How housing demand increases with urbanisation in Côte d’Ivoire

Côte d’Ivoire's real estate sector is growing rapidly as the demand for formal housing in urban areas increases. As the country undergoes industrialisation, developed areas like Abidjan are seeing greater influxes of middle-class populations, expatriates and diaspora communities seeking accommodation.

International companies are responding to the growing demands of these demographics by building more retail space, hotels, road networks and other infrastructure. However, ongoing difficulties accessing credit and a significant housing deficit across major cities have left many Ivorians living in improvised and informal housing, creating opportunity for private companies to fill the gap in the market.

Structure & Oversight

The real estate sector in Côte d’Ivoire is overseen by the Ministry of Construction, Housing and Urban Planning (Ministère de la Construction du Logement et de l’Urbanisme, MCLU). The MCLU manages the implementation of government policy, oversees property developers and improves access to urban and rural housing. It also manages several campaign activities for real estate, including promoting property construction and investment, and encouraging the use of local materials in developments. Meanwhile, the Ministry of Equipment and Road Maintenance (Ministère de l’équipement et de l’Entretien Routier) works with the MCLU to establish road links for developments across rural and urban areas to improve accessibility.

Côte d’Ivoire's government introduced a Construction and Housing Code in 2019, grouping real estate matters such as residential leases, building permits, the sale of real estate for construction and real estate development into one framework. The legislation aims to better regulate the sector, curbing unauthorised construction and improving safety provisions. To support the implementation of the code, the government has introduced a new building permit system for buildings over two stories.

In addition, in 2022 a brigade was established to reduce illegal construction around the country, with representatives from local government and the Directorate of Urban Sanitation and Drainage. It is estimated that around 80% of existing buildings were built without the necessary permits; however, the new code is expected to reduce this figure in the coming years as developers adopt the new provisions.

Performance & Size

Between 2003 and 2018 the real estate sector attracted 2.9% of inward foreign direct investment by type of project and 12.8% by capital expenditure, making it the ninth-largest industry for foreign investment. As the government anticipates an average annual growth of 7.7% between 2021 and 2025, the sector is likely to expand further. A number of foreign construction companies have entered the market in recent years, and domestic companies are flourishing as demand increases.

Urbanisation & Industrial Centres

Growth of the real estate sector has been concentrated largely in urban centres such as Abidjan and Yamoussoukro, which are experiencing influxes of working populations as they become more industrialised.

Abidjan’s real estate market has grown by around 18% per year since 2011. In 2018 the urbanisation rate stood at 3.5%, and Abidjan's population is expected to increase to 6.7m by 2025, up from 5.5m in 2022. Due to this rapid expansion, the African Development Bank estimated in a 2019 report that there was an affordable housing gap of 600,000 units, rising by 10% a year, with around one-third of the figure in Abidjan. In 2020 the annual number of dwellings built stood at 15,000, and in 2021 the monthly rent of the cheapest newly-built, 45-sq-metre house was CFA100,000 ($172) with a purchase price of CFA8.5m ($14,600). "Côte d’Ivoire’s government has concentrated most of its infrastructure investment in Abidjan and other urban centres," Nelly Domoraud-Abobi, managing director of local real estate firm Kalimba Immobilier, told OBG. "This has driven up the standard of living in these areas, making them more attractive to the middle class. However, it deters many people from considering alternative locations because of the lack of offerings available in smaller cities." In terms of formal dwellings, in 2019 the total number of residential properties with a title deed stood at just over 4m. With the country's total population being 26.4m with an urban population of 13.6m, this figure remains low. The cost of registering property is about 7.1% of the property price and requires carrying out five procedures over an average of 39 days.

New Regulations

The government has greatly improved the protection of property rights and the acquisition of new property through the ongoing introduction and implementation of new legislation. However, the issue of land ownership continues to be a challenge, with only 4% of land titled in 2018 according to the World Bank (see Construction chapter). Meanwhile, land documentation in urban areas has gradually improved through the implementation of the Certificate of Change of Land Ownership under Côte d’Ivoire’s urban land reform.

In addition, in 2016 the government made it easier to apply for building permits by establishing a one-stop shop, the Investment Promotion Agency of Côte d’Ivoire. The urban land digitisation project, launched in 2021, will establish a central database for land ownership. French firm IGN-FI will manage the Integrated Urban Land Management System with funding from public investment bank BPIF rance.

Housing Finance

The majority of Ivorians – or over 80% of workers – continue to work informally. This makes accessing credit difficult, particularly as around 19% of the population does not have a bank account. Due to this low penetration, the cost of credit is relatively high, and mortgage purchasers typically make a 10% down payment on property.

In 2020 there were 23 residential mortgage providers, and in 2021 the ratio of mortgages to GDP was 0.1%, suggesting that mortgage penetration is relatively low. One of Côte d’Ivoire’s principal banking institutions, Société Générale de Banques en Côte d’Ivoire, offers a minimum mortgage value of CFA5m ($8600), at a rate of 9.1%. While this amount may be considered relatively affordable, the monthly repayments are too high for most workers, who have a minimum interprofessional guaranteed salary of CFA60,000 ($103). According to a survey by the Centre for Affordable Housing Finance in Africa, 94% of households in Abidjan earn less than CFA300,000 ($515), leading most to rent rather than buy property.

During the Covid-19 pandemic many households became more financially vulnerable. Subsequently, in 2020 there was a decrease in the number of property rentals and purchases. In response to these challenges, the government introduced a moratorium on rent increases and evictions. It also froze rent or provided a rent discount between April and June 2020 for those who lost their jobs. While these efforts were helpful, the pandemic continued to impact the market through 2021.

The government has mainly focused on the development of middle-class housing in urban areas. Most social housing programmes promote the building and financing of formal housing that can only be accessed by those working in formal employment with a bank account. In addition, the construction of housing and amenities in response to the needs of different demographics has led to the development of distinct districts. “The real estate sector has shaped the appearance of different urban neighbourhoods, attracting demographic categories according to the market prices in those areas,’’ Domoraud-Abobi told OBG.

It is also important to consider the diaspora population that has contributed to a real estate boom in recent years. The Ministry of Foreign Affairs, African Integration and Diaspora promotes Côte d’Ivoire as an investment space for the diaspora.

According to Jean-François Moreau, then-president of the Chamber of Urban Developers and Developers-Builders of Côte d’Ivoire, the diaspora population is essential to the expansion of country's real estate market, suggesting activity decreased during the pandemic as a result of the diaspora being unable to access and invest in Côte d'Ivoire. “The most significant contributor to the decrease in the market's client potential came from the Ivorian diaspora," Moreau told OBG. "The diaspora could not travel, and for many promoters this can represent at least 25% of turnover.” Diaspora communities also invest in prime real estate areas, a trend that is likely to continue after the pandemic.

As such, rent and property prices vary considerably depending on the neighbourhood. For example, rent for a four-bedroom apartment in the prime residential neighbourhoods of Cocody and Plateau in Abidjan falls between CFA800,000 ($1380) and CFA1.2m ($2060) on average. In contrast, rent in Yopougon, Abobo and Bingerville is lower, averaging between CFA100,000 ($171) and CFA200,000 ($344).

Informal Sector

The government's Support Fund for Housing and Housing Mobilisation Account provide banks with below-market rates, allowing them to lend to mortgage applicants at an interest rate of 5.5%. This is intended to help lower-income households increase their purchasing power; however, many still find it difficult to access mortgages due to the high monthly costs. These high mortgage prices, which restrict ownership and increase rent costs associated with the housing shortage in urban areas, have driven many individuals to establish residence in informal or temporary housing.

In recent years the government has rolled out initiatives to provide greater levels of public housing, but conflicts over land ownership have significantly hindered these programmes. The aim to increase the supply of social housing is echoed in the National Development Plan (Plan National de Développement, PND) 2021-25, but little progress has been made as of mid-2022. This has led several private companies to recognise the demand for greater housing for low-income and middle-class households in urban areas.

“Abidjan has faced a housing crisis for several years, with the availability of residential properties far lower than the demand," Domoraud-Abobi told OBG. "This situation has caused the population to expand towards the suburbs of Abidjan and the development of new neighbourhoods. The urban landscape of cities has been transformed, and small neighbourhoods in the periphery of residential areas are much more modest,’’ she added.

There is also a notable gap between urban and rural housing. While urban residential housing is gradually becoming formalised, in rural areas around 90% of the population lives in temporary structures. Many of these buildings are made from wood and are vulnerable to fire, leaks and collapse. In addition, thatched roofs leave residents susceptible to disease caused by insect infestations and mosquitoes.

Commercial Property

Alongside urban population growth, local and foreign companies have invested heavily in developing offices, retail and entertainment spaces, and housing. The high demand for housing and other infrastructure has caused office prices, which were previously stable, to rise.

The demand for office space has increased substantially as several international companies set up their West African headquarters in Abidjan, the region’s economic centre. The African Development Bank relocated its headquarters from Tunis to Abidjan in 2014, and several other companies have since followed. According to Knight Frank, Abidjan is one of the fastest-growing office markets in Africa, and it continues to pick up the pace with the construction of large-scale new office buildings.

With the construction of Abidjan's F Tower – expected to be Africa’s tallest building upon completion – commencing in late 2021, the city's real estate market is likely to attract greater international interest. The tower, plans for which are being managed by Belgian contracting company BESIX Group, will have 64 floors of office space, as well as areas for entertainment and recreational use.

Industrial Space & Retail

In recent years Côte d’Ivoire's government has made significant investments to diversify the agriculture-dependent economy towards industry, in line with the goals of both PND 2016-20 and PND 2021-25. The development of the PK24 Industrial Park in Abidjan, as well as three other industrial zones in Akoupé Zeudji, a town roughly 13 km north-west of Abidjan, San-Pédro in the south-west, and Ferkessédougou in the north, at a cost of $1.7bn, has encouraged greater private investment in industrial real estate.

Several new retail spaces have also been developed, mainly concentrated in Abidjan. With the arrival of French supermarket Carrefour in 2015 and a number of other foreign brands entering the market in the years since, dozens of supermarkets and eight shopping malls have been built in Abidjan. However, while international brands are renting commercial spaces in cities, many local retailers find access to commercial spaces challenging due to the high rent prices involved. Monthly retail rents in the centre of Abidjan run between CFA100,000 ($172) and CFA1m ($1720) on average. To lease a shop, retailers must also acquire documentation for their business and pay a 12-month deposit.

Outlook

Having invested heavily in infrastructure, the government has successfully promoted Côte d’Ivoire as an industrialised centre in West Africa. The real estate sector is growing at pace, with several residential and commercial projects planned for urban areas. However, the lack of housing for low-income families and difficulties in accessing finance have driven the development of informal housing. As the country undergoes urbanisation and industrialisation, there is an opportunity for officials to provide social housing with alternative financing options for informal workers and lower-income populations.