Builders of a $7 billion waterfront development in Angola’s capital, Luanda, are seeking to attract an international hotelier such as Hilton Worldwide Holdings Inc. (HLT:US) to boost the profile of the project.
Baia de Luanda SA, whose shareholders include state oil company Sonangol Holdings Lda and the president’s daughter, Isabel dos Santos, is developing four plots around the upmarket seaside bay of the city. It wants a flagship hotel to be built on the site, part of a 7-kilometer (4.3-mile) spit into the Atlantic known as the Ilha surrounded by yacht clubs and some of the city’s most expensive restaurants.
“We have people knocking on our doors to have hotels here, whether Americans or Angolans,” Mauro Filipe Martins, business development director at Baia de Luanda, said in an interview at the site. “This project is a postcard for the new Angola.” He named Hilton as one of the hoteliers the developer is hoping to attract.
Africa’s second-biggest oil producer is luring foreign investors to help diversify the economy away from crude as it recovers from a 27-year civil war that ended in 2002. Dozens of construction cranes mark the Luanda skyline as offices, retail and residential developments are built to accommodate a growing middle class. The Angolan capital is Africa’s fifth-largest city after Cairo, Lagos, Kinshasa and Johannesburg, with almost 6 million people, according to data compiled by Bloomberg.
Angola’s economy excluding oil will grow by 6.4 percent this year, the International Monetary Fund said on March 19, up from about 5.8 percent last year. Total Gross Domestic Product expanded by an average of 9.2 percent in the five years to 2012, according to government budget documents. Angola pumped 1.68 million barrels a day in May, second to Nigeria in Africa, according to data compiled by Bloomberg.
The waterfront needs international brands such as the hotel chains to boost confidence in the developments and attract other foreign investors, according to Fernando da Ponte, manager at Luanda-based real-estate company Century 21 Angola. Three other projects under construction near the bay have the potential to add 350,000 square meters (3.8 million square feet) of new buildings.
“There is demand for retail and office space, but they’ll have to bring in big commercial brands as tenants or they won’t be able to support these developments,” da Ponte said in an interview in Luanda on May 30. “Compared with four years ago, when buyers would accept anything, developers now have to make sure they provide good finished spaces.”
Hotel chains including Hilton and Marriott International Inc., the owner of the Ritz-Carlton and Renaissance brands, are expanding in Africa to take advantage of rising disposable incomes and demand for business travel. Both are yet to enter Angola, where hotel investment has been mostly restricted to companies from Portugal, the country’s former colonial ruler. These include the Epic Sana Luanda, run by Lisbon-based Sana Hotels, and TD Hotels’s Tropico.
Angola is perceived as one of the most difficult countries in the world in which to do business, ranked 179th of 189 countries in the 2014 World Bank Ease of Doing Business Index. The country is placed 153rd of 177 countries on Transparency International’s 2013 Corruption Perceptions Index.
“The major challenge for hotels will be in education,” Baia de Luanda’s Martins said. “They know this and that they’ll have to train everyone to be service-oriented and professional.”
Marriott almost doubled its rooms in Africa to about 23,000 in April with the $200 million acquisition of Cape Town-based Protea Hospitality Holdings. A spokeswoman said she couldn’t immediately comment on the company’s plans for Angola. A spokeswoman for Hilton didn’t return an e-mailed request for comment.
Other Luanda bay projects in development include the Fortaleza Center, which will have 90 outlets including shops and cinemas over seven floors.
The 250,000 square-meter Kinaxixi MXD Complex will include five floors of shopping and two 25-story towers for residential and office space, while Kianda, managed by London-based Mace Group Ltd., will have two 25-story and two 27-story commercial office towers.
“The impact of all this development will be positive because people will seek our services,” Mario Fontes, president of Clube Naval de Luanda, said in a dockside interview on the spit, called the Ilha do Cabo. “However, I don’t exactly agree with some of the large developments and buildings that will bring a lot of people to live on the Ilha. It should be more for sports and leisure.”
Clube Naval, Africa’s second-oldest yacht club at 131 years, is preparing for a $20 million renovation of its own. Its 450 members, including government ministers, ambassadors and oil executives, will get an Olympic-sized pool, gymnasium and three restaurants.
Baia de Luanda was granted the waterfront land by the government of President Jose Eduardo dos Santos. One of the stakeholders is Geni Holding Co., part-owned by Isabel dos Santos, 41. The project cost includes dredging and adding 77 hectares (190 acres) to the waterfront, all road, water and electrical links, and a new 3.1 kilometer park curving round the bay, Baia’s Martins said.
The park’s 47,000 square meters of grass was laid by SIS Angola Lda, a unit of the company that maintains football pitches for European soccer clubs Real Madrid and Ajax, according to the company website.
“Development zones get a lot of buying interest if you have a major hotel chain,” Martins said. “There’s a lot of companies in houses, like ours, that want to move to proper offices.”
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