Property Investment In Angola: Foreigner's Guide

Angola's real estate market is heavily influenced by oil prices, resulting in high property prices that often discourage foreign investors. However, recent developments, including a slight decrease in oil prices and ongoing efforts by the government to combat corruption, have contributed to a more favourable real estate market, attracting an increasing number of foreign buyers. So, can foreigners buy property in Angola?

High property prices

Angola's property market is known for its high prices, with the average cost of an apartment or house ranging from $500,000 to $1 million. These prices are significantly higher than in many other countries, and even comparable to prices in top global cities like New York or Moscow.

The high prices in Angola are partly due to the country's history of civil war, which disrupted industry, agriculture, and local production, and damaged infrastructure. As a result, Angola now relies heavily on imports, with an estimated 80% of consumable goods being brought into the country. This includes not just luxury items like imported tomatoes, which can cost $16 per kilo, but also essential food items like meat and vegetables. The cost of importing goods, including the bureaucratic customs process and congested ports, contributes to the high prices seen across the country, including in the property market.

The capital city of Luanda is particularly notable for its high property prices. A basic meal for two in a restaurant can cost $50, and a hotel room can be as much as $400 per night. Renting a house or apartment in Luanda can also be very expensive, with monthly rents ranging from $10,000 to $25,000, depending on the location and condition of the property. Even with these high rents, there is a shortage of renters, and some apartment blocks remain empty.

The high property prices in Angola are not limited to the rental market. Purchasing property as a foreigner is possible, but it is a complex process that requires obtaining permission from the government. Foreigners must also navigate restrictions on land ownership and title registration, and are required to obtain a local partner to own land and property purchased through a registered Angolan company.

Despite the challenges and high prices, Angola remains an attractive destination for foreign investors due to its growing economy and strategic location. Luanda, in particular, is a popular destination for real estate investment, with property values expected to continue rising in the coming years. However, it is important for potential investors to carefully consider the risks, which include weak legal protection, unclear property rights, corruption, land disputes, and limited financing options.

Legal process and local laws

The legal process and local laws regarding property ownership in Angola are complex and subject to change. Here is an overview of the key points you should be aware of:

• Land Ownership: According to the 2004 Land Law, all land in Angola is owned by the state. However, most urban and some non-urban land can be privately owned through long-term leases from the government, which can be renewed.
• Permission from the Government: Foreigners need permission from the Angolan government to own property in the country. This process can be complex, so it is advisable to work with a lawyer who understands the local laws and regulations.
• Registration Process: Registering property can take around 6-11 months, and the fees for registration are typically around 3.2% of the property's value.
• Restrictions on Land Ownership: Foreigners must obtain a local partner if they wish to own land or property purchased through a registered Angolan company.
• Property Taxes and Fees: When buying real estate in Angola, there are various taxes and fees to consider, including transfer taxes, stamp duties, notary fees, and registration fees. These costs can vary depending on the property's value and location.
• Intellectual Property Rights: Angola offers basic protection for intellectual property. The country is a member of the World Intellectual Property Organisation (WIPO) and has adopted the Paris Convention for the Protection of Industrial Intellectual Property.
• Inheritance Laws: Angola's formal law supports equal rights for women regarding assets and property. The 1989 Family Code allows for joint title in land and property. However, traditional succession practices often favour sons over daughters when it comes to inheriting land.
• Real Estate Market: Luanda is a popular destination for foreign buyers due to its thriving business community and economic growth. Other cities such as Benguela and Lubango also offer investment opportunities.
• Property Prices: Purchasing property in Angola can be expensive, with prices ranging from 500 thousand to 1 million USD per apartment or house.
• Construction Regulations: If you plan to construct a building on your land, you must adhere to government regulations for building. It is essential to familiarise yourself with these regulations before beginning any construction.
• Due Diligence: Before investing in Angolan real estate, it is crucial to conduct thorough due diligence. Risks to consider include weak legal protection, unclear property rights, corruption, land disputes, and limited financing options.

Overall, while it is possible for foreigners to buy property in Angola, it is essential to understand the legal process and local laws to navigate the complex landscape successfully. Working with experienced professionals, such as reputable real estate agents and lawyers, is highly recommended.

Location and property type

When it comes to purchasing property in Angola as a foreigner, it is important to consider both the location and the type of property you are interested in. Here is a guide to help you navigate this process:

Location

When considering the location of your prospective property in Angola, there are a few factors to keep in mind. Firstly, it is recommended to look for properties in desirable areas such as Miramar, Ingombota, and Mianga. These neighbourhoods are known for their prime locations, proximity to embassies, beaches, schools, and other amenities. The police also patrol these areas frequently due to the presence of embassies and schools, making them relatively safer options.

Another location to consider is Talatona. However, it is advised to exercise caution when considering properties in this area as there have been reports of numerous blocks of apartments standing vacant for years due to a lack of renters. Therefore, it is crucial to research the local property market and demand before making a decision.

Property Type

In terms of property type, apartments and houses are the most commonly discussed options for foreigners in Angola. The average cost of purchasing a property can range from 500 thousand to 1 million USD per apartment or house. If you are considering renting out your property, the average rent you can expect to charge is between 10,000 and 25,000 USD per month, depending on the location and condition of the property.

It is also worth noting that Angola offers luxury properties for sale, including prestigious villas and apartments in various provinces such as Luanda and Benguela. These properties often come with additional features such as private pools, gardens, and proximity to desirable neighbourhoods.

Additionally, if you are unable to find your ideal property, you do have the option to construct it yourself on a plot of land that you purchase. However, keep in mind that there are regulations and government guidelines that you must follow when building on land in Angola.

Taxes and fees

There are several taxes and fees that buyers must pay when purchasing real estate in Angola. These include transfer taxes, stamp duties, notary fees, and registration fees. The costs of these taxes and fees vary depending on the property's value and location.

The standard value-added tax (VAT) rate in Angola is 14%, but there are reduced rates for specific transactions. For example, a 5% and 7% VAT rate applies to certain foodstuffs and a 7% rate applies to hotel and restaurant services if specific conditions are met. Local entities with an annual turnover or import operations higher than AOA 350 million are subject to the standard VAT regime.

Property tax is levied on the taxable property value of urban and rural property owned, rental income derived from such real estate, and income derived from the sale or transfer of immovable property. The property tax rate for rental income is 25% nominally, but the effective rate is 15% as it is presumed that 40% of the rental income relates to costs. The property tax rate for the transfer of immovable property is 2%.

It is important to note that property registration in Angola can take 6-11 months and the fees for registering average 3.2% of the property value. Additionally, there is a five-year waiting period after purchasing land before it can be sold.

Risks of investing in Angolan real estate

Angola's growing economy and strategic location make it an attractive destination for foreign investors. However, there are several risks associated with investing in Angolan real estate that potential investors should be aware of:

• Weak legal protection and unclear property rights: Angola's regulatory system is complex, vague, and inconsistently enforced. The country's legal system is based on the Portuguese legal system, and legislation is the primary source of law. While the country has a comprehensive anti-corruption legal framework, implementation remains a challenge.
• Corruption: Corruption remains a strong impediment to doing business in Angola and has negatively impacted international market investment opportunities. The government has implemented various measures to improve governance and fight corruption, but the perception and occurrence of corruption continue to be a concern for investors, especially outside the extractive industries.
• Land disputes: All land officially belongs to the Angolan state, as per the Law on Land and Urban Planning passed in 2004. While most urban and some non-urban land can be privately owned through long-term leases from the government, there are reports of land grabbing and unresolved status of traditional land tenure.
• Limited financing options: Foreign exchange controls and regular problems in accessing foreign currency are significant issues for investors. Additionally, the undeveloped financial system and high inflation rate can deter investment.
• Economic instability: Angola has experienced consecutive years of economic recession, with a sharp decline in GDP and a decrease in oil production, which accounts for a significant portion of the country's exports. The COVID-19 pandemic and the plunge in crude oil prices further exacerbated the country's economic crisis.
• Infrastructure challenges: Inadequate infrastructure, including a lack of basic infrastructure, is one of the factors detrimental to foreign investment in Angola.
• High costs and complex processes: Investing in Angolan real estate can be expensive, with average property prices ranging from 500 thousand to 1 million USD. The process of purchasing property can also be complex and time-consuming, involving hiring a lawyer, conducting due diligence, negotiating the price, signing a purchase agreement, and registering the property.

Frequently asked questions