Morocco’s Rabat and Casablanca have been identified among the least profitable major cities in Africa for landlords in the latter half of 2024, according to rankings on the “Business Insider Africa” website.
As Africa experiences rapid urbanization, the demand for housing is soaring, and with it, the profitability for landlords in many cities. However, not all cities are equally attractive for real estate investment.
According to the cost of living platform “Numbeo’s” updated gross rental yield index, the gross rental yield in Rabat stands at 5.9% in the city center and 5.7% outside the center. The gross rental yield represents the possible return on investment (ROI) from rental revenue, eliminating expenditures like maintenance, taxes, and management fees.
Casablanca offers a slight improvement, with 5.7% in the city center and 6.4% outside of it.
Both cities fall short of the ideal rental yield range, which is typically between 7% and 8% for optimal returns.
Other cities that also listed as less profitable include Algiers in Algeria, Tunis in Tunisia, and Addis Ababa in Ethiopia. Algiers offers a gross rental yield of just 2.4% in the city center, while Tunis provides a yield of 4.8%.
Addis Ababa has a significant disparity with a 6.5% yield in the city center compared to 4.5% outside of it.
According to the website, economic stability, urbanization rates, government policies, and housing demand have contributed to the growing gross rental yields, across major cities on the continent.
Investors targeted the cities with significant potential returns due to expanding populations and increased demand for both residential and commercial areas.