diaspora House for your next trip to Nairobi, Cape Town, Lagos or Accra, but until these acquisitions are complete, you can stay in touch with us via LinkedIn.