Africa’s hospitality sector continues to attract investment from a broad spectrum of international and African investors. The most popular investment opportunity at the moment includes midscale urban hotel assets of 150 rooms, which are located close to corporates, conferencing centers and transport nodes, accorind to a recent report by HTI Consulting.
Top Investment Markets in West Africa
The Top Investment Hospitality Markets in West Africa are Abidjan, Dakar, Cape Verde and Accra, while the bottom five are Bamako, Niamey, Ouagadougou and Conakry. While other markets provide opportunity, the possibility of security or political unrest can hamper performance and cashflows for long periods in West Africa.
East Africa Attracts Investors
In East Africa, the top investment hospitality markets are Kampala, Addis Ababa, and Dar es Salaam, whilst the bottom are Nairobi (over supply) and Kigali (over supply and limited demand).
With the current highest Average Daily Room rates (ADRs) on the continent, Addis Ababa is touted as an attractive option, but the market remains challenging due to a lack of forex, which is resulting in developers battling to complete their hotel developments. “However, if a developer has the proper and adequate financial backing and the correct project team to get a half completed development finalized, then the “opportunity is there,” according to HTI analysts.
Dar es Salaam
A market with plenty of opportunity, the city has performance challenges in recent years due to a lack of direction in policy for private sector, increased supply in the CBD node and reduced levels of demand. Whilst the CBD node is experiencing occupancy and ADR pressure, the outlook on the Peninsula is more optimistic.
Kampala
As one of the next hubs for investment, Kampala’s current limited branded supply, and with the oil prices entering a recovery period, the City provides a “strategic and attractive opportunity for investors.
Kigali
If an investor is able to buy an unbranded hotel in Kigali and adequately convert into an international brand then there is upside if well located. Whilst the Government in Rwanda remains pro-active in attracting investment and high economic growth is projected, the growth is off a low base and demand volumes for the City remain limited when compared to other East African cities.
