Real estate investment trends in East Africa

East Africa's real estate sector is undergoing a significant transformation, with a shift towards logistics, student housing, and healthcare as key investment trends. As funding gaps grow, blended finance is emerging as a crucial alternative for investors looking to capitalize on these emerging opportunities. Niyi Adeleye, Head of Real Estate Finance for Africa Regions at Standard Bank, recently discussed these trends in an interview with CNBC Africa. The rise of logistics and warehousing, driven by the African Continental Free Trade Agreement and e-commerce, is reshaping investor interest in the region. Adeleye highlighted Standard Bank's efforts to support infrastructure development in collaboration with sponsors, particularly focusing on transportation and connecting corridors in East Africa. As the region moves towards regional integration, real estate plays a vital role in providing last-mile connectivity for commercial activities. Warehousing and industrial sectors are expected to benefit significantly from this integration, attracting a growing interest from investors. Adeleye emphasized the importance of developing critical operators at a domestic or pan-African level to capitalize on these opportunities at scale. Additionally, alternative asset classes such as student housing and healthcare are gaining traction among institutional investors. Adeleye pointed out a shift in capital flows towards these sectors, driven by impact investors seeking social alignment with development goals of various countries. The focus on these alternative segments reflects a broader trend towards socially impactful real estate investments. Adeleye also discussed the concept of blended finance, which combines public and private sector funding to create sustainable financing solutions for projects. Multilateral organizations are increasingly involved in mitigating market risks associated with alternative investments, such as student housing and medical services. They aim to address challenges like foreign currency and interest rate risks to enhance project bankability. Adeleye highlighted the opportunities in middle-income housing and digital real estate, including data centers, driven by the growth of internet penetration in the region. However, managing currency risks remains a key concern for investors in these dynamic markets. As East Africa's real estate landscape evolves, investors must be prepared to navigate the complex interplay of opportunities and challenges in the sector.