The Problem: 

The World Bank Group estimates that by 2030, 3bn, or 40 percent of the world’s population will need new housing units.In Africa, this affordable housing demand is significantly more prominent due to: 

• Young demographic 
• Growing GDP
• Rapid pace of urbanisation 

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Moreover, the lack of supply of affordable housing is another key factor in the housing shortage as Africa’s housing market deals with: 

• Limited developers with the technical and financial strength to construct large-scale projects
• Limited financing for affordable housing segment

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By 2050 African countries will have had to find accommodation in urban settlements for 900m new home seekers. The scale of this demand is unprecedented, the developed world having had over two and a half centuries to construct the same amount of accommodation. 

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Key Demand Drivers: 

Demographic: By 2050 the population of the African continent will have doubled, meaning that the region will have added 3.5m people per month. 

• Africa will contribute more than half of the world’s total population growth through to 2050 and more than ¾ of that growth up to 2100.

Urbanisation: African cities become the new home to over 40,000 people every day, many of whom find themselves without a roof over their heads

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Key Indicators of sluggish supply:  

Africa faces a shortfall of at least 51 million housing units as demand continues to outstrip supply by more than 5x in many African Countries: 

• Kenya’s housing shortage is estimated at 2 million units 
• Nigeria is in want of 17 million units 
• Ivory Coast sees a shortfall of 500,000 units

Residential holdings comprise just 2.5% of listed property funds on the continent: 

• Compared to 25% in other developing markets
• 15% in developed countries

Chronic housing deficits, lack of funding, and affordability gap are common as the majority of developers are focused on the top-end of the market, with large volume being shunned in favour of high-margin, luxury properties.

• With African urban centres have the second-highest inequality measurements in the world, this does not augur well for the lower end of the population 

Solution: 

Clearly then, the need for housing in the continent’s major markets is only likely to expand further. Addressing that, however, will require rethinking how affordable units are delivered, given that the current pipeline – whether for public or private projects – fails to keep up with demand.

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As such, the need for both financing of projects and speed of execution are paramount in African urban centres catching up with the shortfall in affordable housing units. 

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Modular Construction: With the key advantages of modular construction being the speed of execution and the potential savings in large volume projects, it is the perfect solution for bridge the current demand supply gap for urban Africa. 

• Time Saving: 40% to 80% savings in execution time 
• Cost Saving: Potential 30% reduction in cost 

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Financing: Visibility on cost, portability, and flexibility of Modular construction would also support increased financing opportunities in the affordable housing space as the unit would not be a fixed asset but instead could be moved around to different locations as required. This adds a layer of flexibility to both governments and enterprises as it ensures that assets will not be sold at a discount or result in NPAs. 

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