Real estate activity in Gabon has decreased slightly since 2012, but remains on an upward path nonetheless, with demand across all market segments driving growth. High-end housing continues to be well received, and low-income housing is much needed. Recent government initiatives to cut back on red tape should help to speed up project delivery, which should in turn benefit affordable housing and large-scale commercial or retail projects.
HIGH-END GROWTH: 2012 saw a peak in housing prices as a result of the Africa Cup of Nations (Coupe d’Afrique des Nations, CAN), a football tournament organised by Gabon and Equatorial Guinea, with commissioned construction projects wrapping up ahead of the event and a growing presence of international visitors driving demand higher than usual.
Market activity has since slowed down, stabilising on an upward trend. “The market is quieter than last year. Many low- to mid-quality goods were delivered in time for the CAN. This was a welcome development for real estate, raising investor confidence as to the ability to deliver projects on schedule,” Riad Bahsoun, managing director of Aloy Invest, told OBG. “Property buying and selling has stabilised on an upward trend, with prices growing about 4-5% per year. Renting, too, continues to grow steadily,” said Bahsoun.
Aloy Invest is one of many real estate agencies in Gabon, including Agences No1, AICI, AIL, Alliance, IMP Conseil and Bureau International de Conseil et de Promotion (BICP), most of which generally concentrate on high-margin developments and projects.
“Most of our business consists of buying and selling property for high-end clients. We also do property management and have started to offer real estate as a financial product, with return on investment of about 8-11%,” Bahsoun told OBG.
Rentals and sales to expatriates have generally fuelled growth in high-end housing, as international institutions and foreign companies seek a base for their offices and staff. In recent years, however, the growth of the Gabonese middle and upper classes has also contributed to the development of high-end market.
PROPERTY PRICES: Property prices in the capital, Libreville, may vary drastically on the same street, due to lack of market structure and uneven urban development, making it difficult to generalise about pricing. As a result, one can only provide rough estimates.
High-end neighbourhoods, such as Louis, Haut de Gué-Gué and Batterie IV, have seen prices of between CFA300,000 (€450) and CFA500,000 (€750) per sq metre. Other in-demand areas, such as Gros Bouquet, Kalikak and Montagne Sainte, have ranged between CFA150,000 (€225) and CFA 250,000 (€375) per sq metre. On the commercial side of the market, a shortage of office space has led companies to move into villas and other residential properties. Such spaces usually rent monthly for between CFA12,000 (€18) and CFA14,000 (€21) per sq metre.
The cheapest residential units cost on average about CFA20m-25m (€30,000-37,500), while a 4-sq-metre room rental can run from CFA50,000 (€75) to CFA100,000 (€150) in more expensive areas. With a monthly minimum salary set at CFA50,000 (€75), a high cost of living and high property prices, the majority of the population cannot afford to buy a house even at the cheapest prices.
URBAN DEVELOPMENT: The National Agency for Public Works (Agence Nationale des Grands Travaux, ANGT) has a number of urban regeneration projects scheduled, including a notable scheme to revitalise the Port-Môle area. China Harbour Engineering Company (CHEC) signed a CFA59bn (€88.5m) contract to transform the 4-ha old port into a 44-ha complex comprising conference, cultural and shopping centres, as well as a beach, a sports centre and a marina.
The revitalisation of the Port-Môle area is a part of a larger urban development plan, which, if completed, could buoy property prices in Libreville. Other elements of this urban regeneration initiative include the extension and rehabilitation of the Boulevard de Mer, one of the city’s chief arteries extending along the estuary. The ANGT has plans to widen the road and set up a number of administrative buildings along it, reducing traffic and creating in-demand office space. The agency is also involved in a project to renovate a segment of the capital’s primary north-south axis, the Glass district road. The main aim of this project is to enhance circulation and reduce traffic blockages, making room for the city’s developing public transport network, with a dedicated lane for buses.
SOCIAL HOUSING: Gabon has a high urbanisation rate, with over 80% of the population currently living in cities. This is largely due to the rural exodus experienced since the 1970s, as agriculture and other rural industries lost ground to the oil and gas sector. With time, growing demand for space and limited sector regulation resulted in sporadic and informal urban development, with many people settling down on the outskirts of town without a land title.
Outpacing the provision of legal and affordable housing, rapid urbanisation under a limited regulatory framework left Gabon with an estimated shortage of about 200,000 houses, the majority of which is in Libreville. The capital itself has a population of about 800,000 people and an estimated housing gap of around 160,000 units. To address this situation, the government promised in 2009 to build 5000 houses per year and also announced a number of reforms aimed at streamlining the regulatory framework.
GOVERNMENT REFORMS: Recent government reforms to the housing sector range from a shake-up at the Ministry of Housing, Urbanism, Ecology and Sustainable Development, to the creation of new institutions and policies for urban planning and housing, all of which are designed to reduce the burden of bureaucracy and facilitate sector development.
The government also created in 2011 the National Agency for Urban Planning, Topographical Works and Land Registry (Agence Nationale de l’Urbanisme des Travaux Topographiques et du Cadastre, ANUTTC) to reform the land title attribution process. In May 2012 the ANUTTC introduced a one-stop shop system, also known as a “guichet unique”, coordinating all ministries and institutions involved in attribution. The one-stop shop system aims to reduce the time it takes to obtain a land title from 10 years to 180 days, and cut the number of administrative steps from 134 to seven.
The new computerised system took six months to become operational, but at present appears to be working well. “The process for buying land has become much clearer in terms of administrative work. This is a significant improvement in the sector that helps to secure investment,” Bahsoun told OBG. “The creation of a new coordinated system for land purchases responds to one of the key challenges of the real estate sector in Gabon: the acquisition of land titles. The system should simplify this process,” Philippe Chandezon, BICP’s director-general, told OBG.
Apart from the ANUTTC, the government created the National Housing Council (Conseil National de l’Habitat, CNH), a body of public and private sector representatives tasked with establishing and implementing a coherent national housing policy, and it also restructured the Special Construction and Urbanism Brigades (Brigades Spéciales et de la Construction, BSUC). With the CNH, the government brought in the private sector to the development of housing policy to a certain extent, whereas with the reinforcement of the BSUC it sought to provide a more forceful answer to the issue of illegal land occupation.
MODEL SITE: The government has identified Angondjé, a suburb north of Libreville, as a key area for expansion to relieve some of the housing pressure in the capital. The project is one of the first in which a new “smart code” for sustainable urban development is being applied. As such, it may serve as a model for future urban development projects. The purpose of the Angondjé project is to create an integrated community, including a variety of housing options, from low-cost to high-end housing, with hospitals, schools, parks, police and fire stations, commercial spaces and roads. The government originally planned to have 5000 units built by 2013, with an additional 5000 to 7000 houses per year until 2015, but according to the ANGT, the target for 2013 is currently closer to 1000 delivered houses by year-end as a result of delays.
OTHER PROJECTS: Several social housing projects have been announced in recent years to close the housing gap. The Tunisia-based Groupe Kontinental Conseil et Ingénierie (Groupe KCI), for example, is in charge of building 5000 social units in Nkoltang, 27 km from Libreville. The project represents a €300m investment and is set to implement the smart code, with the construction of a town hall, a supermarket, a school, administrative buildings and shops. It is expected to generate about 400 direct and 2000 indirect jobs and to be completed by 2016.
Another social housing project is also slated for construction in Cap Estérias (some 30 km north of Libreville) by Oméga Plus Gabon. The Banque Gabonaise de Développement (BGD) has provided financing for 5000 social housing units to be delivered by 2018, with an expected construction rate of 1000 houses per year between 2013 and 2018.
Before construction work can start, however, the project will have to work out an agreement regarding its boundaries with the nearby Raponda Walker Arboreum, to avoid a potential conflict with the National Parks Agency. As of July 2013, no new developments had been announced.
A different type of social housing project, undertaken recently as an alternative and temporary solution to help address the deficit, is the construction of pre-fabricated houses in Angondjé by Turkey-based firm Dorce Prefabricated Buildings & Construction Industry Trade. The company is building 598 houses, which will have an overall capacity for 2000 people. Construction should be completed in 2013 and thus contribute to the achievement of the revised target of 1000 houses delivered during the year.
FINANCING: Three actors share the government budget for housing projects: the Ministry of Housing, the ANGT and Société Immobilière (SNI), a company established in 1976 by the government to develop and oversee housing projects nationwide. The SNI has a capital of CFA1.2bn (€1.8m), to which the largest contributors are the state (70%) and the BGD (20%). Banks and other credit institutions also support the sector, providing financing to both real estate developers and buyers. Banque de l’Habitat Gabonais (BHG), for one, was established in 1960 as a subsidiary of BGD, to stimulate investment in the sector by providing real estate lines of credit. The BHG offers low interest rates for a period up to 20 years, for the purpose of financing the acquisition of land and housing, in addition to the construction and rehabilitation of existing houses. BHG has a capital of CFA6.05bn (€3.8m), 58% of which is owned by BGD.
In 2011, the government created an additional institution to provide financial support for the development of the housing sector and in particular for social housing projects. While it is placed under the supervision of the Ministry of Housing, the Guarantee Fund for Housing is administratively and financially autonomous and is in charge of managing and allocating resources for social housing projects across the country to tackle the existing deficit.
Despite the range of options available to support the development of housing and facilitate credit access, it remains difficult for smaller developers and buyers to obtain financing for real estate. “Interest rates remain high. It is difficult to get a loan lasting beyond eight years, and it is impossible to negotiate anything below a rate of 12-15% in Gabon,” Bahsoun told OBG. Even so, the situation seems to be improving, “A few years ago, you would have gotten an interest rate of 17%,” Bahsoun added.
FOREIGN APPEAL: With growing demand for housing and a number of urban development projects planned, including social housing, opportunities for investment in real estate are likely to improve in the foreseeable future for national and international companies, the latter of which have been playing an increasingly important role in large-scale projects. Apart from the aforementioned case of Groupe KCI, the India-based firm RPP Infra Projects is also operating in Gabon, having received CFA163bn (€247m) in domestic and international funding in 2011 secured by the Ministry of Housing to build 10,000 houses across the country between 2012 and 2015.
OUTLOOK: Demand for housing, on both the low and high ends of the market, is likely to continue providing opportunities for investment for local and international companies, although the implementation of ensuing projects could still face obstacles as plans for urban regeneration and expansion confront sporadic and informal urban development on the ground.
Notwithstanding these obstacles, a push from the government to renovate major urban centres and meet pressing social housing objectives could have a positive effect on the real estate market over the medium to long term. Additionally, government reforms to streamline bureaucracy and overcome such key challenges as obtaining a land title will eventually benefit all actors and create an increasingly attractive environment for investment.
While urban regeneration initiatives could give a new look to the city and improve overall quality of life, providing new working, leisure and commercial space, they may nonetheless take some time to reach completion and exert an impact on the real estate market.