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Greater Abidjan is experiencing a geospatial upheaval in the residential real estate sector as the city expands and new construction hotspots are established, driven by Côte d'Ivoire's strong economic performance and sustained demographic growth.
Côte d'Ivoire's economy has doubled in size over the past 10 years. As a result of this growth, the city of Abidjan, the economic hub of Côte d'Ivoire, is undergoing an urban metamorphosis common to many African metropolises.
Against a backdrop of land scarcity in Abidjan's communes, and increasing urban mobility projects on Abidjan's outskirts, construction is becoming more vertical, and the city's outlying areas (Songon, Bingerville, Grand Bassam, Anyama) are expanding and gentrifying. Between 2014 and 2021, the number of inhabitants on the outskirts of the city will increase by a factor of 2.5.
While for most players, the attractiveness of the real estate market seems a foregone conclusion, behind this apparent real estate boom, developers are going bankrupt. Homes are not finding buyers, short-scheduled construction projects are dragging on, while other players are enjoying success.
Sustained demand remains poorly addressed
By 2023, Greater Abidjan will have a significant housing deficit, with demand for residential housing growing every year. The majority of the 1.4 million households in Greater Abidjan wish to acquire a home, but only a small proportion of these households have the necessary savings or salary levels to obtain a mortgage from financial institutions under current market conditions.
On the supply side, more than 230 real estate developers were licensed in 2023, but the growth in the number of players has not yet allowed the market's production capacity to catch up.
Three major findings emerge from the changes that have taken place in the supply chain in recent years:
- A substantial proportion of the sector is informal. Nearly ¾ of the supply would be produced by private developers, with the remaining quarter being the work of the private sector. The production capacity of the Top 20 and the market is estimated through a census of projects completed over the last 5 years.
- A trend towards homogenization of supply in the Abidjan market: same construction locations, same project sizes, same construction targeting the same segments, with a risk of saturation at the top end of the market and neglect of the low-cost and social housing segments*.
- Change in developer sophistication: The penetration of international companies with financing and construction techniques is increasing the average size of developments. More and more large-scale projects are springing up on the outskirts of the city.
The rental segment of the residential real estate sector is not immune to the difficulties observed in the residential real estate market. Upward pressure on rents has been observed in all communes, with a tenfold effect in the most attractive ones. A benchmark of rents by district and housing type has enabled us to project a heatmap of rents in Abidjan and acquisition costs per m2 .
The large number of construction sites currently underway is insufficient to fill a growing stock of latent demand. The gap is of the order of half a million homes. A 10-fold increase in production capacity would be needed to absorb this growing stock.
The analysis of supply and demand leads to surprising results, often completely uncorrelated. This helps to dispel preconceived ideas about the booming property development market in Abidjan's capital.
In this context, the challenge for developers is to structure a real estate offering that meets the expectations of an emerging bankable middle class, which would represent a real growth driver for them.
*Building trends have been obtained following the consolidation of benchmarking results from +70 promotions currently underway.
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