In the African Hotel Report 2015, released today at the African Hotel Investment Forum in Addis Ababa, Hotel Partners Africa identified the top ten opportunities for investors keen to development hotels in Africa.
In West Africa, Nigeria presents the biggest opportunity, with the strongest economy on the continent matched with only 34 branded hotel bedrooms per million, population. To set this into context, this compares with 6,754 branded hotel bedrooms per million population in North America and 2,432 bedrooms per million in Europe. Ghana with 59 bedrooms and Cote D’Ivoire with 61 bedrooms also present great opportunities with very strong unrequited demand.
The best opportunities in East Africa include Ethiopia (9 bedrooms/million) Rwanda (29 bedrooms/million) and Tanzania (63 bedrooms/million), whilst Angola (48 bedrooms/million), Mozambique (79 bedrooms/million) and Zambia (122 bedrooms/million) present the lowest supply in southern Africa.
There is real under supply in central Africa, but although great development potential exists in the region, the political and economic risks tend to suggest that new international investment will be limited in the immediate future. That said the returns will be high if the right project can be identified. North Africa has traditionally had the greatest level of development, although even here opportunities exist: Algeria is relatively under-developed, with only 110 bedrooms per million population.
Hotel values in the majority of these locations have been growing strongly, and in 76% of African countries, hotel investment returns have been higher than blended averages across other property investments. 8 countries have shown growth of over 6.0% per annum over the last six years including Zambia and Ghana at 6.5%, Tanzania 6.3% and Angola 6.2% from the most under-supplied opportunity markets.
David Harper, Head of property services at Hotel Partners Africa said “This data shows that despite difficulties related to falling commodity prices and currency values in various countries in sub-Saharan Africa, hotel ownership provides an exciting investment opportunity where rewards can be in excess of the risks involved. Investment is moving past the traditional markets of Egypt, South Africa and Morocco, where rewards are not as high, because of the larger existing supply.”