James Charnaud

I am currently in Juba in Southern Sudan. Southern Sudan has had a very difficult time recently, but the Comprehensive Peace Agreement signed in 2005 seems to have stabilised the place. The only economy here is driven by the NGOs and charitable organisations. After so many years of war, most of the people are desperately poor and in need of assistance.

However, there are signs that oil companies are starting to show a more serious interest in the country, as the North and South agree how to share the oil revenues everyone is expecting (the South has 80% of the current oil producing fields). There is a Referendum on independence for Southern Sudan scheduled for 11th January 2011, and the feeling is thatpeople are waiting for the outcome of this before starting to invest in the South. The common reference is: "If the South wins independence we are not sure how the new Government will treat contracts and ownerships given by Khartoum, if not we are worried that conflict might start again". The best way to describe the place is nervous optimism.

From a real estate point of view the market is very distorted. Few investors are willing to buy (for the reasons given above) and the NGOs are typically gifted land so they are not in the market either. This means that land prices are currently depressed. For the brave investor land purchases now could be significantly rewarded if Southern Sudan smoothly gains independence next year and recognises new ownerships.

Another issue affecting the market is that all goods need to be imported, most of it driven overland from Uganda or Kenya, or by barge from Khartoum. A large road building programme is underway, and this is sapping the resources of goods and skilled manpower. This new infrastructure is needed, as there are currently only 40 km of tarred roads in Juba. This means that construction costs for real estate are very high at around $650-1,000 /sq m, if you can find anyone to do it. Small jobs are quoted at much higher rates.

The limited available office and residential stock means that there is a very strong rental market. This is rewarding investors with very high returns. There are signs that the office market has dropped this year, but typical rents for small rooms are in the order of $500 /sq m /year. A company constructing serviced offices on the Ministry Road in Downtown Juba quoted me the equivalent of $1,500 /sq m /year, but with a TV per room thrown in for free!

                                                                    Main Street, Juba

                                          Juba - barges bring goods up the Nile from Khartoum