Mozambique real estate: Risk equals reward

Mozambique real estate: Risk equals reward

Mozambique’s real estate market is growing at a brisk pace. The sector now makes up 3.8% of the country’s GDP. “Investors come here and they need offices, creating a shortage in this market segment, which is now booming. The sector provides 40,000 jobs every year,” says Adrian Frey, from the Mozambique-based financial consulting firm Swiss Capital Partners.

Over the last four years, purchase prices have doubled. Rents are also now consistently quoted in dollars in the capital, Maputo – a further indication of rising prices.

Given the fact that land in the business district of Maputo is scarce and therefore expensive, the focus has been largely on constructing multipurpose high rises. For example, a $1.16bn mega project is being built on one of Maputo’s most important streets, Avenida 25 de Setembro. It will comprise offices, a shopping centre, hotel and residential houses.

The Israeli group Green Point Investments has put its financial weight behind the Maputo Business Tower, a 47-floor, 190-metre-high block that is due to be completed later this year. It will comprise offices, residential housing and a restaurant, as well as a shopping centre, car parking facilities over five storeys and even a heliport.

Major hotel developments are also in the pipeline. For example, the Chinese construction company Anhui Foreign Economic Construction Corp is to erect a five-star hotel with a $250m price tag on Avenida Marginal to rival Maputo’s two other luxury hotels Polana Serena and Radisson Blu

It is being erected between the country’s post office and national library on Avenida 25 de Setembro. Work on what will become Mozambique’s tallest building began in 2009. Early on in the building’s development, Transport and Communications Minister Paulo Zucula said: “We can be proud of a 47-storey building. It shows that we are on the right path, and symbolises the development of infrastructures that is happening throughout the country.” Meanwhile, Fema Ferreira Machado is building yet another multipurpose block in Maputo that will also combine business facilities and accommodation.

The country’s major banks including Banco Central de Moçambique, BCI and Standard Bank have been moving into brand-new headquarters in Maputo’s downtown baixa area. Construction of the last-named’s new headquarters, built across seven floors and made completely from glass, was estimated to cost $42m. It comprises office space and meeting rooms to cater for the bank’s needs for its central operations.

The new building makes a bold statement about the power of the country’s financial sector, and the prestige and presence that international banking groups like Standard Bank are eager to establish in the fast-growing southern African nation. “I assume this investment is due to the fact that our country is on an upward trajectory, which has as background political and macroeconomic stability,” said Standard Bank Mozambique’s governor at the time, Ernesto Gove. “This is a project that represents confidence in the future of a country, a country which has been growing at high rates if compared with other countries, either in Africa or the rest of the world.”

Major hotel developments are also in the pipeline. For example, the Chinese construction company Anhui Foreign Economic Construction Corp is to erect a five-star hotel with a $250m price tag on Avenida Marginal to rival Maputo’s two other luxury hotels Polana Serena and Radisson Blu. It will be next to Joaquim Chissano International Airport and comprise 290 rooms, a functions facility with a 2,000-person capacity and a conference centre. It is anticipated to be finished in 2015.

There are also exciting developments outside of the capital, particularly around the two new most important industries – coal and natural gas. A case in point is the Spanish developer Nexar Group’s plan to construct Karibu Residence 1, a luxury hotel in Palma, a village near where energy company Anadarko recently hit on one of the most important gas discoveries in the world. The hotel will have comfortable rooms and Wi-Fi to meet expected demand from the 10,000 workers from the natural gas industry that are expected to soon descend on the tiny, isolated area.

Meanwhile, African Century is also spending millions of dollars on a project for an industrial park in Palma. It will comprise apartments, a hotel and an industrial park. The industrial park will be made up of 21 warehouses complete with patios and the Palma residences will be made up of two-bedroom, two-bathroom houses with terraces, as well as a communal leisure area and pool, parking and security.

In Pemba, a strategically important town in northern Mozambique, a series of major projects are also under way. They include a $6m apartment block development and a possible new hotel complex – which leading international hotel chain Carlson Rezidor is contemplating building with a view to making 15-20% in annual returns.

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Written by African Business Magazine

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