Knight Frank rates Kampala high for real estate innovative solutionsAn artistic impression for a new Kampala apartments. Cities scoring high for innovation, but have less robust economies will attract those willing to take more risk, such as private equity investors. These cities include Nairobi, Kenya, Cape Town in South Africa and Kampala.
Knight Frank’s latest Africa Horizons Report has ranked Kampala third behind Nairobi and Cape Town for coming up with innovative solutions which help sustain the appeal for investment in the real estate sector.
According to the report released this week, the ability of African cities to emerge resilient from the Covid-19 pandemic will depend on their ability to innovate, providing long-term social solutions to their residents, attracting funding and generating new demand for space. In real estate terms this resilience is demonstrated by cities that can sustain tenant demand, support rental levels and capital values and, ultimately, deliver returns for investors.
Knight Frank’s research into Africa’s innovation-led cities collected over 100 different indicators, including data on more than 3,000 institutions across the continent.
From a long list of over 500 cities these indicators were applied to 29 capital cities to determine the level of innovation and growth, and hence the greatest prospects for resilience for real estate investors.
Lower risk investors will favour cities with above-average innovation scores and a robust economy. These include Cairo, Egypt – the stand-out performer – and Johannesburg, South Africa. These cities have the greatest potential to remain economically resilient in the long term despite undergoing short-term shocks.
However, cities that score higher for innovation but have less robust economies will attract those willing to take more risk, such as private equity investors. These cities include Nairobi, Kenya, Cape Town in South Africa and Kampala, Uganda.
Nairobi is the top city in Africa for innovation and ranks among the top 100 globally. The city offers a good balance between the number of research institutions, available innovation funding and innovation activity (including start-up activity), as well as ease of doing business.
Notably, smaller cities such as Kampala also scored highly for innovation, resulting from an agglomeration of research institutions and increased start-up activity.
The researchers used statistical modeling techniques to determine which observable variable best represented innovation and create an innovation score for each city. This score comprises three components: innovation activity, such as the total number of start-ups; the level of innovation funding and innovation infrastructure, such as the number of research institutions.
Scores allocated are between 0 and 10, with 10 being the highest. Nairobi was rated about 9.8; Cape Town, 8.9; Kampala, 6.4; Cairo and Johannesburg at 6; Dar es Salaam and Lagos, 3.8 and Dakar at 3.7. Addis Ababa was rated just under three.