Africa’s urban population is growing at 3.5% annually, outpacing Asia and Latin America. UN projections indicate that by 2050, 60% of Africans, up from 40% today, will live in urban areas. This translates to over 900 million urban dwellers, generating intense demand for housing across Africa, according to the global property consultant Knight Frank’s biennial Africa Horizons 2025/26 Report.
According to Knight Frank’s analysis, Africa’s current housing deficit stands at 51 million units, and closing this gap requires a staggering US$ 1.4 trillion, with projections from the International Finance Corporation suggesting a potential deficit of 130 million homes by 2030 if unaddressed.
Judy Rugasira, Managing Director, Knight Frank Uganda, explained, “Africa’s housing crisis is daunting, but it’s not insurmountable. With concerted efforts and forward-thinking strategies, the continent can turn the tide on this escalating challenge. The opportunity for developers and investors is tremendous as Africa’s middle classes continue to grow and aspire to own their own homes. Arguably, the continent presents one of the World’s most exciting residential market frontiers for developers.”
Knight Frank notes that given the staggering costs, innovative solutions are being actively explored across the continent to address the housing crisis. These include blended finance models that leverage micro-loans, impact investing, and strategic donor-government collaboration to bridge critical funding gaps. Additionally, public-private partnerships (PPPs) are increasingly being utilised to mobilise capital and technical expertise. Furthermore, smarter urban planning approaches are being adopted to ensure that housing delivery is integrated with resilient infrastructure, optimising both land use and service provision to create sustainable, inclusive communities.
The Knight Frank report also underscores the growing prominence of short-term rentals and co-living arrangements as emerging housing alternatives across the continent. Digital platforms such as Airbnb are reshaping the urban real estate landscape. For example, Cape Town recorded over 700,000 Airbnb guest arrivals in 2023, contributing approximately US$ 778 million to the local economy. Similarly, in December 2024 alone, Lagos generated US$ 13 million from short-let apartment bookings.
THE INDUSTRIAL OPPORTUNITY
Away from the residential sector, Knight Frank also highlights the growing industrial potential across Africa, which is being driven by rapid urbanisation. Illustrative developments include South Africa’s commitment of US$ 54 million towards electric vehicle and battery production by 2035. Meanwhile, China is in discussions to invest US$ 1bn in upgrading the TAZARA Railway, enhancing connectivity between Zambia and Tanzania.
Boniface Abudho, Research Analyst at Knight Frank Africa, added, “In the automotive sector, Volkswagen South Africa exported over 130,000 Polo units in 2024, while Morocco has already established itself as a key car manufacturing centre on the continent, and Burkina Faso is moving towards becoming a new electric vehicle (EV) manufacturing hub through the introduction of its own EV brand, ITAOUA. This highlights Africa’s growing automobile production capacity.”
Further amplifying this momentum, the African Continental Free Trade Area (AfCFTA) is expected to increase intra-African trade by 50% by 2030, according to the United Nations Economic Commission for Africa (UNECA). This anticipated trade growth is catalysing a rush to establish logistics hubs, expand warehousing, and build strategic industrial corridors across the continent.
REAL ESTATE INVESTMENT TRUSTS (REITs)
Knight Frank identifies REITs as a transformative investment vehicle that enables investors to access real estate markets without the complexities of direct property ownership. Although the African REIT market remains in its nascency, it offers significant growth potential, particularly in South Africa, Nigeria, and Kenya. As at the end of 2024, South Africa accounted for more than 85% of the continent’s REIT market. Elsewhere, emerging markets such as Ghana, Morocco, and Egypt are developing regulatory frameworks to support REIT structures.
Mark Dunford, CEO of Knight Frank Kenya, noted: “As the market matures and regulatory frameworks improve, African REITs are poised to play a crucial role in the continent’s real estate development and economic growth. With the right strategies and investments, the African REIT market could become a key player in the global real estate landscape.”
THE GREEN OPPORTUNITY
Knight Frank highlights that Africa stands at a pivotal crossroads—facing immense potential and pressing environmental responsibility. With unmatched renewable energy resources and some of the highest solar irradiance levels globally, the continent is uniquely positioned to spearhead a green transformation. However, the current climate finance landscape paints a stark picture: in 2020, Africa received only US$ 30bn in climate finance, far short of the estimated US$ 277bn required annually, according to the Climate Policy Initiative.
Boniface Abudho, Research Analyst at Knight Frank Africa, emphasises, “Bridging this green finance gap will require the expansion of structured financial instruments, enhanced institutional capacity, and strengthened regional collaboration. These are essential steps to accelerate Africa’s transition to a sustainable, low-carbon economy.”
Encouragingly, momentum is building. Strategic initiatives such as the Africa Carbon Market Initiative (ACMI) are gaining traction, with a goal of generating 300 million carbon credits annually by 2030. This could unlock up to US$ 6bn in revenue and create an estimated 30 million jobs.
Ben Woodhams, Partner at Knight Frank London’s Africa Desk, adds, “African Real Estate developers cannot afford to overlook the green aspects of their new and existing portfolios in the face of a lack of legislation – the demands from grade-A tenants themselves is sufficient to necessitate LEED and similar certification in order to prevent their property from being overlooked by increasingly green-conscious occupiers, many of whom now have global mandates to occupy nothing less than green-rated space.”
MIXED-USE DEVELOPMENTS:
The report concludes by examining the growing trend of mixed-use developments, focusing on Egypt. In Cairo, such projects are gaining traction among homebuyers seeking high-end residences seamlessly integrated with amenities like medical facilities, schools, wellness centres, and retail outlets, echoing urban development models seen in Middle Eastern hubs such as Dubai and Doha.
