How are high interest rates changing project financing for developers?

Central banks across Africa have raised benchmark rates to multi-year highs—often exceeding 25%. This has made traditional bank lending expensive and limited, forcing developers to explore alternative financing such as mezzanine funding, blended capital, and public-private partnerships (PPPs) to keep projects viable.

Why is poor infrastructure such a major barrier to real estate funding in Africa?

Chronic infrastructure deficits in transport, power, and utilities directly increase construction and operational costs. For developers, this means higher initial capital outlay and longer project timelines. For lenders, it signals higher risk, as unreliable power and poor access can negatively affect a property's occupancy rates and long-term value, making the project less financially viable.

What is the impact of ESG and technology demands on securing project financing in Africa?

Lenders and international investors increasingly require projects to meet global standards for sustainability (ESG) and technology integration. Developers who cannot afford to incorporate green building designs, smart technologies, or advanced data analytics platforms risk being excluded from modern financing opportunities, as these features are becoming a new standard for project bankability.

What are the main disruptors affecting real estate funding in Africa in 2025–2026?

The three biggest disruptors are elevated interest rates and tight credit conditions, currency volatility and sovereign debt distress, and political and regulatory uncertainty. Together, these factors have redefined the cost, structure, and accessibility of project financing across commercial, residential, mixed-use, and hospitality sectors.

Which real estate sectors in Africa are most affected by these disruptors?

While all sectors are impacted, the effects vary: Hospitality is highly sensitive to financing costs and currency volatility due to its less predictable revenue streams. Residential and Mixed-Use projects are constrained by tight mortgage markets and the high cost of developing in areas with poor utility access. Commercial developments are pressured to integrate green technology and secure reliable infrastructure to attract and retain tenants.

What new opportunities are emerging from these disruptions?

Disruption has sparked innovation. Developers are capitalizing on ESG-driven funding, secondary city growth, and infrastructure-linked smart-city projects. Impact investors and climate-aligned funds are also filling the financing gap for sustainable housing, logistics, and mixed-use developments.

How can Amimar International help African developers and investors navigate this environment?

Amimar International (www.amimarinternational.com ) provides expert advisory services to structure, finance, and position projects for success amid today’s complex market realities. With decades of experience in commercial and mixed-use project finance, Amimar helps clients secure funding, mitigate risk, and turn disruption into opportunity.

Africa’s Real Estate Reset: How Funding Disruptors Are Redefining Opportunity in 2025–2026

MJ Furey
Oct 8
7 min read

Updated: Oct 14

The African commercial real estate sector stands at a critical juncture as it navigates an increasingly complex financing landscape in 2025 and 2026. With the continent's real estate market projected to reach $17.64 trillion by 2025, representing substantial growth opportunities, developers and investors face unprecedented challenges in securing funding across commercial, residential, mixed-use, and hospitality segments. This analysis identifies the five most significant disruptors reshaping the financing ecosystem and examines their implications for different property categories.

1. Elevated Interest Rates and Tight Credit

After a decade of easy money, African central banks have tightened aggressively to contain inflation, pushing policy rates to multi-year highs—about 27.5% in Nigeria and 30% in Ghana by late 2024. The result: double-digit borrowing costs that have redefined project viability across sectors.

Traditional bank loans and mortgages are now prohibitively expensive; in Nigeria, for example, mortgage rates of 15–25% have left home ownership accessible to only a small minority, with mortgage penetration under 5% versus 30–40% in South Africa. Commercial and mixed-use developers are delaying or downsizing projects, while hospitality ventures struggle to secure long-term local financing as international investors demand higher risk premiums.

Meanwhile, banks (enticed by high-yielding government bonds) have shifted lending away from private projects, deepening the credit squeeze. According to the European Investment Bank, private-sector credit in Sub-Saharan Africa has fallen from 56% of GDP in 2007 to 36% in 2022, underscoring the liquidity crunch facing developers.

In short, high interest rates and constrained liquidity now define the new normal for African real estate. Until inflation eases and central banks reverse course, elevated financing costs will remain the single greatest obstacle to deal flow and development momentum.

2. Infrastructure Financing Gaps and Energy Instability

Africa’s infrastructure deficit, with annual financing needs estimated between $130-170 billion, poses a significant challenge as this shortfall limits essential infrastructure, making commercial real estate development less viable and attractive to lenders and end users. Power supply instability exacerbates these issues, disrupting construction timelines, increasing operational costs, and reducing property attractiveness.

The continent needs $25-50 billion annually for universal energy access by 2030, plus $200 billion for climate commitments, but current funding favours loans over grants, exposing African nations to new debt. Commercial properties, such as office buildings and industrial facilities, require reliable power infrastructure to attract tenants, making developments in areas with unstable electricity supply less competitive. Residential development in areas lacking basic infrastructure struggles to secure financing due to higher risks and lower demand. Mixed-use projects require sophisticated infrastructure coordination across residential, commercial, and retail components, increasing complexity. Hospitality developments, like hotels, demand consistent power, water, and telecommunications infrastructure, making infrastructure gaps unviable.

3. Currency Volatility and Debt Distress

Sharp currency devaluations and sovereign debt pressures are the third major disruptor to African real estate funding. Over the past two years, several economies have faced steep depreciation—the naira lost over 40% of its value after Nigeria floated its currency in 2023, while Ghana’s cedi and Egypt’s pound also plunged amid IMF-backed reforms and high inflation.

These swings have driven up the cost of imported materials and inflated debt-service obligations for developers with foreign-currency loans. For international lenders, exposure to volatile currencies has prompted higher risk premiums and shorter loan tenors, while local developers struggle with cost overruns and delayed completion schedules.

At the same time, many African nations face rising debt-service burdens; the IMF reports that over 20 countries are in or near debt distress, leaving governments with limited fiscal room to support infrastructure or housing programs. Local banks, drawn to government bonds offering double-digit yields, have reduced real estate lending capacity even further.

For investors, the result is heightened caution and a premium on currency stability and fiscal transparency. Consequently, developers who can secure local-currency financing, hedge FX exposure, or anchor projects in sectors with foreign-currency revenues (e.g., tourism, logistics) will be better positioned to withstand the turbulence.

So, where does this leave developers and businesses who want to grow and expand? Can can these choppy waters be navigated?

Turning Disruption into Opportunity: Where Africa’s Real Estate Market Is Finding New Growth

While high interest rates, currency volatility, and regulatory headwinds have reshaped Africa’s real estate landscape, they are also creating new lanes of opportunity for forward-looking developers and investors. The funding environment of 2025–2026 is not just about surviving disruption; t is about redefining how and where value is created. Across the commercial, residential, mixed-use, and hospitality sectors, three powerful opportunity themes are emerging.

1. ESG-Driven Investment and Sustainable Development Premiums

The shift toward ESG-compliant financing has created substantial opportunities for developers who can meet sustainability criteria and access the growing pool of ESG-dedicated capital.

Green Building Premium Capture

ESG-linked property finance has grown by 41% annually since 2018, reaching $4.2 billion by mid-2024, with green buildings commanding rental premiums of 10-15% in major African markets. Developers who can achieve international green building certifications are accessing both preferential financing terms and premium rental income.

The Green Building Council of South Africa reports that certified green buildings achieve 8-12% higher rental rates and 6-10% higher occupancy rates compared to conventional properties. These premiums, combined with reduced utility costs, typically improve project returns by 15-25%.

Affordable Housing ESG Integration

The $1.4 trillion affordable housing opportunity across Africa has attracted significant ESG-focused capital, with investors seeking projects that deliver both financial returns and measurable social impact. Ghana alone requires 85,000 homes annually to address its housing deficit, representing immediate development opportunities for projects meeting ESG criteria.

Affordable housing projects incorporating sustainable design, community development components, and proven social impact metrics are accessing blended finance structures with effective borrowing costs 3-5 percentage points below commercial rates.

2. Expansion Beyond Gateway Cities: The Secondary Market Advantage

Disruption has also pushed investors to look beyond Africa’s established urban hubs. As macro and policy risks increase in megacities like Lagos, Nairobi, and Johannesburg, developers are discovering stronger margins and less competition in secondary and mid-tier cities.

Markets such as Kigali, Accra, Mombasa, Lusaka, and Abidjan are now attracting institutional attention for their combination of lower land costs, improving infrastructure, and rising consumer demand. Many of these cities offer streamlined permitting processes, investment incentives, and urban expansion policies that favour new entrants.

In these environments, mixed-use community developments, logistics parks, and retail corridors are gaining traction as anchor assets of urban growth. Secondary cities also present opportunities for affordable hospitality ventures and flexible commercial spaces, particularly as remote work and decentralized business models spread across the continent.

The strategic advantage lies in being an early mover - securing land and developing infrastructure in cities positioned for exponential growth. Investors who diversify geographically are also better positioned to hedge sovereign and regulatory risk, creating a balanced, continent-wide portfolio strategy.

3. Infrastructure-Adjacent Development and Alternative Energy Integration

The massive infrastructure financing gap has created opportunities for developers who can integrate infrastructure solutions directly into their projects, reducing dependency on government provision while capturing additional revenue streams.

Solar and Renewable Energy Integration

Africa's renewable energy potential presents unprecedented opportunities for real estate developers to integrate energy generation capabilities into their projects; the continent requires $25-50 billion annually to achieve universal energy access by 2030, plus an additional $200 billion yearly for climate commitments, creating substantial demand for private sector energy solutions.

Mixed-use developments incorporating solar generation, battery storage, and micro-grid capabilities can command premium rents while generating additional revenue from excess energy sales. Projects in markets with unreliable grid power, such as Nigeria and South Africa, have demonstrated ability to charge 20-30% premium rents for guaranteed power supply.

Infrastructure-Enabled Development Opportunities

Developers who can finance and construct their own supporting infrastructure are unlocking previously inaccessible land at substantial discounts. Kenya's Naivasha Special Economic Zone and Ghana's $60 billion Petroleum Hub demonstrate how strategic infrastructure investments create massive real estate development opportunities.

Private developers partnering with governments on infrastructure provision are securing long-term concessions and development rights that create sustainable competitive advantages. These arrangements typically provide 20–30-year exclusive development rights in exchange for infrastructure investment commitments.

4. Regulatory Arbitrage and Cross-Border Investment Platforms

Complex regulatory environments have created significant opportunities for developers and investors who can navigate multiple jurisdictions effectively and provide regulatory compliance services to international investors.

Cross-Border Investment Facilitation

The fragmentation of regulatory systems across African markets has created opportunities for platforms that can aggregate investment opportunities and provide standardized due diligence and compliance services. Companies providing these services are capturing significant fee income while facilitating larger-scale cross-border investments.

Digital platforms that can verify property titles, conduct regulatory compliance checks, and facilitate cross-border transactions are commanding premium valuations. PropTech companies addressing these regulatory challenges are attracting significant venture capital investment, with multiple platforms raising $10-50 million funding rounds in 2025.

Joint Venture Partnership Opportunities

Regulatory complexity has increased demand for local partnerships, creating substantial opportunities for African developers to joint venture with international investors seeking local expertise. These partnerships typically involve 60-70% profit sharing arrangements favouring local partners who provide regulatory navigation, land access, and construction management.

Joint venture structures are particularly attractive in markets like Nigeria, Ghana, and Kenya, where foreign investment regulations favor local partnerships. Successful joint ventures have delivered returns exceeding 25% annually while providing foreign partners with regulated market access.

From Challenge to Catalyst

Africa’s real estate funding landscape is evolving through constraint, but it is precisely these constraints that are revealing new, investable frontiers. The convergence of disruption-driven opportunities represents a fundamental reshaping of African real estate markets, creating substantial value creation potential for investors and developers who can navigate the challenges effectively while capitalizing on the emerging opportunities. Success requires sophisticated risk management, local market expertise, and willingness to adopt innovative financing and operational approaches that align with the continent's evolving economic landscape.

Amimar International: Your Strategic Partner in Complex Financing Landscapes

In this challenging environment, Amimar International stands uniquely positioned to guide commercial real estate developers through the complex funding landscape. With extensive experience in middle-market project finance and deep expertise across international markets, Amimar International has established a longstanding reputation for providing high-caliber, professional advisory services to commercial real estate projects seeking funding in the $5-250 million range.

Amimar International's expertise spans the full spectrum of commercial real estate categories, from office and retail developments to mixed-use projects and hospitality ventures. We provide developers with the sophisticated analysis and strategic guidance necessary to secure financing despite prevailing market disruptions.

Ready to navigate the complex funding landscape for your African commercial real estate project? Contact Amimar International today to leverage our proven expertise in securing financing solutions that address the unique challenges and opportunities in today's dynamic African real estate market. Our team of project consulting and private credit experts is prepared to optimize your project's funding prospects through comprehensive risk assessment, strategic planning, and market-tested financing approaches.