Angola’s Middle Class Clamors for Housing Amid Oil Boom

Guilhermina Simoes, a manager at Banco Bic SA in Angola, sat on a stool in the midday heat with a knapsack as she planned to camp overnight and beat the Monday morning crowd to buy a new apartment.

“I’m not leaving until my application is submitted,” said Simoes, a 30-year-old mother of three and a graduate of the country’s Agostinho Neto University. “It’s not a question of choosing where to live, it’s a question of opportunity. There’s nothing else.”

Simoes is among middle class Angolans willing to line up for days to find new homes to escape their rundown neighborhoods in Luanda, the capital of Africa’s second-biggest oil producer after Nigeria. Thousands of people wait for 1,200 application spots a day at Kilamba, a new Chinese-built city of 5,400 hectares (13,300 acres), while other sites at Cacuaco, Capari, Kilometer 44 and Zango are also filling up.

Angola, where a 27-year civil war ended in 2002, is rebuilding with the help of Chinese loans backed by oil production 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.

Photographer: Issouf Sanogo/AFP/Getty Image

While Ferraris and Range Rovers increasingly appear on Luanda’s roads, millions of residents still live in tin-roof slums on dirt tracks with open sewers and no running water. Close

While Ferraris and Range Rovers increasingly appear on Luanda’s roads, millions of... Read More

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Photographer: Issouf Sanogo/AFP/Getty Image

While Ferraris and Range Rovers increasingly appear on Luanda’s roads, millions of residents still live in tin-roof slums on dirt tracks with open sewers and no running water.

Building Challenge

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.

Economic Growth

Before coming to Kilamba on March 3, Simoes spent a week gathering the necessary documents, such as her tax-payer number, national ID and social security card. She also needed a letter from her employer proving she earns $1,500 a month to qualify for a $600 per month rent-to-own plan to buy an $80,000 three- bedroom apartment.

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.

“With Angola’s booming oil economy, a growing middle class is seeking to make gains, through property, consumption and investments,” Alex Vines, head of the Africa Program at Chatham House in London, said in an e-mail.

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.

Benefit Expectations

“Though small as a percentage of the general population, Angola now has an emergent, increasingly articulate middle class expecting the benefits of peace and oil prosperity to flow to them,” Ricardo Soares de Oliveira, a lecturer in comparative politics at Oxford University, said by e-mail.

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.

Ghetto Life

While Ferraris and Range Rovers increasingly appear on the roads in Luanda, where a hamburger costs $20, the most expensive of anywhere surveyed by Mercer, millions of residents still live in tin-roof slums on dirt tracks with open sewers and no running water.

“I want to stop living in my neighborhood in central Luanda because it’s a like a ghetto,” said Nelson Dias, a 38- year-old computer engineer with Empresa Interbancaria de Servicos SA, who’s also seeking an apartment at Kilamba. “This place is organized, it’s a real city.”

Traveling south from Luanda on a new highway, Kilamba’s apartment blocks rise from the countryside foliage, each neighborhood a distinct color, such as blue, green and yellow. The pristine roads, sidewalks and parkland inside are also like almost nothing else in the country.

“I like living here because it’s comfortable and it’s a good place for children with lots of space to play,” said Claudia Patricia, 30, a four-month resident of Kilamba with her husband and two children. “It’s clean and quiet.”

Election Promise

Delta Imobiliaria Sociedade de Promocao, Gestao e Mediacao SA, which oversees the apartment sales, is a private real estate company formed in Dec. 2007 with government funds.

During the 2008 legislative election campaign, President Jose Eduardo dos Santos promised to build one million houses over four years.

“More than 70 percent of Angolan families still do not have a decent house,” he said then.

Simoes had her application for a three-bedroom apartment accepted March 4, and she expects an answer within two weeks. If it’s approved, she has a month to make her first payment.

“Thank God I managed to submit my apartment application,” she said. “It was too much suffering, but at the end of the day it paid off.”

To contact the reporter on this story: Colin McClelland in Johannesburg at cmcclelland1@bloomberg.net

To contact the editor responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net

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