Population growth and the need for improved critical infrastructure is driving construction activity across Africa, according to the 2024 International Construction Market Survey (ICMS) published by Turner & Townsend.
The report shows that although cities across Africa are some of the least expensive for construction globally, accelerating activity is pushing up prices.
With investment driven in the commercial property sector, Harare, Zimbabwe is the most expensive African city to build in with average construction costs having risen to $1 993 per square metre. In South Africa, Cape Town is the most expensive city to develop with construction costs having reached $1 088 per square metre, up from $1 061 in 2023. The cost to build a CBD high-rise prestige office in Cape Town now stands at $1 284 per square metre.
The increasing construction pipeline, which includes investment in data centres, are elevating costs. Prices are forecast to grow a further 25% during 2024 in Lagos, Nigeria (from its current $1 540 per square metre), 6.8% in both Cape Town and Johannesburg (the latter now at $1 010 per square metre) and 6.4% in Kigali, Rwanda (currently $1 131 per square metre).
Alongside inflation, the construction industry faces skilled labour shortages and uncertainties over financing, causing projects to lengthen – by over five weeks on average in Cape Town, Harae, Lagos, and Nairobi.
“It’s a time of rapid change for the continent. In 25 years’, time, over a quarter of the world’s population will live in Africa, and governments are alive to the need to boost infrastructure and real estate investment to keep up with the pace of demographic growth. Data centres and commercial spaces are some of the assets already benefitting. Energy facilities will also reap the rewards of increasing finance to protect against ongoing issues with power security,” comments Wendy Cerutti, director and Head of Real Estate, Turner & Townsend South Africa.
“For the construction sector, this means an increasingly active pipeline. Against this backdrop, skilled labour shortages, uncertainties over financing and lengthening construction programmes are major concerns. To tackle these, the sector should aim to improve efficiency and start laying long-term plans where possible. In this way, it can make the most of the opportunities to come.”
Globally, the ICMS report’s survey of 91 global cities shows the US continuing to dominate the rankings of the most expensive places to build, with six US cities in the top ten. New York has retained its position as the most expensive market to build in for the second year running at an average cost of US$5 723 per square metre.
Worldwide deglobalisation trends and nearshoring prompted by supply chain disruption and geopolitical tensions are seeing growth and investment in manufacturing, especially in emerging international markets such as Malaysia, Indonesia, Nigeria, Brazil, and Mexico. Labour constraints remain a significant inflationary factor globally, and all but three of the 91 markets surveyed reported an impact from a shortage of skills.
Ranking of African markets: