Acknowledged as one of the continent’s leading hospitality investment experts, Wayne Troughton of HTI Consulting shared unique insights on the Top 5 and Bottom 5 Hospitality Investment markets in Africa ahead of the 10th annual African Property Investment (API) Summit in Johannesburg on 2 & 3 October.
Recognised as Africa’s premier investment showcase for African real estate over the past decade, the two-day event is celebrated as a deal making platform for investors looking to access opportunities and developers seeking to attract capital.
According to Troughton, the hospitality sector continues to attract investment from a broad spectrum of international and African investors says Troughton.
“We are tracking investment from structured funds, predominantly from
Europe and the Middle East; an increasing percentage of High Net Worth
Individuals (HNWIs) from Europe, Middle East, and Africa itself), Owner
operators that invest from Europe, Africa and the USA), as well as
Family Offices Middle East, the UK, Europe, and SA.”
The most popular investment opportunity at the moment includes midscale
urban hotel assets of 150 rooms, which are located close to corporates,
conferencing centers and transport nodes.
Top Hospitality Investment Markets in West Africa
According to Troughton, the Top Investment Hospitality Markets in West Africa are Abidjan, Dakar, Cape Verde and Accra, while the bottom five are Bamako, Niamey, Ouagadougou and Conakry.
Top Hospitality Investment Markets in East Africa
In East Africa, the Top Investment Hospitality Markets are Kampala,
Addis Ababa, and Dar es Salaam, whilst the bottom are Nairobi (over
supply) and Kigali (over supply and limited demand).
With the current highest
Average Daily Room rates (ADRs) on the continent, Addis Ababa is touted
as an attractive option, but Troughton cautions that the market remains
challenging due to a lack of forex, which is resulting in developers
battling to complete their hotel developments. However, he notes that if
a developer has the proper and adequate financial backing and the
correct project team to get a half completed development finalized,
then the “opportunity is there,” he adds.
Dar es Salaam
A market with plenty of opportunity, the city has performance challenges
in recent years due to a lack of direction in policy for private
sector, increased supply in the CBD node and reduced levels of demand.
Whilst the CBD node is experiencing occupancy and ADR pressure, the
outlook on the Peninsula is more optimistic.
As one of the next hubs for investment, Kampala’s current limited
branded supply, and with the oil prices entering a recovery period, the
City provides a “strategic and attractive opportunity for investors,”
If an investor is able to buy an unbranded hotel in Kigali and
adequately convert into an international brand then there is upside if
well located. Whilst the Government in Rwanda remains pro-active in
attracting investment and high economic growth is projected, the growth
is off a low base and demand volumes for the City remain limited when
compared to other East African cities.
Currently, the most attractive markets are Cape Verde, Senegal, Benin and Ghana. While other markets provide opportunity, the possibility of security or political unrest can hamper performance and cashflows for long periods.
As an industry platform for deal making, Troughton hopes to use the API
Summit platform to meet and engage with investors whom are active and
operate in the hotel and mixed-use real estate development market.
Adding that, “We would like to meet and talk with bankers interested in
exposure in the African hotel space, and for them to connect me with
their colleagues in other African countries.”
Source: Nomad Africa Magazine