Africa’s logistics industry offers opportunities for Middle East investors and developers: Knight Frank
August 25, 2016: The logistics sector is a growing focus for property development in Sub-Saharan Africa, on the back of rising demand for modern warehouse space from retailers and consumer goods manufacturers, suggests Knight Frank’s recent report on emerging logistics property sector. This trend is being driven by the growth of the region's middle classes, the expansion of its consumer markets and the increased prevalence of mobile retailing.
Developers active in the logistics sector include those from the Middle East and China, as well as South African developers seeking to transfer their expertise to the rest of Africa.
Africa's poor transport infrastructure although a major challenge for logistics operators, presents a real opportunity on the back of the numerous large-scale projects across Africa which aim to improve transport networks.
Drone technology has the potential to help logistics operators overcome transport infrastructure challenges, and several projects are underway exploring the use of drones in Africa.
Future demand for logistics property will be shaped by the rapid growth of online retailing in Sub-Saharan Africa, which is being driven by the increased penetration of smart mobile devices. The African online retail sector is forecast to be worth US$50 billion by 2018, representing a six-fold increase in value in the space of five years.
Around 90 per cent of Africa's trade happens by sea, making its ports crucial locations in logistics networks. Several major new ports are under construction across the continent and sites near to ports are highly desirable for logistics property development.
Andrew Marshall, Senior Surveyor in Logistics, at Knight Frank Middle East commented, "As Sub-Saharan Africa undergoes a wave of modern commercial property development, the logistics sector is emerging as a focus for activity. Already some leading Middle Eastern developers have targeted the sector; Kuwaiti based Agility has ambitious plans to create a network of logistics hubs across Africa, while Dubai's DP World has been granted a concession to develop and operate a new logistics centre in Kigali, Rwanda."
Dana Salbak, Associate Partner and Head of Research, at Knight Frank Middle East Knight Frank, said, "GCC countries such as the United Arab Emirates and Saudi Arabia have gained global prominence with their world-class infrastructure and transport systems. Combining their strength in developing high-spec warehousing and sophisticated infrastructure, with the growth potential that the African logistics market offers, the opportunities cannot be emphasized enough. We realise however that for this to materialise, efforts need to focus on improving security, increasing transparency and combating corruption, along with establishing robust legal frameworks."