Demand for housing continues to rise at all levels of Gabon’s real estate sector, but the high-end housing market has primarily driven growth. Gabon also faces important social housing needs and, despite ambitious government building programmes, little progress has been seen in recent years. However, market activity should see a spike in 2012 as several social housing projects get off the ground, aided by a government effort to streamline sector regulation and facilitate access to land titles.
HIGH-END GROWTH: Demand for high-end housing has grown steadily in recent years, driven primarily by expatriates and middle- and upper-class Gabonese, many of whom are returning from abroad. However, with limited space for expansion in Libreville and difficulties in accessing land titles for new projects, a shortage of space has led to spiralling prices. There has been some concern in recent years that the high demand for limited housing would lead to a speculative bubble and ultimately weaken the market. Prices saw a peak leading up to the African Cup of Nations (Coupe d’Afrique des Nations, CAN) football tournament in early 2012, as a spike in construction activity to prepare for the event and the presence of international visitors pushed demand for housing even higher. However, the market has stabilised since the end of the tournament. “Prices, while still high, have returned to a sustainable level in the high-end housing market since the conclusion of the 2012 CAN,” Riad Bahsoun, managing director of real estate agency Aloy Invest, told OBG.
A variety of real estate agencies exist to meet demand at different levels of the market, including Agences No1, Aloy Invest, AIL, Alliance, IMP Conseil, AICI and the Bureau International de Conseil et de Promotion (BICP). Created in 1984, BICP is the oldest real estate agency in Gabon, and brokers the sale of both individual units and buildings, in addition to offering consulting and investment promotion services. Higher-end agencies derive much of their income from brokering the sale and purchase of land for clients, as many land exchanges result in the construction of a new property. A handful of agencies also offer property management services.
PROPERTY PRICES: It is difficult to generalise about real estate prices in Libreville, as sporadic urban development and a low level of structure in the market mean that property prices can vary widely even on the same street. High-end neighbourhoods such as Louis, Haut de Gué-Gué and Batterie IV often draw between CFA300,000 and CFA500,000 (€450 and €750) per sq metre for comfortably sized properties. Properties in other in-demand neighbourhoods such as Kalikak and, further south, Montaigne Sainte and Gros Bouquet usually cost between CFA150,000 and CFA250,000 (€225 and €375) per sq metre. In the commercial market, there is a general shortage of office space in the capital, particularly as the number of foreign companies grows apace with economic development. As result, many companies choose to their base their operations in villas and other residential properties in the capital. Rental prices for such office spaces generally range between CFA12,000 and CFA14,000 (€18 and €21) per sq metre, per month.
The cheapest residential units in Libreville generally range around CFA15m (€22,500). Although the Gabonese minimum wage is much higher than that of neighbouring countries at CFA150,000 (€225), high property prices and an elevated cost of living make buying even the cheapest homes unaffordable for the majority of the population.
URBAN DEVELOPMENT: The National Agency for Public Works (Agence Nationale des Grands Travaux, ANGT) is also overseeing a project to revitalise the Port Môle area of Libreville, in an effort to transform it into a centre of urban life, which does not exist in the capital. US engineering firm Bechtel is currently developing the site plan for a 15-ha zone around Port Môle, which will ultimately include a refurbished marina area with public and recreation spaces, as well as a number of commercial and leisure structures including offices, restaurants and two hotels. The ANGT is expected to launch the first calls for tender in late 2012 or early 2013, pending the completion of feasibility studies and government approval of the building plan. The revitalisation of the coastal area should also contribute to increasing property values in the city centre in the medium term, as development projects continue. For example, the Port Môle project is expected to be the jumping-off point for plans to develop the Boulevard Triomphale, one of the city’s main thoroughfares extending east from the coast. Similar mixed-use building projects are planned for the boulevard, including commercial and residential spaces as well as public areas.
SOCIAL DEMAND: Gabon has a high rate of urbanisation, currently around 85%, and over half of this population resides in Libreville. As investment in agriculture and other rural industries lost pace to the hydrocarbons industry after the 1970s, the country saw a rapid rural exodus that has increased pressure in urban centres. Due to rising demand for space and limited regulation of the real estate sector, much of urban and real estate development has taken place in an informal and very often sporadic manner. The arrival of successive waves of rural populations has also led to the development of shantytowns on the outskirts of major cities.
As a result, Gabon faces an important housing deficit estimated at 200,000 homes nationwide, of which 160,000 are concentrated in Libreville. In addition to the evident social strain, the housing shortage provides leeway for landowners to manipulate prices. In 2009 President Ali Bongo Ondimba set the goal of constructing 5000 new housing units per year for a total of 35,000 units by 2017, but little concrete progress has been made until very recently. However, once the structural obstacles are sorted out, there is considerable political will and private sector interest to see a major boost in sector activity. Bruno Otah Ondounda, the director-general of the Housing Bank of Gabon (Banque de l’Habitat du Gabon, BHG), told OBG, “Since 2009, the investment budget of the government in housing has increased two or three times, which reflects the priority the authorities are placing on housing.”
SECTOR OVERHAUL: In the last year, the government has moved to eliminate a number of administrative and regulatory obstacles that are partially responsible for the lack of progress on social housing projects. In June 2011 the government initiated a top-to-bottom reform of the housing sector, including a shake-up of the Ministry of Housing and the creation of several specialised agencies, in hopes of streamlining the sector. Most high-level officials at the Ministry of Housing, Land Registry and Urban Planning were reshuffled, and Daniel Tchibinda was appointed the new secretary-general of housing.
The reforms have also included the establishment of several new institutions. The National Agency for Urban Planning, Topographical Works and Land Registry (Agence Nationale de l’Urbanisme, des Travaux Topographiques et du Cadastre, ANUTTC) was set up to plan and oversee all land and real estate development projects, to maintain and extend the national land registry, and to facilitate the purchase and transfer of property titles.
In May 2012 the ANUTTC introduced a guichet unique, or “single-window”, system to simplify the procedure for land purchases. By coordinating with all ministries involved, the guichet unique is expected to reduce the time required to obtain a title deed from 10 years to only 180 days and to cut the number of administrative steps from 134 to seven. Purchasing land for development purposes has been a slow and problematic process in the past, particularly for individuals and small-scale builders. The new system should dramatically speed up access to property, although a lack of available space in and around the capital remains a challenge.
As part of the same reform effort, the National Housing Council, which includes both public and private sector representatives, was created to design and implement a coherent national housing policy. The government also restructured the Department of Urban Planning and Construction to make it more effective in its mission to locate and resolve cases of illegal land occupation and unplanned or unzoned urban developments. Finally, a set of regulations for urban planning and design originally developed by the US-based firm Duany Plater-Zyberk & Company – SmartCode – was adopted to direct all future urban expansion. SmartCode is an open-source program intended for urban planning and design.
MODERN CITIES: The application of SmartCode principles will emphasise strategic and sustainable development by creating integrated construction projects. With the code, urban planning will be organised around self-contained communities, in which health and educational infrastructure, administrative facilities, transport access, waste management and water systems are integrated into the building plan. All civic facilities are meant to be accessible within a 400-sq-metre radius, in order to increase convenience, combat unregulated urban sprawl, and ensure respect of the environment and local populations.
Several challenges remain, and it will likely take some time for the streamlined land ownership procedures to come into full effect. Yet, these reform efforts have already brought a new structure and rigour to the housing market that bodes well for the coming years. Several projects that have been recently launched, or are set to be introduced soon, should boost sector activity considerably by year-end 2012.
The ANGT issued the first round of contracts for housing projects in late 2011, and the state is expected to invest CFA396bn (€594m) in such projects over the next five years. Increasing the national housing stock has been identified as a top priority, according to the National Infrastructure Master Plan, which was launched in June 2012. Of the €15.99bn identified for master plan projects between the years 2011 and 2016, €2.23 is allocated to housing developments. While a portion of the financing will come from the public sector, the private sector and foreign investment will also be critical to the realisation of these programmes. ANGONDJÉ: Work should soon pick up on a major urban development project in Angondjé, a northern suburb of Libreville. Given its proximity and the lack of existing structures, Angondjé was identified as a key area for expansion to relieve some of the housing pressure in the capital. The Angondjé district will be one of the first to apply the new SmartCode system. The building plan, which was approved in late 2011, provides for an integrated community with a variety of housing options, health and educational infrastructure, administrative centres, police and fire stations, parks, commercial outlets and leisure areas, as well as a structured road network and access to public transport. At full capacity the site may contain up to 30,000 homes.
Various types of housing will be available in the new district. The ANGT began constructing several model social and low-cost housing units in December 2011, and the first 1000 homes are expected to be completed by year-end 2012. According to ANGT project estimates, social housing units geared toward public servants are slated to cost between CFA13m and CFA20m (€19,500 and €30,000). Low-cost housing units, intended to increase access to quality housing for low-income residents, are slated to cost between CFA5m and CFA10m (€7500 and €15,000). The site also includes commercial real estate buildings, which will then be funded by private real estate promoters. The ANGT predicts that once the project enters full swing, a total of 5000 units (all types) will be constructed in 2013, followed by 7000 units per year between 2014 and 2015.
NEW PROJECTS: Another new housing development is under way on a 500-ha plot in Nkoltang, located on the Route Nationale 1 approximately 5 km east of Nkok, the site of a new special economic zone. The Nkoltang site is being prepared for construction by KCI Gabon, which is a construction and public works company present throughout Central Africa. The Nkoltang site will apply SmartCode and is expected to accommodate 5000 housing units at full capacity, as well as administrative and social infrastructure.
A similar urban district project applying SmartCode is planned for Lambaréné, a key river transport hub in the interior. The feasibility study and preliminary design have already been completed under the ANGT’s direction, and the project is slated to launch in 2014 with the construction of 1000 housing units.
In June 2012 the government announced a project to build 5000 homes in Cap Esterias, roughly 30 km north of Libreville, with financing from the Gabonese Development Bank (Banque Gabonaise de Développement, BGD). The plan is to construct 1000 homes per year between 2013 and 2018. However, like many projects before it, administrative obstacles may slow implementation. The project will only be able to move ahead once an agreement is reached regarding the boundaries of the nearby Raponda Walker Arboretum, so as to avoid a potential conflict with the National Parks Agency.
PRIVATE SECTOR: A government commitment to financing housing projects and efforts to streamline the regulatory context are all positive signs, but private sector investment in real estate will be critical for further stimulation of the industry. The ANGT expects private investment in development projects to rise steadily within the next 20 years. The National Infrastructure Master Plan identifies several financing mechanisms to facilitate this investment in real estate, including public-private partnerships, built-operate-transfer concessions and fully private projects. The state will likely favour joint venture structures, with shared risk and reward, on higher-value commercial, leisure and top-range housing projects.
FOREIGN APPEAL: A number of companies, both national and foreign, are already active in social housing developments in Gabon, and the increasing number of projects on the horizon is creating significant opportunities in the sector. The BHG’s Ondounda explains, “There is great potential in housing as there are a lot of real estate developers and construction companies seeking to promote and develop their activity in Gabon. These include local small and medium-sized enterprises as well as foreign companies which recognise the opportunities presented by the Emerging Gabon strategy.”
Many of Gabon’s large-scale social housing projects are led by international firms, with increasing participation from Chinese and Indian companies. The Indian firm RPP Infra Projects recently secured CFA163bn (€244.5m) in domestic and international financing through the Ministry of Housing to build 10,000 houses nationwide between 2012 and 2015. The homes are to be constructed under a “design-build-transfer” model, and the first model homes are expected to be complete and ready for approval by year-end 2012. Under the terms of the agreement, the government will provide RPP Infra Projects with 120 ha of land throughout the country at no charge; RPP has the right to build on 20% of the land and sell it to other firms. Another India-based firm, M3M, has announced plans to build 5000 low-cost housing units over the next two years, for an estimated investment of CFA46.7bn (€70m).
PROVIDING CREDIT: The budget for housing projects is divided between the Ministry of Housing, the ANGT and the National Real Estate Company (Société Nationale Immobilière, SNI), a government body established in 1976 to develop and oversee housing projects nationwide. Today, the state retains a 70% stake in the organisation. Of the 2011 public housing budget, CFA28.8bn (€43.2m) was allocated to the Ministry of Housing, CFA18bn (€27m) to the ANGT and the remaining CFA1.4bn (€2.1m) to the SNI.
In addition to public entities, a number of banks and credit institutions work to stimulate the sector and provide financing to real estate developers and buyers alike. One of the primary actors, the BGD, was established in 1960 with the social objective to provide access to real estate and household consumer loans. The BGD also funds various social and real estate development projects. The BHG was originally created as a subsidiary of the BGD, which still maintains a 20.4% stake in the housing bank. The BHG lends to both businesses and individuals to support social housing projects and the purchase of equipment and construction materials, with the specific goal of overcoming the housing deficit.
In addition, the Gabonese government has set up a public institution known as the Guarantee Fund for Housing (Fonds de Garantie pour le Logement, FGL), which is meant to play an administrative and financial role in distributing money to deal with the deficit. In the same vein as the development and housing banks, the FGL is tasked with providing loans at all steps of the housing construction and sale processes. Despite the multiplicity of organisations created to provide credit to the housing sector, smaller developers still have trouble accessing medium- to long-term credit at rates which they can afford.
OUTLOOK: While the industry continues to face many challenges, a concerted effort on the part of both the government and private sector partners to bridge the gap in housing should finally begin creating more opportunities in 2012. As various social and commercial real estate projects are moved under the purview of the ANGT, the agency is expected to bring private sector expertise and structure to the country’s ambitious real estate infrastructure programme. In the short term, a lack of new housing stock, including social housing and mixed-use projects, will continue to result in higher property prices in Gabon. As several new construction projects get off the ground, opportunities for foreign companies should continue to increase in the coming years.