In an interview with Property Watch shortly before she flew back home, DrNephthys Ramses, a Cairo-based real estate expert said there is huge potential and opportunities as far as real estate development is concerned.
“The city’s market is promising due to the demographic trend and I can firmly say many FDI will flow in in the near future,” she said.
According to her, demographics are the data that describes the composition of a population, this include age, race, gender, income, migration patterns and population growth.
“These statistics are among factors that affect how real estate is valued and the type of properties in demand.
Therefore, major shifts in the demographics can have a large impact on market (real estate) trends for a number of years,” she added.
Dr Ramses is of the opinion that the growth of Dar es Salaam will draw more investment in the construction of high quality yet affordable housing.
“Kigamboni is urbanised, there is more development of high quality luxury housing so there is also a need to have quality but affordable units. Again, modern shopping centreswould also be developed,” she noted.
Apart from Dar es Salaam, other areas that would attract foreign real estate investment would include Arusha, Bagamoyo and Mwanza.
The Egyptian real estate expert who was in the country to search for investment opportunities in thesector said growth potential would lead to a notable increase in construction activities involving overseas investors.
Dr Ramses’ views are supported by a 2015 study conducted by Knight Frank, a global property consultancy, which states that population increase coupled with a strong economic growth across several countries including Tanzania was creating a formidable middle class that could prove too attractive for global real estate investors to ignore over the coming decade.
According to the report, Tanzania’s population is estimated to reach 7.3 million in 10 years’ time. Part of the report reads:
“Large volumes of good quality commercial and residential property are needed to support the growth, presenting excellent opportunities for global funds looking to enter into markets.”
Tanzania Investment Centre (TIC) isn’t behind in tapping the said investment and that is why information available at the centre insists on tackling FDI, observing that Dar esSalaam, Mwanza, Tanga, Arusha and Mbeya continue to experience a rapid population growth.
The good news is that for over three decades, urban population has been growing faster than the availability of decent houses. TIChints that population growth is due to rapid increase of economic activities that attract people who in turn need boarding.
Michael Yardney, Director for Metropole Property Strategists, a property consulting firm, sees demographics are set to determine the shape and strength of property markets over the coming years.
Therefore, he said, investors who own the type of property that will remain in strong demand by affluent occupiers in the future are likely to be rewarded with strong capital growth.
“On the other hand, well-located medium density apartments and townhouses in our capital cities will be the preferred style of accommodation for an increasing population in the future.
These will be type of properties that will also make great long term investments,” he added.
An annual report dubbed ‘Emerging Trends in Real Estate: The global outlook for 2015’ published by London-based Urban Land Institute (ULI) and PricewaterhouseCoopers (PWC) indicates that investors and developers are increasingly targeting African real estate as one of the key emerging markets, drawn by the prospect of 20 per cent-plus returns across many territories.
“In almost all of Africa’s markets, demand for high-quality retail, office and industrial accommodation outstrips supply as international and local occupiers respond to the improving economic outlook.
Demographic shifts and changes in consumer behaviour have been the underlying drivers of demand here, encouraging investors from overseas to enter the various markets,” reads part of the study.
Media reports indicate stable economic growth is another factor that drives the real estate market, Johnson Mdimu, an independent real estate expert, says.
“Apart from demographics, economic growth is another thing that the investor will have to look at because it has major impact on the markets,” he added.
According to him, following the government’s move towards industrialization, the economy performance outlook is encouraging. Therefore, real estate investment would be at the centre of rapid economic change, which in turn will transform the construction industry.
It is said that foreign real estate investment in sub-Saharan Africa was a forgotten area due to the fact that most markets in the region were not matured enough. However, Tanzanian real estate market has shown great potential.
Professors (Dr Karl-Werner Schulte, Dr Stephan Bone-Winkel and Dr Wolfgang Schäfers) from the International Real Estate Business School University of Regensburg in their study titled 'Foreign Real Estate Investment in Sub-Saharan Africa:
A Behavioural Approach in Countervailing the Investment Stigma by Image Analysis and Exploration of the Tanzanian Real Estate Market,' see a promising market.
According to them, Tanzania has strongly encouraged foreign investments ever since its implementation of economic reforms. The country has therefore formally opened its gates to foreign investors in all sectors including real estate.
The report suggests that Tanzania’s attractiveness as a destination for investment is readily identifiable. In the recent past, Tanzania’s real estate market has primarily been tapped by domestic institutions such as pension funds and insurance corporations.
The small group of active international investors mainly hails from the US and the United Kingdom, whereas Arabic and Chinese investors start to play an increasingly dominant role.
In the case of UK investors, historic heritage such as long-standing business ties between Tanzania and its last colonial ruler often play a key role in establishing business in real estate even today.
According to publicly available data, German investors, as well as investors from the rest of Europe, are still far behind in regard to their interest to invest in the Tanzanian real estate sector. Moreover, with the current economic stability as well as population growth, things might change for good.
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