Housing Investment Landscapes: Angola

Angola is one of the fastest urbanising countries in Africa, putting extreme pressure on the need for housing in urban areas. Its housing deficit was estimated at more than one million units in 2010 and demand was expected to grow considerably. Angola’s housing crisis must also be understood in the context of a country whose 27-year civil war, which ended in 2002, left its infrastructure in tatters.

Most investment in housing in Angola has been by way of the government, which has funded an ambitious post-war housing program thanks to its vast oil reserves. The country’s petroleum sector accounts for nearly 45% of GDP and has helped it to obtain various oil-backed loans from international lenders, especially China.

The scale of Angola’s state-led urban planning projects, including infrastructure provision, is remarkable. In 2014, the data from the Ministry of Urbanism and Housing showed that almost 152 000 units had been delivered with financing from the state budget, mainly in newly developed towns called centralidades. Each centralidade provides housing for about 2 000 families, housing usually intended for civil servants and middle-income clients. Around the capital city of Luanda alone, five new cities are in various phases of construction: Kilamba Kiaxi, Cacuaco, Zango, Km 44 and Capari. The master plan for Kilamba Kiaxi includes homes for 200 000 inhabitants and the budget is reportedly US$3.5 billion, financed by a Chinese government credit line and built by a state-owned Chinese contractor. Indeed, many government-funded, large-scale housing projects are contracted out to Chinese state-owned companies and Chinese subcontractors. China has also been the country’s largest source of finance for housing construction.

While the level of development is impressive when compared to regional counterparts, the lack of private sector involvement in the industry is notable. Due to Angola’s command economy history and ongoing oil production, private real-estate investors and companies building housing usually look to financing from the state rather than financial markets to access funding. This has resulted in little need to develop other housing finance products to fund housing delivery. Rather than develop mortgage-based products, banks financed social housing projects when they were guaranteed by the government.

Government housing schemes are unaffordable for low income households. Apartments in the Kilamba Kiaxi project, for example, are marketed from US$84 thousand, when the country’s GDP per capita on a PPP basis was barely US$6 thousand in 2016. Using CAHF’s online affordability calculator, only 2.2 percent of the population would be able to afford an US$84 thousand house. As a result, most Angolans still build their own housing, raising money from family members, employers, or their own savings. Land for housing is frequently sourced on the informal property market and without a clear title, which disqualifies the home builder from receiving a mortgage.