Of the hotel investment markets in Africa, international real estate and investment management firm JLL favours SA, Mauritius and primary cities in East Africa
This is according to JLL hotels and hospitality in sub-Saharan Africa head, Xander Nijnens. “From a sector perspective, we favour the mid-market, budget and serviced apartment segments over luxury and upper upscale.” High currency volatility across the region has caused challenges to investors in terms of inflation, rising lending rates and uncertainty in investment underwriting, he says.
STR Global’s latest pipeline report (May 2016) shows a 34% increase in rooms under construction in Africa at 30,737 — revealing many high growth markets. “However, the pace of demand growth is disparate across the continent,” says Nijnens. “East Africa and SA have good demand fundamentals, while North Africa and West Africa have been impacted by instability and economic slowdown.
“’Africa is not for wimps’ is a phrase well known to Africans, particularly when foreigners suffer challenges,” says Tim Smith, managing partner of HVS Consulting in SA. “This phrase could equally be applied to hotel investment and development on the continent. But with higher risk comes higher reward and the change in values of some of these markets shows that those rewards can be substantial.”