AFRICANGLOBE – It is 9:58 am on a Tuesday morning. A group of shoppers wait anxiously for South African chain Woolworths to open at 10:00 am. Two of the irritated shoppers, Andre and Alicia, originally from Portugal, live in a $5000 per month condo, situated on the third floor of this commercial center.
Not surprised by the rent they pay in Maputo’s newest shopping mall, Centro Commercial Mares, they are disturbed by the hours of operation for businesses in the shopping center. The price, they say, is worth it because they have safety and reliable utilities and are situated next to Maputo’s famous Costa do Sol beach.
Further south along Avenida Marginal, a seafront road along Mozambique’s booming capital, sits the newly erected Radisson Blu hotel and the construction site for the expansion of the Southern Sun hotel. A quick right turn up Rua Jose Craveirinha takes you to Avenida Julius Nyerere and the growth center of Maputo’s real estate boom.
Apartment blocks, hotels and modern offices characterise the changing waterfront and city center of Maputo. Slowly displacing the Portuguese colonial style buildings are new condominiums and two to three bedroom apartments that rent for at least $2000 to $3000.
The older apartments will still cost about $800 to $1000. Mozambique’s GDP per capita will hit about $1250 for 2013. Prices are obviously inflated. But regardless the increase in price, buyers come in doves, largely from Mozambique’s thriving energy industry.
It is no wonder people think this country is Angola waiting to happen, says a finance manager at Vale, at current projected growth numbers for real estate prices, only oil & gas companies will survive in the country.
Office space in the city center goes upwards of $40 per square meter. The price is expensive but not too extreme. But with the growing influx of foreign investors and companies, the prices can only remain reasonable for another one or two years. For comparison, Luanda, Angola’s thriving capital offered similar prices per square meter before its oil boom. Now businessmen pay upwards of $100 per square meter in the city. The change in prices, continues the finance manager at Vale, climbed sharply from reasonable to ridiculous in a matter of two years.
For several years Luanda has been in the top two for most expensive cities in the world, often taking the top spot. That is partly due to a rapid influx of oil money and partly due to a limited supply of goods after the civil war ended in 2002. Maputo is more gas money than oil money (for now) and has strong trade with South African companies. But the positives that lend well for keeping food prices down do not affect real estate.
Specifically limited supply of hotel rooms and office spaces will persist for the near future. If you could double the amount of real estate tomorrow, says one government insider, then maybe price growth could slow. This is not possible but do not think investors and developers are not working together to make such growth happen in near term.
Skyrocketing prices and accompanying investment returns attract investors from Europe and Asia. The Portuguese were first movers of some sort to their former colonial outpost but have been slowed by tightening restrictions on their movement into the country. Now other Europeans join the South Africans and Asians in reaping the rewards of the sector.
Maputo may not see Angola’s prices for local goods. A bar of soap in Luanda can be double the price of the same brand in Maputo. The same goes for certain foods and beverages. Maputo is still a tourism heaven, says one local real estate agent, with its beaches, open culture, and kind people which are hard to find in tandem in most parts of the world. But, he continues, one cannot think that the gun on its flag feels pressed against your head when you see the bill for your monthly rent whether commercial or personal.
By: Kurt Davis Jr.