Mozambique’s real estate market has been steadily growing over the past years, in sharp contrast to many other regions in the world, says South African-born Ettiene Erasmus, managing director of Mozambique Property Development and Investments.[hidepost=9][/hidepost]
The company is currently developing the Bazaruto Island View Estate, situated close Vilanculos, about 700 kilometres north of Maputo. When completed, the development is expected to feature a combination of privately owned homes and hotels as well as a marina and plastic surgery facility. According to Erasmus, construction work on the first houses will start in January 2012.
Although this is Erasmus’s first foray into the property industry, he has been doing business in Mozambique for close to 20 years. He notes that he “always knew that the property market will be a good industry to be in once things start to take-off”. According to recent data from Rand Merchant Bank, Mozambique is currently one of the fastest growing economies in Africa, with an expected average annual GDP growth of 7.8% from 2011 to 2016.
Up to now, the development was mainly promoted to South Africans, but Erasmus says his focus will now be to attract European buyers.
According to Erasmus, foreigners often find it difficult to understand Mozambique’s property laws. He explains that it is not possible to own an empty plot of land in Mozambique, only if there is a development on it. “The moment a house is built on a piece of land, the owner can get a title deed on that building.” He explains that this is to encourage development in the country.
“I always say to people in South Africa to go to their banks. All the South African banks will give you a bond to buy a house in Mozambique. A bank is not going to approve a loan if they are not sure about property ownership.”
A few months ago, the safety of foreign-owned property in Mozambique came under the spotlight when South African newspaper Beeld reported about an incident where armed soldiers and police took possession of the La Perla holiday resort in southern Mozambique. However, it was later alleged that there were irregularities with the development of the resort. According to Beeld, one of La Perla’s South African developers was also accused of fraud for allegedly taking deposits from investors for land on a separate development that was never developed. In a lead article, the same newspaper also urged South African property developers to stop doing as they please in Mozambique and to observe the country’s laws.
Erasmus describes these events as unfortunate and says the Bazaruto Island View Estate fully complies with all property legislation and laws in Mozambique.
Erasmus notes that Mozambique’s operating environment has improved considerably since he first started doing business in the country. “Over the last 20 years there has been as a dramatic change in Mozambique as there was in South Africa. Mozambique is definitely growing.”