Special Focus: Lusophone Africa
Fastest growing African economies face
real estate shortage
Despite a boom in planned construction projects in Mozambique and Angola, investors face
a raft of bureaucratic hurdles that can make it hard to raise the funds to begin building
Rodrigo Almeida Dias
Though Mozambique and Angola
are currently two of fastest growing
economies in the world, there is still
a considerable shortage of residential
and office space, according to Rodrigo
Almeida Dias, Head of Mozambican
Desk at F. Castelo Branco & Associados
in Portugal.
He says that both nations have
financial systems that have yet to
either fully meet the demand from
multinationa ls, or adapt to an emerging
middle-class. In addition, Almeida Dias
points out that “despite the low vacancy
rate, most buildings have urgent repairs
and have sky high rent prices compared
to continental Europe”.
By way of government and foreign
investment response, there is currently
a boom in construction projects planned
for completion in 2015/2016, but foreign
investors wanting to buy property
in Mozambique and Angola still face
bureaucratic constraints at every stage of
the process.
“In Mozambique, as the land is owned
by the state, you cannot mortgage the
land itself,” says Almeida Dias. “This
makes it hard to raise the necessary
funds from banks or investors to do the
building.” And while Angola is more
advanced, “it’s difficult to ascertain who
owns the land, identify where properties
are located, the size, the owner”, says
João Robles, Head of the Angolan Desk
at the same firm. “In certain situations it
requires caution to make sure that you are
buying what you intend to buy.”
However, while the pressure on
lawyers to exercise due care when
offering a formal legal opinion will
continue, Almeida Dias and Robles are
starting to see signs that such problems
are being addressed, with the approval
of a new Angolan legal framework for
real estate funds, and a recent expression
of interest for the review of property
registration procedures in Mozambique.
Investors turn to African agriculture
Eduardo Lobo Martines
Though oil and gas have been the main
areas of interest for foreign investors in
Africa, agriculture is becoming increasingly
appealing, with entities from Brazil and
China leading the charge.
The two economies have ever-growing
populations but limited land to develop
food. The demand for produce, like rice,
soya bean and ethanol, continues to soar so
investors are looking to countries such as
Ethiopia, Angola, Mozambique and Ghana
for agriculture investments.
Eduardo Lobo Martines, Head of
Business & Practice Brazil at Vieira de
Almeida & Associados, says investors are
looking at the entire agriculture chain for
opportunities. “Such investments combine
with the Comprehensive Africa Agriculture
Development Programme, which is an
African Union initiative to improve food
security, nutrition, and increasing incomes
in Africa. The aim is to increase growth in
agriculture by six percent annually.”
Lobo Martines says the African agriculture
54 • IBERIAN LAWYER • March / April 2014
sector faces many challenges, including
choosing the most suitable development
model. They usually take two general
forms – large-scale, mechanised commercial
farming and small, family farming.
“It is very important, however, that
whatever model investors choose they
make sure that they work with domestic
suppliers, companies and people who
know the local market and the local
production structure,” Lobo Martines
says. “They need to include local
communities in the process, otherwise it
will not work in the future.”
There are challenges and risks involved
that vary from country to country,
such as land and property rights, state
interference, political risk, governmental
red tape, cultural differences, as well as
a lack of infrastructure. However, Lobo
Martines remains positive. “There are
opportunities and agriculture can be the
platform for further growth in exports
and infrastructure.”
www.iberianlawyer.com