Emerging Ghost Malls, Hotels, Office Buildings and Cities of Africa

We usually think of China when contemplating “ghost cities” and other ghost real estate properties. But the Chinese propensity to build infrastructure far in advance of actual demand is not limited to the Middle Kingdom. The Chinese Communist Party wants to open the world to the construction of ghost infrastructure by Chinese economic consortiums. Africa has been one of the first overseas test platforms for this “Chinese economic pressure relief valve,” but it will not be the last.

Chinese Ghost Infrastructure Rushes Into Kenya

Observers now warn of overbuilding. Nairobi is a traffic-clogged city, with sprawling slums where most of 4 million population lives. Too many high-end developments are being built for the number of high and middle-income consumers that exist.

Too much new office space in Kenya last year hurt rental prices and occupancy rates, according to Knight Frank’s 2017 Africa Report. The report notes that this was exacerbated somewhat by the departure of oil multinationals like Shell and Chevron over the last few years, and the exodus of expatriates. Prime residential prices also fell. Retail space took longer to let; mall merchants reported sales declines as high as 60%.

Economist David Ndii from the Nairobi-based Africa Economics warns that the real estate market might be glutted and that this could be “a case of investors chasing their own tails.” __ Chinese-built Ghost Skyscrapers and Malls Submerge Kenyan Markets

It is not the problem of Chinese developers when real estate supply overwhelms real estate demand. That is a problem for the host country — whether in Africa or in any other country that buys into the global Chinese push to build infrastructure.

In Africa, Chinese developers have often used the “natural resources in exchange for infrastructure” business model. When worked properly, Chinese developers walk away with their profits. African nations are usually left with infrastructure that they cannot properly maintain or operate.

Lessons of Kilamba, Angola

Kilamba, Angola
Source


Between 2008 and 2011, Chinese development company CITIC built an empty city for 500,000 people on the outskirts of Luanda. Christened Kilamba by the Angolan government, apartments were promptly priced too high to sell. Two years later, the Angolan dictator ordered prices to be lowered. Subsequently, the occupancy rate for Kilamba rose from near 0% to around 20%. But the journey from “ghost city” to development success has been very rocky and is nowhere near the halfway point. Consider:

Now in 2014, there are indeed many people living Kilamba, but there, and in other similar developments, the issue is that basics like running water and electricity remain elusive. I saw pictures just last week of women queuing with buckets at communal taps.

Several journalists have continued to report on the trials and tribulations of Kilamba, though mostly in Portuguese, so perhaps the stories have not been seen as widely as the early pieces with the “ghost town” headlines. __ In Comments Here

In China, ghost cities are often used as “investment markers” by absentee owners eager to protect their wealth in an economy where they are not allowed to invest freely overseas. With their investment options severely limited, putting money in real estate — even ghost real estate — seems better than hiding it under the mattress.

In Africa, a Chinese-built ghost city looks better than almost any other existing place to live — at least in the city’s early years before decay, infrastructure breakdown, and slum-building have had a chance to fully emerge. The government was forced into lowering rents and prices to below profitability, for political purposes. And occupancies do indeed rise. But no political edicts can stop the inevitable onset of widespread decay.

Africans Have Little Understanding of Maintenance

All technology requires maintenance. When technology is not maintained, it eventually stops working as designed. This is a problem everywhere, but particularly in third world countries — especially Africa.

White rule in South Africa ended in 1994. It was about ten years later that power outages began, which eventually reached crisis proportions. The principle reason for this is simply lack of maintenance on the generating equipment. Maintenance is future-oriented, and the Zulu entry in the dictionary for it is ondla, which means: “1. Nourish, rear; bring up; 2. Keep an eye on; watch (your crop).” In short, there is no such thing as maintenance in Zulu thought, and it would be hard to argue that this is wholly unrelated to the fact that when people throughout Africa say “nothing works,” it is only [a slight] exaggeration.
_Gedaliah Braun, “How Africans May Differ From Westerners”

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The abysmal decay of foreign-built infrastructure for lack of maintenance is a common problem across sub Saharan Africa. It makes no difference whether the railways, electrical power infrastructures, or high rise constructions were built by the Chinese, Europeans, or Americans. The inevitable onset of decay from lack of proper operation methods and routine maintenance leads quickly to breakdown and the need for replacement.

The sickening collapse of Zimbabwe and the accelerating decline of South Africa highlight the difficulty of Africans to maintain infrastructures of all kinds. After China gets the natural resources it wants from Africa, it too will leave the dark continent to its own decay.

More: Why China must expand its infrastructure bubble to as much of the world as it can — someone has to finance all the dysfunctional domestic spending and bad debt.

What Chinese Cash Has Done to Venezuela . . . This kind of Chinese roadkill is likely to grow more common worldwide as China’s debt mountain global diplomacy expands.

As for Africa, it is in a race against time, and losing. African populations are bursting the seams, pouring into African cities and beyond. Ghost cities can certainly be built in Africa by the Chinese, but they will soon be crime-ridden slums of broken down hopes and infrastructures.

As Africa’s workers seek better opportunities, they are flocking to cities faster than those cities can absorb them, leading to the proliferation of slums in urban areas and a flood of illegal migration to the West. As the demand for education, health care, and other public services continues to grow, social pressures will continue to mount. And without economic security, some young people will resort to illegal activities, or fall prey to extremist groups exploiting their desperation. __ https://www.project-syndicate.org/commentary/automation-africa-industrialization-by-brahima-coulibaly-2017-06

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3 Responses to Emerging Ghost Malls, Hotels, Office Buildings and Cities of Africa

  1. j says:

    Maintenance and Operation can be outsourced, like in Dubai, Qatar, Kuweit.

    • alfin2101 says:

      Excellent point. All of the oil rich arab states outsource important maintenance and operations. Rulers and managers understand the importance and are willing to sacrifice a small amount of profit in order to keep infrastructure that underpins their societies working.

      In sub Saharan Africa the problem is more difficult. Loyalties of the ruling classes do not extend beyond family and tribe. Maintenance itself seems unnecessary and foreign, since it is assumed that outsiders will always provide new railways, new generating stations, new transmission lines, new roads, new buildings, sewers, water lines, farming equipment, hospitals and medicines, engineers, physicians, vaccines etc. etc.

      Africa is different from all of the rest of the world. Until people get past their political correctness and understand what the underlying differences mean for Africa’s future, the dark continent will be floating on a sea of denial.

  2. The Chinese are just looking for new ingredients to add to their cuisine, and soon Kenyan lo mein will contain actual Kenyans.

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