The warehousing and logistics sector has grown by nearly 25 percent over the last ten years in Africa.
There are a variety of factors driving demand, including the need for resilient distribution networks and better cost efficiencies, growing storage space requirements for goods, and the rise of eCommerce (Knight Frank).
Companies across manufacturing, fast-moving consumer goods, pharmaceuticals, import and export, automotive, retail and eCommerce require distribution networks that are increasingly sophisticated. However, there is a general shortage of Grade A warehousing space in Africa.
With the cost of moving goods in Africa being almost three times higher than in developed countries, accounting for as much as 75 percent of retail prices, Africa is in need of investment and modernisation across the warehousing and logistics sectors.
Though economic fortunes vary across African nations, the continent’s billion-plus consumers are a source of growing demand. Manufacturers and retailers want to base their operations and distribution centres within easy reach of large pools of customers to improve service levels and to drive efficiencies.
East Africa is the dominant source demand for industrial space, which is set to grow at 6 percent annually in Ethiopia, and at 5 percent in Uganda and almost 4 percent in Kenya (JLL). Organisations such as Africa Logistics Properties (ALP), Tilisa developments, Improvon and Actis are leading in developing multiple industrial parks in Kenya and across the East African region.
There is currently a 103-acre logistics and warehousing park being developed in Nairobi by IMPACT, a joint venture between Improvon and Actis.
Demand for warehousing in Nigeria is being driven by the growth of manufacturing industries, its special export promoting zones and infrastructure developments. Most warehouses are centred in and around Lagos due to the presence of industrial parks and proximity to seaports and airports.
The growing middle class and urban-educated population have fuelled demand for retail stores, shopping centres and eCommerce, which require warehousing networks to support their operations, particularly around Lagos.
The market is very fragmented and full of small local players, but it has started to be regulated by local authorities. The Nigerian Export Promotion Zone Authority has set up an SEZ Investment Company which has raised USD$250m for setting up industrial parks in Lagos, Abia and Katsina. ALP who are very active in Kenya is also looking to make significant investments in Nigeria.
South Africa has seen steady demand and investment in the warehousing sector owing to eCommerce, the affordability of industrial property and the good returns this asset type delivers to investors.
Organisations such as Atterbury, Stor-Age and Growthpoint are key developers in this space. Atterbury is currently developing a 300,000 square metre mixed-use facility in Cape Town, which has a big warehousing component. Iron Mountain has delivered a number of projects in Johannesburg, Cape Town and Durban as they continue to invest locally to increase capacity for document storage.
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