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Interesting read: Why an American investor is building malls in the Congo

The city of Lubumbashi has not been on the radar of international companies outside of miners but all that is changing
Dianna Games
21 October 2014

YOU’RE building a shopping centre where?" Property developer Preston Haskell says he fields this question often from acquaintances around the world when he talks about his latest investment in Africa.

The shopping centre in question is part of Haskell’s Luano City project, a 220ha, $1.4bn multifaceted property development on the outskirts of Lubumbashi, in the Democratic Republic of Congo. It includes smart office blocks, residential units and the Congo’s first modern retail centre.

I bumped into Haskell, chairman of Forum Properties Africa, a few weeks ago at the sod-turning ceremony for the shopping centre, which will be anchored by Shoprite — the group’s second Congo supermarket.

Lubumbashi is one of the places in Africa that has piqued the interest of US magnate Haskell. He successfully invested in Russian property in the 1990s and has now found another frontier market of huge potential.

Lubumbashi has not been on the radar of international companies outside of miners. The city has just a few small local supermarkets and one international-quality hotel.

Yet the city is the nearest urban centre of size to operations of some of the world’s biggest mining companies and is the capital of a region that generates more than 60% of the country’s revenues.

Haskell, whose Congo journey began with a chance meeting with Katumbi in Johannesburg some time back, is just such an investor. The property developer saw a gap in the market for quality real estate at a time when the city was still characterised by its colonial inheritance.

Katanga province, within which Lubumbashi falls, has attracted $25bn in new investment in just less than a decade, but most of it in mining. Katanga’s provincial governor, Moise Katumbi, guest of honour at the Luano City sod-turning, reckons that since he took over in 2006, the population of the city of Lubumbashi has grown from 1.6-million people to nearly 4-million.

The sprawling city, like many other fast-growing towns in Africa, has limited opportunity for development within its original infrastructure, which was built for a much smaller, colonial-era population.

For all the potential, investing in the Congo is still risky. Sporadic outbreaks of conflict are just part of the story. The region remains commodity dependent and is a high-cost, structurally inefficient market. So it takes a bold investor to lay down large investments there.

Haskell, whose Congo journey began with a chance meeting with Katumbi in Johannesburg some time back, is just such an investor. The property developer saw a gap in the market for quality real estate at a time when the city was still characterised by its colonial inheritance.

Interest is growing in Luano City’s offerings. Mining companies have already snapped up smart office blocks and work is under way on housing and the shopping centre, which is already almost fully let.

Haskell says he prefers, where possible, to put money into building something new rather than investing in what others have built. Congo offers fertile ground in this regard — as do many other resource-rich parts of Africa where new towns are growing.

These boom towns undermine the theory that resources are a curse because of their limited linkages to broader economies. Africa’s growing urbanisation, much of it happening in resource-rich areas, is driving demand for everything from food to air-conditioners and myriad other consumer goods.

It shows you certainly don’t have to be a big multinational to profit from Africa’s growth.

http://www.rdm.co.za/business/2014/10/13/why-an-american-investor-is-building-malls-in-the-congo