Real estate investors chasing the myriad opportunities in Africa are finding it easier than ever to do business, but the challenges that remain are significant.

The African real estate market is a complicated one, influenced by good and bad changes in governance and the quality of related infrastructure and the strength of legal frameworks. Meanwhile, the impacts of international politics, urbanisation and volatile oil prices have had an impact on economies across the continent, while the strength of the dollar has made it harder for some investors to service their debts and slow economic growth and the increasing pace of development has led to oversupply.

Regardless of the uncertainties, the potential rewards mean that Africa remains a highly attractive investment destination and the projects that investors are targeting are improving in quality all the time.

The state of the real estate market in Africa presents a mixed message says Paul Dineen, a partner with international law firm DLA Piper, which last year produced a report on real estate investment in Africa entitled: Real Estate Investment in Africa: Is the Honeymoon Over?

While the level of activity is similar to three years ago, “the ease of doing business has improved slightly”, he says, noting that clients are seeing improvements in transparency “albeit not to the extent that would encourage institutional clients to invest more heavily”.

That said, problems remain, says Richard Holberton, head of occupier research for Europe, the Middle East and Africa at real estate services company CBRE, which co-authored the report. Those vary from country to country, including difficulty repatriating capital, exchange rates, title planning, land ownership and the role of government, but “it is becoming easier to establish what constitutes best practice”, through the learning of “difficult lessons”.

Perhaps the most difficult of lessons has been overcoming low oil and commodities prices over the past few years, which has significantly impacted the continent’s many economies which are over-reliant on extraction. There has been a resulting urgency to efforts by those countries to diversify, which Holberton says “are going to be positives for the market because clearly they make occupier markets and ultimately investor markets less dependent on single sectors or single sources of revenue”.

Another positive trend is growing inter-country co-operation within Africa, which goes against the global international trend towards protectionism years and is “favourable for attracting inward investors, delivering big inter-country infrastructure projects and possibly getting to a more harmonised system on land use and planning systems”, Holberton says.

Even with that progress, Alexander Boadi of London-based real estate consultancy Let’s Move Africa and a public-private partnerships (PPP) advisor to the United Nations, points out that investors face unique challenges. This can be particularly true when purchasing land owned by local chiefs, which can cause prices to fluctuate wildly, as “the value of land just depends on how that particular person felt at that particular time”.