The Potential Impact of US Tariffs on Real Estate Investment in Africa

Global headlines in recent weeks have been dominated by the U.S.'s newly announced tariffs on a broad number of countries, including several African economies. To date, several tariffs have been announced that have been postponed, adjusted, and retracted. Throughout the global uncertainty, the question looms: What could the impact of these tariffs be on real estate investment in Africa?

If the U.S. imposes new tariffs, especially broad ones, the impact on real estate investment in Africa would be indirect but no less real.  These impacts would originate through various channels.  Primarily, the tariffs could lead to a global economic slowdown, which could result in lower investment flows.  Generally, tariffs slow global trade and hurt global growth, a glimpse of which has already been seen with the mere announcement of potential tariff increases. Slower growth makes investors more risk-averse, pulling capital out of emerging markets. A further impact of an economic slowdown is less foreign direct investment (FDI) flowing into large African real estate projects, such as infrastructure and residential developments targeting the affordable portion of the market.  

A further impact could be that real estate projects in Africa could become more costly.  Trade tensions often cause a “flight to safety”, wherein investors buy U.S. assets, which strengthens the Dollar.  A stronger US Dollar (USD) makes borrowing in USD, a common practice for African real estate developers, more expensive.  In addition, African currencies may depreciate, making imported building materials pricier, thereby squeezing real estate margins.  Increased costs and borrowing uncertainties could see developers delay projects and investors requiring higher returns to justify the increased risk. 

The “tariff war” that has made the most headlines has been that between the U.S. and China.  To date, China has been a large backer of African infrastructure and real estate development. If U.S. tariffs were to hurt the Chinese economy, outward investment, including in Belt and Road projects, may slow.  The impact could be less funding for major African real estate projects, particularly large urban developments.  

However, the potential impacts of new tariffs are not all adverse.  These tariffs could re-route global supply chains, leading to a shift in trade routes, which could, in turn, create new real estate opportunities.  Some African ports (e.g., Kenya, Nigeria, and South Africa) could become more attractive as logistics hubs if companies reconfigure trade to bypass tariffed countries.  This could lead to the potential growth in industrial/logistics real estate in strategic locations.

The potential impact on each African market would be highly dependent on local dynamics.  If an African country has a more diversified economy or greater internal demand, real estate investment may be less exposed.  If the country is heavily export-dominated, especially on goods facing new tariffs (like textiles and minerals), the economy, and by extension, the real estate market, could suffer.  

In summary, the potential impact of U.S. tariffs on African real estate investment could be negative in the short term (via a global slowdown, stronger USD, less FDI, higher borrowing costs, etc.), but some niches, such as logistics hubs, could benefit if trade patterns shift.