This post originally appeared on http://www.opp.today/africa-logistics-sector-offer-new-opportunities-for-developers/.
[Editor’s Note: With several projects already underway, drones have the potential to solve infrastructure challenges.]
A growing logistics industry in Africa is offering new opportunities for experienced developers, says a top international agent.
The logistics sector is growing in Sub-Saharan Africa on the back of rising demand for modern warehouse space from retailers and consumer goods manufacturers, says Knight Frank Middle East.
It is being driven by the growth of the region’s middle classes, the expansion of its consumer markets and the increased prevalence of mobile retailing.
Dana Salbak, Associate Partner and Head of Research at Knight Frank Middle East, says, “GCC countries such as the United Arab Emirates and Saudi Arabia have gained global prominence with their world-class infrastructure and transport systems.
“Combining their strength in developing high-spec warehousing and sophisticated infrastructure, with the growth potential that the African logistics market offers, the opportunities cannot be emphasized enough. We realise however that for this to materialise, efforts need to focus on improving security, increasing transparency and combating corruption, along with establishing robust legal frameworks.”
The main points of Knight Frank’s Logistics Africa 2016 report are:
- Developers active in the logistics sector include those from the Middle East and China, as well as South African developers seeking to transfer their expertise to the rest of Africa.
- Africa’s poor transport infrastructure although a major challenge for logistics operators, presents an opportunity on the back of the numerous large-scale projects across Africa which aim to improve transport networks.
- Drone technology has the potential to help logistics operators overcome transport infrastructure challenges, and several projects are underway exploring the use of drones in Africa.
- Future demand for logistics property will be shaped by the rapid growth of online retailing in Sub-Saharan Africa, which is being driven by the increased penetration of smart mobile devices. The African online retail sector is forecast to be worth US$50 billion by 2018, representing a six-fold increase in value in the space of five years.
- Around 90% of Africa’s trade happens by sea, making its ports crucial locations in logistics networks. Several major new ports are under construction across the continent and sites near to ports are highly desirable for logistics property development.
Andrew Marshall, Senior Surveyor in Logistics, at Knight Frank Middle East, says, “As Sub-Saharan Africa undergoes a wave of modern commercial property development, the logistics sector is emerging as a focus for activity. Already some leading Middle Eastern developers have targeted the sector; Kuwaiti-based Agility has ambitious plans to create a network of logistics hubs across Africa, while Dubai’s DP World has been granted a concession to develop and operate a new logistics centre in Kigali, Rwanda.”
Modern logistics property is currently scarce across much of the Sub-Saharan region, but there is a growing need for high quality new development, says the report.
“Driven largely by the growth of Africa’s middle-classes and the associated expansion of its consumer markets, there is rising demand for high quality logistics space from retailers and consumer goods manufacturers seeking to expand their African operations and improve distribution networks and supply chains.
“Such occupiers demand properties built to high technical specifications that support modern retailing, distribution and manufacturing practices.”