Real Estate In Africa: See Countries With Free And Restricted Markets In 2024
Africa is the most profitable region in the world, and here’s why. Africa provides a low-cost labor market compared to other regions in the world. Also due to the booming youth population and housing deficit, real estate in Africa is a goldmine.
Six of the world’s twelve fastest-growing economies are in Africa. The continent has 60% of the world’s uncultivated arable land. By 2025, Africa’s growth prospect is predicted to be among the highest in the world. From this, it is obvious that investing in Africa is a smart move.
However, there is the question of what and where to invest in. At first glance, it would seem as though the oil and gas, banking and finance as well as telecommunication sectors are the major drivers of the African economy.
No doubt, these sectors attract a fair share of foreign investments to the region. But are they the only ones? Real estate in Africa is growing at an enviable rate. Thus, the best time to get into real estate in Africa is now.
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The prospects of real estate in Africa
Surprisingly, there’s a sleeping giant in real estate in Africa. It is barely tapped. According to a PWC assessment, the investment returns in Africa’s real estate “exceed those achievable in almost all developed markets”.
Real estate in Africa is also the leading driver of the continent’s post-pandemic recovery with over $800 million in deals taking place annually. In fact, Chinese investment in African countries surged from $75 million in 2003 to an astounding $5 billion in 2021. So, whether it is for agriculture or infrastructure, Africa’s property market is worth investing in.
Best part is that depending on the country, land can be very affordable. People investing can take out small loans, use credit cards, cash or savings to invest.
That’s why investors may start by buying land in rural areas. For example, in rural Kenya, $5,000 could purchase between 1 to 5 acres of land, while in urban areas, it might only cover a fraction of an acre.
For those interested in property investment but lacking immediate funds, various financing options exist, including personal loans.
But there is a lot to learn about real estate in Africa. A good place to start is knowing what conditions come with owning a property in Africa. The conditions usually vary from one country to another. This is why we will be giving you a rundown of Africa’s free and restricted property markets.
Free versus restricted property markets
Land ownership in Africa is of two types; Free and Restricted (leased). In many African countries, foreigners are given access to lands on a lease. In a leasehold property market, ownership of a property is only for a specific time frame.
The lease contract grants its holder temporary ownership and freedom to use the land for a given duration. In most African countries, properties are leased for a duration of 99 years. In some other countries, the lease duration is usually shorter.
During this time, the new owner (lessee or tenant) must abide by the terms agreed in the lease contract. At the end of the lease term, the original owner has the right to repossess his/her land. If need be, the duration of the lease can be extended.
However, the tenant has to notify the owner before the lease expires. In this system of land ownership, the landlord has a freehold and with it the freedom to sell the land. Nevertheless, for some African countries, a lease is the only window for foreigners to invest in real estate in Africa.
What happens when leasehold land lease in Africa expires?
The fate of leasehold land after 99 years depends on the specific laws and regulations of the country where the land is located. In some countries, the lease can be renewed or extended, often subject to certain conditions such as payment of a renewal fee or compliance with land use regulations. However, if the lease is not renewed, the lessee may lose their rights to the land.
In countries with more restrictive real estate markets, the process of renewing a leasehold may be more complex and subject to bureaucratic hurdles. For example, in some jurisdictions, the government may have the discretion to refuse renewal or impose new terms that could be less favorable to the lessee. This can create uncertainty for investors and property owners.
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What does Freehold mean in Africa Real Estate?
In many African countries, freehold ownership is considered the most secure form of property tenure. It provides the owner with full control over the land, including the ability to develop, lease, or sell the property. This form of ownership is often preferred by investors because it offers long-term stability and the potential for capital appreciation.
However, the availability and prevalence of freehold property can vary significantly across the continent. In some countries, freehold ownership is common and well-established, while in others, it may be limited or subject to various restrictions. These differences are often rooted in historical, legal, and cultural factors that shape land tenure systems in each country.
African countries with a free property market
Starting with the good news, there are about 9 African countries that operate a freehold property market. Among these 9, some are more liberalized than others. The more liberal countries offer better transparency and flexible laws that permit foreigners to own real estate in Africa. These are indeed the treasure troves of real estate in Africa.
#1. South Africa
South Africa stands out as one of the most liberal real estate markets in Africa. The country has a well-established legal framework that allows both locals and foreigners to own property with minimal restrictions.
The property rights are well-protected, and the process of buying and selling real estate is transparent and efficient. Major cities like Johannesburg, Cape Town, and Durban offer diverse investment opportunities, from residential to commercial properties.
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However, it’s worth noting that an alternative of freehold is equally practiced in South Africa. Sectional title is no different from freehold except that it offers the owner of the property less freedom.
Sectional title in South Africa refers to a form of property ownership where individuals own a unit within a complex or development, such as an apartment or townhouse, while sharing ownership of common areas like gardens, corridors, and recreational facilities. This type of ownership is governed by the Sectional Titles Act of 1986, which outlines the rights and responsibilities of unit owners and the management of common property.
In exchange for this inconvenience, owners of sectional titles have greater peace of mind when it comes to security.
#2. Botswana
This beautiful African country offers foreign investors a mouth-watering deal. The only hiccups are the 30% transfer tax imposed on foreign property purchases and the restriction on tribal and state lands.
Nevertheless, properties here are still relatively affordable compared to international standards. Also, it is important to consider the long-term prospects of acquiring a property in Africa’s third-freest economy, according to the 2022 Index of Economic Freedom.
One of the key regulations is that foreign buyers must obtain approval from the Minister of Lands and Housing before purchasing any land. This approval process is designed to ensure that the acquisition aligns with national interests and development goals.
Additionally, there are different types of land tenure in Botswana, including tribal land, state land, and freehold land. Foreigners are generally restricted from purchasing tribal land, which is communally owned and managed by local tribal authorities. However, they can acquire state land and freehold land, subject to the necessary approvals.
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#3. Namibia
This is one of the countries that allows foreigners to invest in real estate in Africa. The reason is linked to Namibia’s satisfactory land registration system. Foreigners have full ownership of the land after purchasing it. However, land designated for agricultural use is typically restricted to foreigners. Other than this, there is little or no restriction on land ownership.
#4. Morocco
In Morocco, the “Titre de propriété” or Title deed is the most important document. With it, a buyer has full ownership of the land. Morocco also provides land insurance. Apart from agricultural land, foreigners are free to own any land of their choice as long as it is available. However, it is advisable to follow due process in order to avoid falling victim to fraud.
#5. Egypt
Egypt like Morocco offers international insurance for land titles. Foreigners are not only free to buy land, but the entire process is also credible and transparent. The comprehensive land records in Egypt give the buyer peace of mind, whether it’s a foreign or domestic buyer.
Like most other African countries, Egypt places a restriction on the ownership of two prime real estates. These are South Sinai and Sharm El Sheikh. Land in these areas is only available on a 99-year lease. When it comes to countries with friendly policies for foreign investment in real estate in Africa, Egypt ranks among the best.
#6. Ghana
There are different categories of land in Ghana. This could make things a bit difficult for foreigners who want to invest in the country. While some of these land titles are only available on lease, foreigners are still able to buy and own land in the country.
It is all a question of knowing which land title is for lease and which is available for freehold. In some cases, foreigners that want to invest in real estate in Africa can do so by partnering with a citizen of the country.
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#7. Cameroon
Cameroon lacks a well-regulated system of land records. Although foreigners are allowed to own properties in the country, there are certain limitations. Land designated for agriculture can not be held on freehold but only on a 99-year lease.
Another important consideration for foreign buyers is the need to navigate the local legal and bureaucratic processes, which can be complex and time-consuming. It is highly recommended that foreign investors work with local legal experts and real estate professionals who are familiar with Cameroonian laws and procedures to facilitate a smooth transaction.
Foreigners are also subject to restrictions on the types of land they can purchase. For example, they are generally not allowed to buy land in certain strategic or sensitive areas, such as those near military installations or border regions. These restrictions are in place to protect national security and sovereignty.
#8. Rwanda
Rwanda has one of the most comprehensive land registration systems in Africa. It is also one of the easiest places to acquire real estate in Africa, but there is a clause. Every foreigner is required to invest a minimum of $500,000 in a commercial bank for a minimum of six months.
According to the law, this will give the investor a permanent residence in the country and with it the freedom to invest in real estate. Also, government lands cannot be acquired by foreigners but may be leased for a duration of 50 – 99 years.
#9. Mauritius
In Mauritius, foreigners needed a minimum of $500,000 to invest in real estate, this was later changed to $350,000. The investment equally grants the investor a permanent residence for a period of 20 years.
Taking things a notch higher, the government of Mauritius proposed an attractive deal. Early investors are granted special privileges to invest in residential apartments around the smart cities. If you want to invest in real estate in Africa but not certain of the right country, try Mauritius.
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African Countries With Restricted Property Market
It is still possible to run a thriving real estate business in African countries with restricted property markets. However, you need to develop a plan that involves developing the lands and selling them to the citizens. Below are some of the lucrative African countries with restricted property markets.
#1. Angola
In Angola, land became state-owned after independence in 1975. Despite the land reforms, land ownership is still restricted within Angola. Leases are provided for residential and non-residential purposes to investors.
The lease is of two types namely open and fixed-term lease. For an open-ended lease, a period of two years is assumed and the tenant is free to renew the lease before it expires.
#2. Mozambique
In Mozambique land belongs primarily to the government and foreigners are only permitted to get a leasehold. The initial duration of the lease is 50 years and it is renewable. The lease duration can be increased from 50 years to 99 years.
Although land belongs to the government and can’t be sold, the properties on the land can be rented or sold by its owner. This law applies to both foreigners and citizens alike.
#3. Democratic Republic of Congo
Acquiring Land in the Democratic Republic of Congo is complicated. Part of the reasons for this is inadequate land records and poor land security which often results in disputes. The constitution gives foreigners the right to invest in land but this can only be on a lease.
A section of the constitution clarifies the government’s position on this stating that only Congolese have the right to own land.
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#4. Ethiopia
The land registration system in Ethiopia is equally complex. This could be a challenge for a foreign investor. One thing is clear though and this is the fact that foreigners are not allowed to buy and own land. This privilege is only reserved for citizens. However land is available for lease to foreigners who want to invest in the country.
#5. Tanzania
Tanzania also has a restricted property market where land belongs to the government. Foreigners are only given access to land on a lease and this is where the country differs from other African countries in a way.
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Tanzania leaseholds tend to have shorter durations depending on where the land is located. Lease terms last between 33 to 99 years. However, areas around the capital city Dodoma come with shorter lease terms which may not be renewable.
#6. Nigeria
The Federal government of Nigeria regulates foreign acquisition and control of lands in the country. This is done under the Acquisition of Land by Alien Laws (ALAL). Under this law, foreigners are only allowed a leasehold on the land for a duration of 99 years.
The concept of freehold land ownership was abolished by the Land Use Act of 1978. This significant legislation shifted land holdings to a state-controlled system, transforming freehold ownership into leasehold rights. Essentially, the governor of each state now oversees and administers all land within their jurisdiction. Leaseholders are required to apply for renewal upon the expiry of their lease. Additionally, the Act empowers the federal government and its agencies to possess land titles.
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#7. Zambia
Zambian’s latest land policy restricts foreigners from owning land in the country. Initially, this wasn’t the case, foreigners could freely buy and own lands. But after acquiring large parcels of land, most foreigners sell the land back to Zambians at exorbitant prices.
Using its new policy, the government also hopes to stop the trend of foreigners acquiring the choicest lands. In the new policy, foreigners can only get a 99-year lease on land.
#8. Kenya
Foreigners can buy land in Kenya, but there are certain restrictions and conditions that they must adhere to. The Kenyan Constitution and the Land Control Act govern land ownership by non-citizens, ensuring that foreign investments are regulated and aligned with national interests.
One of the primary restrictions is that foreigners cannot own freehold land in Kenya. Instead, foreigners can only acquire leasehold land, which is typically granted for a maximum period of 99 years. Leasehold land provides the right to use the land for a specified period, after which the lease can be renewed.
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Additionally, there are certain types of land that foreigners are prohibited from owning. Agricultural land, for instance, is generally off-limits to non-citizens unless special permission is granted by the President of Kenya. This restriction is aimed at safeguarding local agricultural interests and ensuring food security.
Despite these restrictions, Kenya remains an attractive destination for foreign real estate investors. The country’s robust economic growth, strategic location, and improving infrastructure offer significant opportunities. Urban areas like Nairobi and Mombasa are particularly popular for commercial and residential real estate investments.
Conclusion
Without a doubt, real estate in Africa is a profitable venture albeit it is not without risk. Many African countries are still very volatile in terms of policies and strength of law.
This makes investing in such countries a hassle as you can never be too sure of which way the government will lean next. Regardless, real estate in Africa consistently yields a great return on investment for those who are brave enough to brave the risk.
Also, from all indications, this bearish trend isn’t over yet. Africa’s increasing rate of urbanization shows that there is still enough room for investors who are yet to join the bandwagon. Do you have questions about investing in Africa’s real estate?
You can check out our real estate directory for some opportunities and sign up for our free membership to be notified when new real estate opportunities are listed. If you are still not satisfied, drop your questions in the comment section below. We will do our best to provide relevant answers that can guide you through your investment journey.
