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12 African Countries In Top 20 Affordable Luxury Real Estate Markets

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According to a September study by the German real estate portal Lamudi, twelve African countries are among the Top 20 emerging markets where luxury real estate is most affordable. Ethiopia topped the ranking in a total of 32 emerging markets in the recent Lamudi results. Luxury real estate in Ethiopia now costs an average of 396.58 € per square meter. To put this in perspective, luxury Paris property such as the Place Vendôme, Tuileries, and Palais Royal real estate commands 13,000 € per square meter, according to This Paris Life. To extend the frame of reference, Global Property Guide reports an average cost of over 6,000 € per square meter for “affordable luxury” land throughout France. Amazingly, therefore affordable luxury real estate in France is roughly 15 times more expensive than luxury real estate in Ethiopia!

Out of phase with the Lamudi study, however, Global Property Guide reports that all land in Ethiopia is owned by the government of the country, and can only be leased. With continuing border disputes, and weak enforcement of property rights, it is not clear how investors can securely exploit this appealing valuation of real estate for commercial purposes in Ethiopia. And recent drops in currency values of many African countries already discourage investment. However, the broader picture is more appealing in some of the other countries featured in the Lamudi report.

Côte d’Ivoire’s real estate market has grown rapidly since 2011

Côte d’Ivoire is now in full economic takeoff following a political and military crisis. Luxury real estate here is at an average price of 427.65 € per square meter, according to the Lamudi classification, which was made on the basis of average prices gathered from several thousand real estate sales advertisements. After ten years of sluggish economic growth, Côte d’Ivoire’s construction industry now claims double-digit growth in the most recent three years, according to the Oxford Business Group. Côte d’Ivoire’s real estate market has grown rapidly since 2011. Private initiatives thrive and the market is seeing significant development. A number of unique sources contribute to these especially attractive property prices. Substantial support by international donors in Côte d’Ivoire has artificially subsidized the markets and the country is now open to global construction firms, and boasts diversified investment sources.

Tanzania took third place in the Lamudi ranking with prices at 486.03 € per square meter. With an average price of 850.54 € per square meter, Kenya claimed sixth place on the list, following Mexico and Colombia. These figures are meticulously mined by Lamudi, a portal launched in 2013. The clearinghouse is a global property portal focusing exclusively on emerging markets. The Lamudi platform is available in 34 countries in Asia, the Middle East, Africa and Latin America, and includes in excess of 900,000 real estate listings throughout its global network.

Nigeria, with a per square meter price of 856.29 €, was followed closely by Kenya, according to Lamudi. Meanwhile Tunisia at 885.52 € appeared in the ninth slot, just ahead of Ghana (1,035.75 €), and Morocco (1,144.25 €). Rounding out the African countries featured, Uganda (1,597.22 €) occupied 15th place, ahead of Algeria (1,766.53 €), while Angola (3,965.52 €) closed the top 20 list.

Marrakech a top investment choice

Target cities to watch in the emerging luxury real estate market include Marrakech, Morocco. Marrakech holds strong growth prospects, favorable political stability, and an enticing environment for foreigners. Marrakech was recently named by Financial Times property experts as a top investment choice for 2014.

Lamudi’s focus on raw price may not be a representation of true property values. While luxury real estate property values in Morocco may be nearly four times those of Ethiopia, both are relatively cheap on a global scale, especially with regard to developed countries. For this reason, other criteria such as governmental and economic stability, environmental quality, and effectiveness of law enforcement may be more important determining factors than the price of land when comparing the featured countries for the purpose of luxury real estate investment. Furthermore, the unpredictable political climate and economic instability in these areas guarantees that these prices will fluctuate dramatically in relatively short periods of time.

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African Currencies in Decline

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As currencies across the African continent fall against the dollar, the International Monetary Fund stated that the financial sector should brace itself for additional volatility. The IMF warned Wednesday in a semiannual assessment of risks to the global financial system, that the fallout from the end of “easy-money policies” by central banks could decelerate global economic expansion, reveal inflated asset prices, and further strain overextended lenders. Several factors contribute to the decline, including a trend by international investors to abandon emerging markets.

MSCI’s primary emerging equity fell 1.4 percent, declining to a one-month low, and Asian shares with the exception of Japan lost 1.6 percent. China led with a 2.75 percent rout on stocks. India, among the best equity performers this past year, realized its lowest daily fund outflow as of Wednesday. Resultant currency declines included record lows in several countries, including South Africa’s rand, Zambia’s kwacha, Uganda’s shilling, Tanzania’s shilling and Ghana’s cedi. The zloty and forint also fell sharply against the rising euro. China, by far the leading investor in African frontier markets, led this trend due to predicted increases in US interest rates which have yet to materialize.

Symptoms of global decline observed in more volatile emerging markets


Neil Shearing, head of emerging markets research at Capital Economics, stated that, “It is a bit of a bloodbath in equity markets. There are several things going on … the rise in oil prices, inflation expectations. Bond yields globally, including in emerging markets, have gone up and equity markets have come off the boil.” In some countries economic indexes are below the crisis levels set in 2008. Symptoms of global decline have been first observed in more volatile emerging markets.

China’s influence cannot be exaggerated. China’s decelerating growth struck fear among investors in emerging markets, from South Africa all the way to Malaysia. Equal with the fortunes of the world’s second-largest economic force, China’s financial grumbling reaches into pockets around the globe. Following an Asian recession and market meltdown, the Beijing government supported its own economy and stock market with a liquidity injection, but emerging market currencies cannot rely on such support. As a result, African markets now feel the domino effect.

Compliance failure could further jeopardize economic stability

African governments are taking stopgap measures to stem collapses. Nigeria, Africa’s top economy, froze its foreign exchange market, but this had the repercussion that it’s Naira was excluded from the influential JP Morgan bond index. The new currency crisis is increasing government debts as well, which reduces ability to comply with debt forgiveness specifications. Compliance failure could further jeopardize economic stability in many countries. Bond issues reveal yet another hedging mechanism already in play.

Bonds, commodities, and currencies are all near 16 year low figures. Stephen Bailey-Smith of Standard Bank Group Ltd. said, “Everyone’s putting on a helmet and just hoping to get through the day. African Eurobonds have been hit harder than average because they’re perceived as being more commodity-dependent.” Kenya’s shilling dropped 0.3 percent to 103.7 per dollar, the lowest closing since October 2011. And finance ministers claim that selling dollars on the currency market to compensate is not effective because speculators will quickly respond. African markets may have an opportunity to rally if the US Federal Reserve holds interest rates steady. Without a specific catalyst, African currency markets may be headed for a very long decline.

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