Acknowledged as one of the continent’s leading hospitality investment experts, Wayne Troughton of HTI Consulting shared unique insights on the Top 5 and Bottom 5 Hospitality Investment markets in Africa.
According to Troughton, the hospitality sector continues to attract investment from a broad spectrum of international and African investors.
“We are tracking investment from structured funds, predominantly from Europe and the Middle East; an increasing percentage of High Net Worth Individuals (HNWIs) from Europe, Middle East, and Africa itself), Owner-operators that invest from Europe, Africa and the USA), as well as Family Offices Middle East, the UK, Europe, and SA.”
The most popular investment opportunity at the moment includes midscale urban hotel assets of 150 rooms, which are located close to corporates, conferencing centres and transport nodes.
Top Hospitality Investment Markets in East Africa
In East Africa, the Top Investment Hospitality Markets are Kampala, Addis Ababa, and Dar es Salaam, whilst the bottom are Nairobi (oversupply) and Kigali (oversupply and limited demand).
Troughton names Kampala is one of the next hubs for investment. He says 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.”
With the current highest Average Daily Room rates (ADRs) on the continent, Addis Ababa is touted as an attractive option, but Troughton cautions that the market remains challenging due to a lack of forex, which is resulting in developers battling to complete their hotel developments.
However, he notes that 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,” he adds.
Dar es Salaam
A market with plenty of opportunities, the city has performance challenges in recent years due to a lack of direction in policy for the 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.
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.
Top Hospitality Investment Markets in West Africa
According to Troughton, 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.
Currently, the most attractive markets are Cape Verde, Senegal, Benin and Ghana. While other markets provide opportunity, the possibility of security or political unrest can hamper performance and cashflows for long periods.
As an industry platform for deal-making, Troughton hopes to use the API Summit platform to meet and engage with investors who are active and operate in the hotel and mixed-use real estate development market. Adding that, “We would like to meet and talk with bankers interested in exposure in the African hotel space, and for them to connect me with their colleagues in other African countries.”