How developers can leverage the AfCFTA trade deal

The development of green industrial parks, such as the Green Energy Park in Naivasha, Nakuru County, presents an opportunity for investors in real estate to tap into in the wake of the African Continental Free Trade Area (AfCFTA).

Real estate consultant Knight Frank notes that investors who are quick to move into the industrial and logistics space are set to benefit as governments on the continent implement the AfCFTA.

Knight Frank lists the AfCFTA, green industrial parks, and smart warehousing as some of the opportunities in the industrial real estate space for investors. A guide by Knight Frank for 2025-26 titled Africa Horizons highlights areas of opportunities and challenges that investors in the real estate sector are bound to encounter.

The guide notes that the continent’s industrial landscape is being reshaped by the AfCFTA, which is projected to increase intra-African trade by over 50 per cent by 2030, according to the United Nations Economic Commission for Africa (UN-ECA).

“The anticipated surge in trade is driving heightened demand for logistics hubs, warehousing facilities, and cross-border industrial parks,” reads the guide launched at this year’s East Africa Property Investment (EAPI) Summit held in Nairobi.

Industrial hubs

The guide states that investors are increasingly targeting strategic locations with strong transport linkages, capitalising on the continent’s evolving role in the global supply chain.

“The geographical positioning of industrial hubs is critical for trade efficiency,” the guide says. “Many hubs are located near ports, airports, and major transport corridors to facilitate regional and international commerce.”

Tatu City, a special economic zone (SEZ) in Kiambu County, is one of such industrial hubs listed in the guide.

It says its proximity to Nairobi City’s transport networks, and tax incentives such as reduced corporate tax and import duty exemptions are attractive to investors as they are key drivers of growth.

“The Tatu City Industrial Park currently hosts over 50 operational companies, reflecting strong investor confidence,” the guide says. Knight Frank notes that Kenya has positioned industrial parks and SEZs at the core of its economic transformation agenda. The guide notes that the African Export-Import Bank (Afreximbank) has committed to a three-year, $3 billion (Sh390 billion) country programme to support trade-related investments.

It also cites the Dongo Kundu Integrated Industrial Park and Naivasha Special Economic Zone II as some of these projects, which have also been incorporated into Kenya’s Fourth Medium-Term Plan (2023–2027) under the Vision 2030 framework.

This is aimed at expanding Kenya’s manufacturing capacity for export markets.

The AfCFTA potential, green industrial parks, smart warehousing and public-private partnerships are other opportunities for the continent’s industrial sector.

It notes that sustainability is becoming a priority, with eco-friendly industrial zones emerging. “Many multinationals’ firms prioritise ESG (environmental, social and governance), having made pledges to their shareholders,” the guide says.

The Kenya Electricity Generating Company (KenGen) recently unveiled such an industrial park under the banner Green Energy Park in Olkaria SEZ, Naivasha, Nakuru County.

Transport corridors

KenGen, which is a listed State-owned company, seeks to provide green electricity to businesses setting up at the park.

The Olkaria SEZ, according to a statement from the firm in March, will support industries in green manufacturing, agro-processing, electric mobility and data centres. One of the advantages of the SEZ is its proximity to transport corridors such as the Nairobi-Mombasa highway and the Standard Gauge Railway (SGR) through the Naivasha freight terminal.

“The AfCFTA is set to boost intra-Africa, increasing demand for industrial and logistics real estate. Countries establishing competitive industrial hubs early will benefit from this growing market and ‘first mover’ advantage,” the Knight Frank guide says. The guide states that governments are increasingly partnering with private developers to build industrial parks, leveraging expertise and funding from global players.

“Advances in automation, AI-driven logistics, and smart warehousing are creating opportunities for tech-driven industrial developments, particularly in urban centres for distribution centres and ‘last mile’ delivery facilities,” the guide says.

Amid all these advances characterising the industrial real estate space, the guide also lists challenges, such as infrastructure deficits, which investors should be aware of. Others are regulatory and bureaucratic hurdles, access to financing and skills gap.

The guide says inadequate roads, unreliable electricity, and limited water supply pose hurdles for industrial development. It adds that while there is progress, gaps remain, particularly in secondary cities.

Deter investors

Further, there are unclear land ownership laws, complex business registration processes and inconsistent government policies that deter some investors.

“Foreign investors remain cautious about investing in opaque markets. Streaming regulations will be key to attracting long-term investments,” the guide says.

In addition to skills gap for sectors such as manufacturing and logistics, which are key for industrial real estate, the guide points out the challenge of finances.

It explains that developing large-scale industrial projects requires significant capital. “While foreign direct investment (FDI) is increasing, especially from countries like China, local financing options remain limited due to high interest rates and strict lending criteria,” it says.

Knight Frank says the continent’s industrial real estate sector is on a trajectory of sustained growth, driven by trade liberalisation, infrastructure advancements and the rising demand for localised manufacturing.

It adds that strategic investments in SEZs, government-led initiatives, and increasing private-sector engagement are transforming the continent into a competitive industrial hub. Additionally, the integration of robust logistics networks, favourable tax policies and expanding e-commerce further reinforces the continent’s position in global supply chains.

“While regulatory complexities and infrastructure gaps remain, continued investment in industrial hubs presents a significant opportunity to unlock economic potential, enhance industrial output, and solidify Africa’s role in global manufacturing and trade,” says Knight Frank in the guide.