- Angola has been facing a challenging and uncertain period as a result the effects of the systemic shock caused by the fall in oil prices, which began in June 2014. In regards to this, the Executive, with the support of the IMF, has implemented measures to support reform in order to restore macroeconomic stability and to stimulate economic diversification.
- Among these measures, we point out the implementation of a new exchange rate regime, which led to a significant depreciation of the currency and the introduction of new taxes on consumer goods, namely the VAT regime that has had a significant impact on the national economy.
- A new lease law was approved, this new Law, although not as innovative as demanded by the market and taking into account the reality of the country, brought important changes to the market as a whole, highlighting, for example, the obligation by law for the rent values to be fixed in national currency, which t happens to function as an inflation regulating mechanism.
- On the other hand, given the latest rapid growth of commercial areas throughout the country, the need to regulate the contractual relationship between shopkeepers and shop owners has become urgent.
- On the 1st of October 2019, the implementation of VAT was introduced however, it will not be applicable across all realty transactions, and transactions subject to SISA and lease for habitation are exempt from this tax. This will bring more complexity for those carrying out exempt and non-exempt transactions, although the right to deduct VAT on non-exempt transactions through a pro-rata or real allocation mechanism is ensured.
- We have witnessed a reduction in the risk associated to investing in Angola, as a result of lower guaranteed profitability, reduced market liquidity and uncertainty regarding economic developments.
- Yields have been falling, mainly due to a sharp reduction in rents and in a more significant way in the residential segment, which has rates between 3% and 5%. In the commercial segment, which is more attractive to investors, capitalization rates are between 9% and 10%.
- Based on the analysis of the different moments in investment and income behavior during the 2005 – 2020 period , and taking into account the minimal growth in stock in recent years, we believe that the present moment precedes a stabilization phase and subsequent growth in return on real estate investment.
- In the office market, we have seen a decline in demand and new supply indicators, as a result of the slowdown in economic growth that began started in 2014.
- The new office supply between 2015 and 2019 (226,409 sqm) is roughly the same as in 2014 alone (232,973 sqm) being 2020 the year that marks the surpass of 1,000,000 sqm of offices.
- With this, companies behaviour has been based on the concern for the optimization of the size of the occupied office space and the costs linked to it, a solution has been emerging in the offer of flexible office spaces, with lower installation costs for companies, which are in our understanding a recent trend.
- Despite that, the market availability rate has been increasing, reaching 25% at the end of 2019. However, the number of alternatives with the capacity to house a large occupation is low.
- Prime rent has decreased by 65% since the beginning of the economic crisis, from 160 USD /sqm/month in 2014 to 55 USD /sqm/month in 2019.
- The climate of uncertainty and the drastic drop in consumption coupled with reduced purchasing power, are currently the main challenge of the retail market and have severely conditioned the opening of new street stores and the completion or opening of the planned shopping complexes for the center of Luanda.
- In the short term, stagnation in the demand for commercial spaces is expected to continue. Still, it is expected that the economic recovery will see the expansion of existing networks and the entry of new players in this market segment.
- The surrounding area of Luanda has been consolidating itself as the reference for commercial complexes, meanwhile, real estate development of this type of projects has been driven exclusively by large distribution operators.
- In terms of available stock, the 21 existing commercial complexes in the great city of Luanda totalizes approximately 350.000 sqm GLA.
- In Luanda, the prime sales value is around $ 6.500 / sqm and the prime rent is around $ 50 /sqm/month, representing a reduction of 20% and 45%, respectively, since the beginning of the economic crisis.
- The industrial and logistics segment maintains it’s trend of an increase in professionalism.
- The expectations for these segment point to an expected growth in the coming years, which will follow the evolution of the national economy and the Executive’s bet in the National Industry.
- Even so, since the beginning of the economic crisis, demand has been decreasing, consequently, a continuous drop in asking price values, more significant in lease than in sale values.
- In this perspective, Zenki Real Estate estimates that in the last 3 years the lease values for prime properties have fallen by an average of approximately 30% and sales figures by an average of 25%. The commercialization of land for industrial and logistic use is about 20% below the values practiced at the beginning of 2016.
- Currently, the prime sale value of warehouses in Viana is around 1.200 USD / sqm and the prime rent value of warehouses in Viana is about 10 USD /sqm/month.
- The residential segment has also been experiencing signs of economic slowdown, with a continuous reduction in the levels of new construction and the increased availability of used or semi-new residential solutions in the main areas of the city.
- The exit of some companies from the market has caused an increase in the availability of smaller apartments (1 bedroom and 2 bedroom apartment), which are typically destined for the expatriate staff. In this way, the trend of low demand levels for both sale and lease continues.
- As for the prices of references, there was a descending adjustment, reflecting a further decrease of 24% in prime sales value, compared to the values up to the beginning of 2016, currently standing at 6.500 USD / sqm.
- The hotel sector depends almost entirely on the corporate sector, in particular, companies related to the Oil & Gas sector, a situation that has been reflected in the main operating indicators, with a special effect on hotels.
- Luanda and Talatona for example, have registered an average occupancy rate of 50% in the last 2 years.
- During 2019, the average price per room registered a reduction of 20%.
- Taking a look at the past years, there have been very few new hotel developments in Luanda, yet , The National Development Plan for 2018 – 2022 points to the tourism sector as one of the Government’s strategic bets for the upcoming years.
