Emerging markets in Africa driving forward office market demand, report shows
Occupier demand in Middle East and Africa region office market is expected to grow despite recent turmoil in the area with Angloa and Nigeria leading the way.
Growth in banking, telecommunications and construction sectors is driving occupier demand and flexibility and adaptability are the key characteristics for successful operations in Africa and Middle East, according to the latest report from global real estate services firm Cushman and Wakefield.
The need for increased investment in these regions to aid redevelopment and recovery will present further opportunities leading to sustained levels of interest from multinational companies to locate in the Middle East and Africa, according to Cushman and Wakefield’s Emerging Markets 2011.
The report reviews 19 markets in Africa and nine in the Middle East which are becoming established or beginning to emerge as office destinations for multi national companies.
It warns that multinational companies operating in these markets or entering the region for the first time, need to be acutely aware of the increased and/or changing pattern of risk factors such as political instability, and to act accordingly.
It highlights the need to for companies to adopt a flexible business model and to be sympathetic of local conditions when operating in these markets.
The most expensive locations within the MEA region are in Angola and Nigeria. Luanda, the capital of Angola is the most expensive market, with Lagos in Nigeria in second place driven by severe lack of prime space and strong occupier demand.
Angola’s reliance on the extractive industries, in particular the diamond industry has led to sustained occupier demand and growth in rental levels. An increasing number of countries in Africa however, have experienced significant growth within the service industries such as banking, telecommunications and information technology (IT) all of which are advancing significantly.
Conversely, the office markets in UAE are characterized by oversupply due to significant development along with the impact of global economic slowdown and subsequent lack of occupier demand. These markets have recovered somewhat recently as a result of being increasingly recognized as the more stable business hubs in the light of recent political upheaval within the region with rents stabilizing and remaining amongst the highest in the region.
In particular, the Dubai Free Zone locations such the Dubai International Financial Centre (DIFC) and Dubai Media City, have seen sustained demand over the year, attracting new and established companies looking to upgrade their space.
‘Being at the forefront of real estate activity and development in MEA we can support our corporate clients as they navigate the potential risks and seize the opportunities available to them in these markets,’ said Alisa Zotimova, head of Alliance Program and New Markets, EMEA.
‘Political stability and economic growth are key to the development of office markets in the region and the established gateways of Dubai and South Africa will continue to provide a bridge to the rest of the continent where growth opportunities do exist for the pragmatic and patient,’ she added.