These 5 sectors will drive real estate growth over the next 10yrs

…as institutional investment rises 260% to $1.8bn in 6yrs

There is high expectation among real estate analysts that five emerging sectors, also called alternative sectors, are to drive the sector’s growth in Nigeria and Africa in the next decade.

These sectors are purpose-built student accommodation (PBSA), industrial and logistics real estate, data centres and technology-driven spaces, healthcare real estate, and mid-market residential and young professional housing.

They differ significantly from the traditional and familiar sectors, including residential, commercial office space and retail developments, which attracted major institutional investment that rose 260 percent to $1.8 billion in 2020, up from N0.5 billion in 2014.

A recent report by Fotren and Company, an online real estate research platform, states that, over the past few decades, these familiar sectors offered what investors required, including dollarised rents from multinational tenants, a growing domestic middle and upper class, and financing structures modelled on the South African market.

Olapeju Aderemi of Insight & Reports at Fortren and Company notes that “as the market continues to mature, the unit economics for alternative property sectors are becoming more attractive.”

He added, “data that we are tracking across student housing, healthcare and data centres shows a growing institutional appetite in these alternative assets, and we believe that a number of them will drive Africa’s real estate growth over the next decade.”

Purpose-built student accommodation (PBSA)

This is a frontline alternative sector that is gaining traction across institutions, especially in Nigeria, where the rise in annual student enrolment is pushing demand northwards, and attracting notable individual and institutional investors like UPDC, Student Accommod8, Acorn Holdings, Eris, etc.

The investment case for African PBSA, according to Aderemi, begins with a supply gap that is both quantified and widening, noting that student housing stock across the continent currently meets less than 30 percent of demand. Against that gap, Africa has 1,331 officially recognised higher education institutions with a gross enrolment ratio (GER) of 9 percent, compared to a global average of 42 percent.

Industrial and logistics real estate

The growth in e-commerce alongside trade liberalisation is driving the growth of industrial and logistics real estate across Africa. Africa’s e-commerce market is projected to grow at a Compound Annual Growth Rate (CAGR) of 13.25 percent, reaching over$1 trillion by 2033.

Urbanisation is concentrating consumer demand in dense metropolitan corridors, and an expanding middle class is shifting consumption from informal markets toward supermarkets, pharmacy chains, and organised retail, all of which require Grade A warehousing, cold storage, and integrated logistics networks to function at scale. That means huge opportunities for investors in that space.

The African Continental Free Trade Agreement (AfCFTA) compounds this, aiming to eliminate 90 percent of intra-African tariffs and catalyse integrated value chains along the Abidjan–Lagos, Cairo–Alexandria, Johannesburg–Pretoria, and Nairobi–Kampala corridors.

Data centres and technology-driven spaces

Africa’s data centre opportunity is a function of demand that already exists, a supply gap that is quantified, and regulation that is creating captive markets. Sub-Saharan Africa accounts for approximately three-quarters of global mobile money transaction volume and 65–66 percent of total transaction value out of a global total of $1.68 trillion.

The region is projected to be the fastest-growing in mobile data traffic globally, at approximately 37 percent annually through 2028. Enterprise adoption of cloud services and SaaS is simultaneously shifting institutional IT workloads into co-location and hyperscale facilities. All of this requires physical infrastructure.

Africa’s total data centre capacity currently sits at 360MW. McKinsey projects demand will grow from 0.4GW in 2025 to approximately 2.2GW by 2030, a fivefold increase requiring an estimated $10 billion to $20 billion in new investment, excluding fit-out costs. Against 126 operational facilities, 52 additional centres are in development or planning, pointing to a 32-percent capacity expansion by 2030, significant, but likely insufficient relative to demand.

Healthcare real estate

Investment opportunity in this sector is underpinned by two converging demand pressures, which are growing middle class able to pay for quality care, and a disease burden that is shifting the model of care delivery toward outpatient and specialist formats that require purpose-built real estate.

A growing middle class, rising per-capita incomes, and the rapid expansion of private health insurance are expanding the addressable market for private healthcare. Simultaneously, the rapid rise of non-communicable diseases — diabetes, hypertension, cancer, and cardiovascular illness is restructuring how care is consumed.

Outpatient revenue has surged 45 percent since 2020, nearly triple the growth rate of inpatient services. The implication is direct—demand is shifting toward stand-alone dialysis centres, day-surgery clinics, diagnostic imaging centres, and medical plazas, all of which require compliant, purpose-built facilities that the existing stock cannot provide, thus creating opportunity for investors.

Mid-market residential and young professional housing

Africa, especially Nigeria’s demographic profile, is the major driver of the opportunity in the mid-market residential property. The continent is home to approximately 1.5 billion people, projected to reach 1.9 billion by 2035, with almost 70 percent under the age of 30.

“This cohort is entering the workforce, forming new households, and generating sustained housing demand across every major urban market. 45.6 percent of Africa’s population, approximately 720 million people, now live in cities,” Aderemi stated.

According to him, within the next decade, Luanda and Dar es Salaam are projected to join Cairo, Kinshasa, Lagos, and Greater Johannesburg as megacities, exceeding 10 million inhabitants, broadening the pipeline of urban housing demand well beyond a handful of gateway cities.