Growth of Angola’s middle class brings new prospects to real estate investment

2 August 2010

Luanda, Angola, 2 Aug – The growth of Angola’s middle class, with the ability to buy their own house, is opening up prospects for investment in the highest real estate segment in Angola, according to a study by the Deloitte consultancy, to which Macauhub had access.

The study entitled, “Research: 10 Factors of Competitiveness for the Angolan Real Estate Sector,” was drawn up by Deloitte for ESCOM Imobiliária and for Mota-Engil Real Estate, and concluded that supply was still insufficient for the market’s needs, and focused on the highest segments in the capital, Luanda.

However, the authors noted, demographic indicators showed the emergence of a young middle class.

With higher education levels than average, these people often work for multinationals set up in Angola, in the public sector or the financial sector, the study said.

They are benefiting from greater stability in their contracts with employers and have the financial capacity to buy their own home.

Alongside this, the “buy to let” market is proving to be an interesting investment option, given the number of expatriates working in Angola.

The average number of people per family unit has fallen over the last few years, and an increasing number of young couples are looking for their own home, and thus small homes (1 to 3 bedrooms) are the ones to have seen the greatest rise in sales.

The study also noted that the arrival of expatriates has led to a second hand letting market, often not under the best conditions.

Deloitte’s work covered the whole of Angola, but its analysis focused on cities with the greatest potential for development, such as Luanda, Benguela, Lobito, Huambo, Lubango and Soyo.

Figures were collected via questionnaires to residents and commercial, office and industrial market research.

In the biggest cities, and particularly in Luanda, the fact that there is a lack of land available for construction in the best areas means that prices have rocketed, which in itself focuses real estate promoters on the highest level of the market, which is also the most saturated.

The construction factor also increases the cost of real estate, given that production capacity for construction materials in Angola is still insufficient, which leads to imports, and its transport is difficult.

The current state of development of the emerging Angolan real estate market is considered by Deloitte to be incipient.

Structure real estate financing products are rare, with real estate loans inhibited by the inefficiency of land and property registry.

Another conditioning factor pointed out in the study is the lack of legislation on horizontal property, as well as the bureaucracy, costs of acquiring land, approval of projects and granting of licences. (macauhub)