Angola, where a 27-year civil war ended in 2002, is rebuilding with the help of Chinese loans backed by oil output of more than 1.7 million barrels a day from offshore fields operated by companies such as Total SA (FP) and Chevron Corp. (CVX)
The government’s decision on Feb. 5 to cut the prices of bigger apartments to a maximum of $190,000 from $200,000 and smaller ones to $70,000 from $125,000 sparked a flood of applications. Before that about 30,000 units in five suburbs of Luanda, home to more than five million people, stood empty for more than a year because Angolans couldn’t afford them.
The government paid $3.54 billion for Beijing-based Citic Construction Co. Ltd. to build 115 apartment blocks in the first 900-hectare phase of Kilamba, 20 kilometers (12 miles) south of Luanda.
“Eleven years after the end of Angola’s civil war, we are seeing the beginnings of an emerging middle class in Luanda,” Lucy Corkin, a sovereign risk analyst at Rand Merchant Bank in Johannesburg, said March 7 in an e-mail. “The challenge is that Angola’s social and physical infrastructure is currently not yet properly equipped to deal with their demands in terms of goods and services.”
Luanda is plagued by power outages several times a day and almost constant traffic jams around dusty and garbage-strewn slums. The nation is trying to build up agriculture to reduce imports and feed a country that was the world’s fourth-largest coffee producer before independence in 1975.
Angola is the fifth-biggest diamond producer by value, and its per capita income of $5,681 ranks seventh in sub-Saharan Africa, ahead of countries such as Nigeria and Kenya, according to the International Monetary Fund. The United Nations said in 2011 that 54 percent of its people still live on less than $1.25 a day.
Angola forecasts 7.1 percent economic growth this year after 7.4 percent last year and an average expansion of 9.2 percent over the past five years, according to government budget documents. The country depends on oil for approximately 40 percent of its total output and 70 percent of government revenue, according to the IMF.
Luanda is Africa’s most expensive city for expatriates to live in and the second-costliest in the world, according to Mercer’s annual cost of living survey.
It cost $15,000 a month to rent a four-bedroom executive house in the city’s Miramar and Ingombata areas last year, according to London-based real estate broker Knight Frank LLP. In the Nigerian capital, Abuja, and Lagos, the main commercial hub, a prime property went for an average $10,000 a month.
Rent for an unfurnished, two bedroom apartment in Luanda was $6,500 a month, according to Mercer. That compares with $4,424 in London, $4,500 in New York and $4,848 in Tokyo.