Tunisia: Revival for real estate sector
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As Tunisia is still working to put its economy on a firm footing, the country has benefitted from a revival in real estate investor interest, with figures indicating that foreign direct investment (FDI) for the sector edged close to pre-revolution levels in the first 10 months of 2012.
Several large-scale tourism projects, together with a huge government social housing initiative, are spurring a sizable influx of capital into the country.
Foreign investment in tourism and real estate accounted for 4.5% of all FDI between January and October 2012, nudging nearer to its 2010 figure of 4.8%, according to data from the Foreign Investments Promotion Agency in Tunisia (FIPA). In total, TND75m (€36.5m) was invested from abroad in Tunisia’s real estate and tourism sectors during the first 10 months of 2012. This is compared to the TND82.3m (€40m) seen in the first 10 months of 2010 and is a year-on-year (y-o-y) increase of 588% from the same period of 2011.
The primary contributor to the sector was Qatar real estate investment company Qatari Diar, which, in October 2012, channelled TND70m (€34m) into an $80m (€60.8m) luxury hotel project in Tozeur.
In a separate testament to investor confidence in the sector’s long-term potential, the Emirates’ Bukhatir Group has reiterated its commitment to roll out a major tourism and real estate development once it receives the go-ahead from Tunisia’s government. Valued at $5bn (€3.8bn), the mixed-use Tunis Sport City project, which has been in the pipeline for several years, will combine sports facilities with luxury homes.
While real estate prices rose on average by 0.82% between January and November 2012, according to local research firm Argus Immo Tunisie, the market also showed significant regional variations. Values have fallen in some coastal resorts where foreign buyers and tourists have been slower to return in large numbers, preventing the real estate market from making a full recovery. Property prices in both Djerba and Merzouga fell 7% in summer and were also down 2% in Nabeul.
However, property prices in popular residential areas are on the increase, particularly in newly built neighbourhoods near Tunis. Prices in the prime location of Soukr shot up 14% during the first six months of the year, while in Sidi Bousaid, the most expensive part of Tunis, they reached TND2600 (€1265) per square metre. In other key locations, such as Maâmoura, property values rose even higher, up 22%, and they also increased 12% in El Kantaoui.
Nadhir Ben Ammar, the general manager of Edifia Promotion Immobilière, pointed out in a recent interview with OBG that prices for land in Tunisia had also risen sharply. “Usually, prices used to go up 4% to 5% a year, which was a normal rate of increase for a stable market like Tunisia,” he said. “But lately we’re seeing increases that are 12% to 13% a year.”
Part of the reason behind rising price of new builds has been widely linked to speculators selling cement above a maximum price laid down by government of TND6.5 (€3.16) per bag. The practice prompted the Ministry of Commerce in April to intervene, calling on industry players to abide by the regulations. Tunisia’s daily production of cement stands at 30,000 tonnes per day, which exceeds national demand.
Aware that sharp price increases are making it difficult for Tunisia’s lower-income households to access property, the government announced a TND1bn (€486.9m) plan in April 2012 to build 30,000 social housing units throughout the country in 2013. The government has said families with a monthly income of around three times the guaranteed minimum wage will be eligible for the programme.
In September, the Ministry of Equipment launched an international call for tenders to finance the first phase of the plan, which will see the construction of 11,800 units in Tunis, Ariana, Ben Arous, and Manouba. A further 3800 units are to be built in the governorates of Nabeul, Zaghouan, Bizerte, Sousse, Monastir, and Mahdia, and 2400 homes are also earmarked for Beja, Jendouba, Le Kef, Siliana, Kairouan, Kasserine and Sidi Bouzid. An additional 2300 units will be constructed in the governorates of Gabes, Medenine, Tataouine, Gafsa, Tozeur and Kebili.