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Wild at the edges: CFO, Imogestin-SA, Branca do Espirito Santo.

How do you create a real-estate industry out of virtually nothing? For decades, hardly anyone invested in real estate in Angola but the current heavy demand for both commercial and residential properties led to a mushrooming of informal agencies. Now the situation is stabilising and leading the way is Angolan company Imogestin. We talk to the CFO.

The real estate market in Angola, says Branca do Espirito Santo, CFO of the country's largest and best established agency, is "really speaking, immature. It is in the start-up phase."

Nevertheless, it is growing apace, as what seems an endless conveyor belt of properties become available. In addition to the hundreds of thousands of subsidised apartments that have, or are in the process of coming into the market, the demand for office space, especially in the capital, Luanda, "is overwhelming", says Espirito Santo.

We met her in her high-rise offices in the heart of the capital. Wherever you looked from the windows of her offices, you saw both newly finished (and often intriguingly designed) office towers and equally large structures in various forms of completion.

There had been no construction of commercial property from the beginning of the war in 1975 to the establishment of peace in 2002. Since then, as the country's economy grew in double-digit figures, the demand for office space had easily outstripped whatever supply was still available.

"Almost all the office space that is being constructed" she said has already been spoken for. "Companies are desperate for office space." Many, including some major international firms, have converted residences into offices. Many traditional homes in the upmarket Miramar and Alvalade areas were being used to conduct business from--"these even include some embassies".

Our visit had taken place just a few days after it had been announced that Imogestin would take over the sales management of the new cities from Sonip and Delta Real Estate. This followed persistent complaints that the process had been far too slow and cumbersome in the past--with hopeful applicants often having to spend nights in the open so as not to lose their place in the queue.

Since the decision had been made only a few days ago, Espirito Santo did not want to go into details on how her company would handle the process. "But you can be sure, we'll manage it as well as possible--we have the experience," she said.

A few weeks later, the company's CEO, Rui Cruz, announced that the cases of people who had already paid for their properties but who had not yet received the keys to their apartments, would be dealt with first from mid-January. Imogestin was also working on practical modalities to rapidly process the hundreds of thousands of applications for new homes that had flooded in.

Imogestin is also one of the biggest developers in the country. Putting together special purpose vehicles for property development in Angola is a complex matter, Espirito Santo said. It involves financing from local institutions such as BAI Bank, (which is also a shareholder), Bank Millennium, Malange Bank and so on. Portuguese companies are also partners in several Imogestin projects.

She took us to view her company's two projects, both over 20 storeys high and in advanced stages of completion. The Kianda Towers, which will be composed largely of offices and shops, is named after a powerful mermaid, central in Angola's mythical tradition.

Near this construction is Maxima, a large, ultra-modern complex that will include residential areas, a galleria that will include high-end shopping and entertainment and plenty of retail outlets. The contractors include Angolan companies such as Griner.

Imogestin has also been developing several public housing schemes on behalf of the government and is involved in building hotels in Lobito.

End of informal dealings

Esplrito Santo is also the chairman of APIMA, an association for real estate professionals and investors in Angola. The total freeze on all urban development during the lost war decades meant that when business picked up after 2002, there were only a few professional realtors and developers around.

A good amount of dealing was done informally. While all land belongs to the state, some properties, such as those belonging to the Catholic Church are private. There are also people who own land and property from colonial times. Then there is a vast network of informal 'ownership' by dint of occupation, and parcels of land that fall under traditional ownership.

All these factors coming together created a haphazard realtor market and it was obvious that some form of organisation was essential. Thus, APIMA was established in 2008 with 30 members. "While it is not necessary to become a member, there are advantages in doing so," says Espirito Santo.

But it is still not clear how many estate agencies are operating in Angola. "2010-11 was the last year of informal dealings--including brokers and contractors," she explains. "Laws on the conduct of the industry have only recently been passed. Now real-estate agents are obliged to register companies with authenticated capital."

Despite this, the pressure of demand, led to the very rapid development of quality housing in some areas such as Talatona. "The demand for high-value housing is now plateauing," she said. "Most of the really expensive houses, with marble floors and walls, and even gold taps, have already been purchased."

Nevertheless, rents in newly built gated communities, as we discovered, can easily range from $12,000 to $18,000 per month. International companies also tend to house their expatriate staff in large, self-contained gated communities with their own shopping and leisure facilities.

While gated communities have now become a feature not only in Africa and the rest of the developing world but also in global cities such as London and New York, the pace of development in Angola is quite staggering.

Whether the private sector, which is looking largely for a 15% return on capital as basic opportunity cost, will continue to invest in the higher end of the property market in light of the reduced national income for oil, remains to be seen.

Mortgage rates, at least at the time of the interview, were 12-15%, down from around 25% in 2010-11. Most financing is from banks as there are no dedicated mortgage companies yet.

"This has hit the middle class hard," says Espirito Santo. "The problem has been the lack of title deeds. There is a lot of work going on, at state and private level, to try and resolve this issue as the demand for suitable housing, especially in Luanda, is fairly stable."

Espirito Santo studied microeconomics at the Martin Luther University in Germany before returning to Angola to work in the Ministry of Planning. During the war years, she worked for a German NGO, managing funds to develop agriculture. She went into the real estate business some 16 years ago and worked her way through the entire value chain--property development, brokerage, evaluation--before BAI bank, an insurance company, several individuals and herself formed Imogestin.

To what degree has the demand for property, both residential as well as commercial been met so far? "I would say the demand in 2010 was for around tm square metres. It is around 600,000 sqm now."

The Angolan real-estate industry may be relatively new and still wild at the edges but it has got to be the most promising in Africa.
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Title Annotation:SPOTLIGHT: REAL ESTATE; chief financial officer
Comment:Wild at the edges: CFO, Imogestin-SA, Branca do Espirito Santo.(SPOTLIGHT: REAL ESTATE)(chief financial officer)
Publication:African Business
Geographic Code:60AFR
Date:Mar 1, 2015
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