Why Invest in Commercial Property Development?
Africa is a continent with a rich historical and cultural heritage, and a property market that has potential for high returns that appeal to both first-time and seasoned investors. The world is presently experiencing a particularly tumultuous period, marked by low levels of confidence and certainty. Africa is no exception and presents its share of challenges, from frequent civil unrest to a rising number of “disruptors” causing upheaval across many industries.
Africa’s scenic destinations, land diversity, and favourable exchange rates compared to most parts of the developed world still make it an attractive option for investors seeking commercial property development opportunities. However, purchasing property in Africa can be complex due to buying logistics, potential pitfalls, and legal requirements that vary from property type to property type and country to country. Making the investment experience a profitable and safe experience requires that the investor engages with a recognised specialist in property and property development in the region.
Even in stable market conditions, not to mention less certain times, it can be challenging to determine where and how to invest. Investors look for safety and growth, making investment decisions difficult. For many, the most viable option is to invest in “safe haven” assets, such as property, whether residential or commercial property development. Property has traditionally been a preferred choice for many investors as it tends to maintain, and appreciate, in value over time. It can also be an effective tool for diversifying an investment portfolio. There are several methods of investing in African commercial property developments.
Commercial Property Development Opportunities
For many, property ownership represents security, a legacy, and a place to call home. To acquire a property, most people must apply for a home loan, which, when used responsibly, can be a valuable investment tool.
Residential investment properties are one of the most popular real estate types worldwide, attracting investors seeking a long-term place to call home or use as a holiday property. Unlike other investment properties that prioritize capital growth, individuals and families purchasing residential properties value affordability and functionality over time. Residential investment properties provide numerous advantages, such as potential capital growth and lower vacancy rates. They also require less management and maintenance than commercial property developments do and over time, property value is likely to appreciate, providing a solid foundation for long-term investments.
Commercial property developments are a type of investment property that targets businesses and individuals with a larger budget seeking to capitalize on Africa’s potential for significant capital growth. Commercial property developments frequently come fully leased to tenants, sparing investors the need to collect rent. The primary disadvantage of this investment type is that businesses frequently lease these properties, which may result in higher repair and renovation expenses.
Buy-to-let properties are another proven investment model that, if well-managed, can be highly profitable. Certain prerequisites need to be satisfied for this investment to succeed, particularly in a rising interest rate climate that may erode rental yields. Factors that determine returns include location, property type, quality, operating expenses, demand, and the potential for property price appreciation. Potential tenants should also undergo comprehensive vetting, and rental income should cover the majority of property costs, including management fees.
Choose a Real Estate Developer in Africa Proven Credentials
Gateway Real Estate Africa (GREA) is a private real estate development company that delivers premium turnkey construction projects on the African continent. GREA provides direct real estate exposure to high-yielding rental income streams with robust growth potential.
GREA has a proven track record of delivering innovative, award-winning developments that provide excellent growth and returns to investors. Make GREA your real estate developer of choice in Africa. Contact us today.