Real Estate Investment Trusts and Africa’s evolving investment landscape

Investors from around the globe are increasingly eyeing Africa, hoping to capitalize on strategically important sectors such as mining, oil and gas, and infrastructure, as well as fast-growing industries such as technology and real estate. Recent changes in the investment landscape across the continent — such as growth in capital markets, increasing M&A valuations, and more cross-border opportunities — are likely to accelerate the trend.

The growth in capital markets and M&A across Africa is driven by foreign investors looking to acquire African businesses. They are recognising the value proposition that African targets represent for foreign investors. The latter can look to Africa to acquire a well-run, world-class business at a price that is often lower than what they would pay for a similar business in other jurisdictions, allowing them to maximize their returns and realize value for their shareholders over a shorter space of time. 

Newer investment opportunities also show promise. 

Real Estate Investment Trusts (REITs), for example, are a relatively new trend on the continent that global investors should have on their radar.

REITs: an emerging opportunity 

REITs appear to be pushing past the nascent stage with a flurry of new listings and issuances of REIT securities. Increasingly, developers and investment funds are merging to provide REIT management services and act as first-time promoters of REITs in the region. The value of REITs listed on stock exchanges in South Africa, Nigeria, and elsewhere, now exceeds $30 billion, according to data and analytics provider Fortren & Company. 

South Africa accounts for the bulk of this activity. REITs have become a significant financial instrument in the South African property sector, supported by the South African REIT Association, which was founded in 2013. The country’s REIT structure is aligned with international investment norms, and there are also tax advantages. Shareholders are taxed for any distributions they receive, but REITs are not taxed at the corporate level, which means qualifying distributions from a REIT to its shareholders are tax-deductible. 

Kenya has offered REITs for about a decade, and recently has seen a surge in first-of-their-kind REITs, including purpose-built-student housing REITs, the first REIT listings on the over-the-counter (OTC) markets, the first dollar-denominated REITs, and the first reverse IPO listing for a REIT. 

Zimbabwe is a great example of the growth of REITs. Despite the technique being very new in this country, three REITs have already been established, with shopping malls in particular being targeted. Morocco, Ethiopia, Tanzania, and Nigeria are other jurisdictions that have seen growth in REITs of late. 

Kenya’s capital market authority and the REITs Association of Kenya, founded in 2017, have worked with their counterparts across the region to bring their REIT regulations into alignment, and four other jurisdictions to date have implemented REIT regulations similar to Kenya’s. We estimate we are about 35% of the way there when it comes to standardizing cross-border REIT regulations. But the landscape is improving quickly, increasingly prompting issuers to consider cross-listing REIT securities across multiple jurisdictions. 

In addition to REITs, there are other key investment trends and opportunities to watch across the continent. It is important for investors and corporate General Counsel to realize that each country has its own regulations, standards, and practices when it comes to investing, and it is critical to understand the nuances of each before making investment decisions. External counsel in these countries can be a valuable resource. 

South Africa: a strong and stable market

In South Africa, we are seeing the anti-trust (competition) authorities increasingly considering the public-interest elements of M&A transactions. This often requires foreign investors to factor in partnering with local shareholders as part of their transaction structure. 

South Africa’s exchange-control regulations also play an important part in the flow of funds out of South Africa, and foreign investors need to consider this when setting up their legal structure. Because of its complex tax and exchange-control legislation, transactions in South Africa require input from local experts. 

In terms of industries, we anticipate increased growth in the renewable energy sector, along with fintech and agriculture. We also have noted a rising appetite for the acquisition of digital assets. 

South Africa continues to lead the region in M&A deal values, ranking ahead of Kenya and Egypt. In 2025, it accounted for more than a third of the continent’s total deal value, according to analysts. The market has been stable in both value and number of deals, in spite of recent global uncertainty. South Africa is also the leader in market capitalization, ahead of Morocco and Egypt. 

Kenya: capital markets and M&A transactions surging

Kenya has experienced significant growth in capital markets transactions over the past two years. This included the first IPO in over a decade, in the banking industry, signaling renewed interest in the capital markets. The IPO came on the back of increased debt instrument issuances by listed entities and financial institutions. 

A corollary to this trend was a record number of mergers and acquisitions in the financial sector, specifically banking and insurance. Insolvencies have also been driving M&A transactions in this market. 

Meanwhile, the types of transactions are becoming more sophisticated. In Kenya, there has been an upsurge in asset-backed securities, alongside growth in companies coming into the Nairobi Securities Exchange. Deal structures beyond the typical cash considerations are also on the rise in Kenya and across the continent.

Opportunities in other markets 

Ethiopia should be watched keenly by any investors looking to expand into the African market. With a population of over 130 million, the country has recently established a capital markets authority, established commodity and securities exchanges, and completed Africa’s largest hydro-electric dam. 

From a structuring standpoint, most investors set up holding companies in more stabilised markets such as Kenya and Mauritius, then deploy capital into Ethiopia and other growing economies. Kenya and Mauritius continue to offer an array of tax incentives that would interest investors, such as Exclusive Services Export Zones for the former and a low income tax resident base for the latter.

Other areas to watch include Egypt, a key market for M&A transactions, and Morocco, which has been experiencing strong M&A growth. 

Local expertise is needed 

As REITs, M&A transactions, and other forms of investment continue to involve players in different jurisdictions, both across and outside the continent, here are some things to keep in mind. 

First, when investing in Africa, it is a good idea to prioritise simple transaction structures that are fully aligned with the client’s needs and reduce the number of regulatory hurdles to overcome. Those hurdles, and the best structures, vary from country to country depending on the investment landscape, maturity of capital markets, and other factors. 

Second, resilience is an important part of any M&A transaction in Africa as well. We are seeing deals take longer to close, which requires more resilience in order to maintain value. 

Finally, understanding the unique regulatory landscape of each jurisdiction and partnering with outside legal and tax advisors who are aligned with your end goal is paramount. That is particularly true for cross-border deals, where it is critical to have sound legal advice and representation in each involved jurisdiction. 

We have found it invaluable to be able to mine the local expertise of our trusted Meritas colleagues across Africa, who are well versed in the nuances of their local markets. Deep knowledge of local investment regulations, structures, and norms is essential in today’s growing but still fragmented and challenging investment landscape across Africa. 

Brian Muindi is Partner and Head of Corporate & Commercial Practice at TripleOKLaw in Kenya. Stuart Roux is Associate Partner at VDMA Law in South Africa. Tapiwa Chivanga is an Associate Partner and George Gapu is Head of the Labour and General Law departments at Scanlen & Holderness Legal Practitioners in Zimbabwe. 

All authors are from member firms of Meritas, a global alliance of more than 172 independent law firms, giving clients access to more than 9,200 lawyers in 244 international markets. This includes firms in Cameroon, Ghana, Kenya, Mauritius, Nigeria, South Africa, Uganda, and Zimbabwe, who collaborate to deliver high-quality legal services to business clients around the world.