By Dr. Amina Sheikh Omar - Academic and Islamic finance expert who serves as Deputy Rector for Planning and Development at SIMAD University, where she also works as a lecturer. She holds a PhD in Islamic Finance.
“Africa does not lack property demand; it lacks investment aligned with the homes, infrastructure and productive assets its people actually need.” Dr. Amina Sheikh Omar
Africa’s real estate market is routinely described as one of the largest and fastest-growing in the world, with a total value put at around $17.6 trillion. Remittances keep climbing, cities keep expanding, and a modest middle class is taking shape in urban centres from Lagos to Nairobi. On paper, the case for investing in African property has rarely looked stronger.
A closer look at where the money is actually going tells a less flattering story. Much of the capital entering the sector is financing luxury estates and speculatively priced land banks rather than the affordable housing that most of the population needs. The fundamentals are strong. The allocation of capital against them is not.
This mismatch shows up in the housing stock itself. A meaningful share of newly built units sits empty, generating little more than higher valuations and, in turn, higher property taxes for surrounding neighbourhoods. Two forces are largely responsible: a limited understanding among developers and financiers of what housing the majority of the population can actually afford, and the fact that much development capital originates with international investors whose understanding of local demand is, at best, incomplete.
GHOST ESTATES AND THEIR COSTS#
The result is what might be called the “ghost estate”: a development that looks prosperous from the road but, on closer inspection, stands mostly vacant or is occupied only intermittently by owners who do not live there full time. Ghost estates carry real costs: vacancy weighs on resale values for existing owners nearby, the tax base they create raises costs for neighbours without a matching rise in local activity, and businesses, which depend on visible foot traffic, tend to avoid areas that look half empty.
None of this negates the genuine appeal of African real estate to foreign capital. The continent still offers a comparatively low-risk environment relative to many other emerging markets, and business climates in a growing number of countries are actively courting investment. That combination of stability and potential returns is real, but it comes with caveats serious investors cannot ignore: patchy title and registration systems, mortgage markets that remain underdeveloped across much of the continent, and property transactions that too often close without any public record of price. Anyone allocating capital to African property needs to underwrite these frictions, not assume them away.
DIASPORA CAPITAL CUTS BOTH WAYS#
Foreign capital reaching African real estate increasingly originates with diaspora communities rather than institutional investors. Remittances are one of the continent’s most dependable sources of foreign exchange, totalling $96.4 billion in 2024 alone, and a meaningful share of that money finances land purchases and construction, often supplying the hard currency developers cannot otherwise access.
That same capital, however, has pushed housing costs in some cities beyond what local wage earners can afford, since diaspora buyers are not constrained by domestic incomes in the same way as local households. The effect varies by location, but the pattern — diaspora demand outrunning local purchasing power — is increasingly familiar across several of Africa’s fastest-growing cities.
THE COST OF IMPORTING WHAT COULD BE BUILT LOCALLY#
A second structural problem is import dependence. Much of the raw material used in African construction is sourced abroad, so a large share of every construction dollar leaves the domestic economy rather than circulating through local suppliers and labour. South Africa offers a partial counterexample, having built stronger linkages between its real estate sector and domestic manufacturing, retaining more value at home as a result.
Where those linkages do not exist, the consequences are predictable. Currency depreciation feeds directly into the cost of imported materials, pushing up construction costs and, with them, property prices. As affordability erodes, markets increasingly cater to buyers transacting in hard currency, while speculation crowds out the steady, income-linked demand that makes a housing market sustainable.
WHAT A BETTER ALLOCATION OF CAPITAL LOOKS LIKE#
An effective real estate sector should do three things: deepen local industry, create jobs and keep value circulating within the domestic economy. Too much of Africa’s current development falls short on all three counts.
The properties best aligned with how Africans actually live and work look different from the luxury towers dominating so much investment marketing: affordable housing, build-to-rent and student accommodation, Grade A logistics and warehousing, and land suited to data centres and related digital infrastructure.
These asset classes track the continent’s demographic reality: a young population, rapid urbanisation and cities where renting, rather than owning, is increasingly becoming the norm. Long-term housing demand will increasingly come from renters, students, mobile workers and the logistics needs of e-commerce, not solely from aspiring homeowners.
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INFRASTRUCTURE, NOT HYPE, CREATES VALUE#
The clearest lesson from Africa’s property markets is that infrastructure, not sentiment, creates land value. Roads, ports, power transmission lines, railways and industrial parks turn peripheral land into economically active land. That is why corridors such as Lekki in Lagos, Konza in Kenya, and growth areas around Kigali and Nairobi have become genuine investment stories rather than purely speculative ones.
Not every fast-growing corridor deserves that label. The distinction between a genuine growth corridor and a speculative trap comes down largely to whether infrastructure and economic activity are actually present or merely promised. Investors who confuse the two tend to be the ones left holding land that never appreciates as expected.
THE MISSING PLUMBING#
Africa’s real estate market is also held back by underdeveloped market infrastructure: slow title registration, regulatory frameworks that vary by transaction type and jurisdiction, mortgage products that remain inaccessible to most households, and pricing data that is rarely made public. Each adds friction to a market that would otherwise function considerably better.
Real estate investment trusts and property technology firms are beginning to address parts of this problem. REITs give institutional and retail investors a way to hold income-generating property without the burden of direct ownership. PropTech platforms can improve transparency around title records and streamline transactions that have historically relied on paper records and personal networks.
Together, they can make African real estate more liquid, transparent and accessible, though neither is sufficient on its own to fix a market this fragmented.
WHERE THE REAL RETURNS ARE#
Africa’s real estate story is not, at bottom, one of scarcity. It has housing demand, rising incomes, expanding cities, a large and growing diaspora, strengthening infrastructure corridors and rising institutional interest — most of the ingredients any market would want.
What it lacks is alignment between where capital goes and where demand actually sits. Unless institutional capital starts flowing towards affordable homes, mid-market rentals, productive assets and infrastructure-linked development, the continent risks building more of what it does not need while continuing to underbuild what it does.
The next chapter of African real estate will not be written by ghost estates and luxury enclaves. It will be written by whoever builds for the millions of families, students, workers, renters, small business owners and civil servants whose incomes cannot absorb endless price escalation.
That is where the real market is — and where the sustainable returns will be found.
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Dr. Amina Sheikh Omar is an academic and Islamic finance expert who serves as Deputy Rector for Planning and Development at SIMAD University, where she also works as a lecturer. She holds a PhD in Islamic Finance.
The views expressed in this article are those of the author and do not necessarily reflect the editorial position of Dawan Africa.