By Sandile Mpanza, Head of Commercial Property Finance Africa Region at Absa CIB
In 2023, a financing deal quietly redrew the boundaries of East Africa’s real estate playbook. Acorn Holdings Limited secured KES 6.7 billion from Absa Group and Absa Bank Kenya to develop ten purpose-built student accommodation sites across Nairobi. On paper, it was a domestic transaction. In substance, it marked three precedents: the first time a development Real Estate Investment Trust (REIT) had been bank-financed through a bilateral loan in Sub-Saharan Africa; the first sustainable finance facility for commercial property outside South Africa; and a decisive shift in where – and how – real estate value is now being constructed.

The significance was in its architecture: a local developer with deep operational roots, and a pan-African bank structuring capital to match emerging demand. It was a signal that institutional real estate in East Africa is being redefined from the inside out.

In the decades preceding, the centre of gravity was external – defined by foreign investors seeking dollar yields, South African retail chains expanding into the region’s mainstay cities, and a commercial playbook designed elsewhere and replicated at speed. That model is now evolving.

What is emerging alongside it is a more grounded investment architecture: local developers with embedded networks, regional funds capable of navigating fragmented regulatory environments, and capital originators positioned at the intersection of infrastructure, population movement, and spatial policy. Foreign and pan-African players are still largely active, but the weight of execution is increasingly carried by those with day-to-day proximity to how the market functions. Success now depends less on scale alone, and more on fluency in local systems.

This is the context in which the East Africa Property Investment (EAPI) Summit convenes in May. Under the theme “Positioning for Opportunity”, this year’s forum turns attention to the investment landscape across Kenya, Tanzania, Uganda, Rwanda, Seychelles and beyond – markets demonstrating early signs of economic recovery and monetary recalibration.

The imperative to position for opportunity is clearest where the weight of precedent is heaviest: commercial real estate.

The cost of capital has climbed, foreign exchange reserves have tightened, and long-accepted lease models – particularly those pegged to hard currency – are under renewed pressure. However, Nairobi’s premium office market continues to show resilience. Stabilised retail assets in Dar es Salaam and Kampala also demonstrate steady footfall. But underlying assumptions about risk and return are being reassessed. Dollar leases are under pressure in markets where currency volatility has become harder to absorb, and liquidity constraints are prompting tenants to negotiate harder on structure, not just price.

The South African retail giants that once defined the region’s landscape are also consolidating their footprints, slowing expansion or exiting non-core geographies altogether. But this is not a story of withdrawal – it is the market reasserting its own logic. In place of scale for its own sake, opportunity now lies in adaptability: the ability to develop, price, and lease with flexibility, whether through USD leases, USD-indexed agreements, or purely local currency leases.

What remains underappreciated is the extent to which local knowledge now constitutes a competitive advantage. Developers with embedded supplier networks, the ability to structure financing in local or hard currency, and an understanding of how municipal processes influence project timelines are better positioned to extract value.

It is in the emerging asset classes, however, that the future is being prototyped.

Urbanisation across East Africa continues at pace, outstripping the ability of formal housing supply to respond. In Kenya alone, the housing deficit is estimated at over two million units – likely an understatement. Government incentives, from land swaps to tax relief, are increasingly aligned with investor interest. In response, developers are adopting more blended strategies—holding some residential units for rental income, selling others outright, and introducing rent-to-own schemes to meet evolving demand patterns. Crucially, affordability is no longer viewed as a constraint on return, but as a foundation for stable occupancy, strong velocity of sales, and long-term portfolio resilience.

Student accommodation is following a similar trajectory. Nairobi is seeing sustained tertiary enrolment growth, yet purpose-built accommodation remains a fraction of what is required. The Acorn transaction demonstrates that bankable student housing projects are possible when operational scale and tailored financing intersect.

A third category gaining quiet traction in the region is data centres. As digital usage intensifies and cloud adoption deepens, demand for local hosting, storage, and processing capacity has surged – particularly in markets with rising AI integration and fintech penetration. In 2024, Microsoft and G42 announced a US$1-billion digital infrastructure package for Kenya, anchored by the construction of a hyperscale Azure data centre to service the wider East African region. That same year, Schneider Electric and IXAfrica launched NBOX1 in Nairobi: a carrier-neutral, AI-ready facility billed as the region’s most advanced digital hub. As governments invest in digital sovereignty and latency-sensitive sectors scale, data infrastructure is becoming a legitimate asset class in East Africa – one with long-term demand fundamentals and strategic policy alignment.

What unites these asset classes is their alignment with long-range fundamentals. Each responds to an unmet need shaped by the evolving dynamics of urban population growth. The market is growing in scale and sophistication, and with that, the imperative for partnership – between local operators and global capital, between policymakers and financial intermediaries, and between domestic and cross-border institutions – is becoming central to how opportunity is structured.

East Africa’s real estate market will increasingly be defined by those who know it best, with regional and local operators well positioned to lead. But the scale of opportunity exceeds the capacity of any one cohort. Global capital still has a crucial role to play – particularly where it partners with grounded execution. The future will reward those able to match ambition with proximity, and capital with context.