Warehousing across Africa

The warehousing sector in Africa has been steadily growing over the past decade. 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 e-commerce.

Companies across manufacturing, fast-moving consumer goods, pharmaceuticals, import and export, automotive, retail and e-commerce require distribution networks that are increasingly sophisticated. However, there is a general shortage of Grade A warehousing space in Africa.

Across the continent, declining land supply combined with increasing demand is driving up land prices and increasing competition between owner occupiers compete and institutional investors for the best sites. In key cities land values in established industrial clusters have grown significantly over the past five years, such as Lagos (58 percent) and Nairobi (42 percent).

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.

There are active industrial parks in 47 African countries, with the largest percentages in Morocco, Ethiopia and Uganda.

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

East Africa is the dominant source of demand for industrial space. 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.

Infrastructure investments such as the Chinese-built ring-road network in Nairobi are prompting some occupiers to explore areas beyond traditional industrial nodes. Some periphery cities have seen industrial land values appreciate by as much as 35 percent in the Namanve (Uganda) for example over the past five years.

West Africa

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 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 a special economic zone 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

South Africa has seen steady demand and investment in the warehousing sector owing to e-commerce, 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. Iron Mountain has delivered many projects in Johannesburg, Cape Town and Durban as they continue to invest locally to increase capacity for document storage.

For further information contact:

Wendy Cerutti
Director, South Africa
e: [email protected]