Just over two years ago, political strife in the North African state of Tunisia unseated its longtime president and also triggered mass pro-democracy movements across the region. While the political movements have helped the civil society to voice their opinion, it has deeply scarred the region’s economy. Like other regional countries, the Tunisia has also suffered the brunt of these campaigns and serious threats still surround the economic future of country.
Recently, Tunisia has entered into another two year multi-billion dollar bailout package with the International Monetary Fund (IMF). This new loan is the third time that the country has approached international donors for financial assistance to revive its economy after the 2011 revolution dented its economic prospects. The loan is targeted towards building the country’s weak banking sector and injecting funds in other broad sectors that will generate greater job opportunities and curb civil unrest. Even though Tunisia remains politically unstable and struggles to cope up with its economic challenges, the country has performed much better than other regional countries, such as Egypt, in terms of economic recovery. The Tunisian real estate sector offers a bright spot for global investors and could lead the way in helping the country regain a firm footing on the economy.
According to recent figures, interest in Tunisia’s real estate sector is facing a revival as foreign direct investment (FDI) in the market has almost touched the figures of first 10 months of 2012. Official figures of the Foreign Investments Promotion Agency in Tunisia (FIPA) show that a total of €36.5 million ($48.6 million) were invested in Tunisia’s real estate and tourism sectors. The real estate sector is making a strong comeback due to increased government spending on social housing initiatives and other large-scale tourism projects. During this period, foreign investment in tourism and real estate accounted made up 4.5 percent of the total investment.
In particular, the Tunisian real estate market has caught the fancy of wealthy investors from the Gulf region. The Qatari real estate investment company Qatari Diar stands committed to invest about €34 million ($45.3 million) into a luxury hotel project in Tozeur. Once a green signal is received from Tunisia’s government, the Emirates’ Bukhatir Group is expected to make an investment in a major tourism and real estate development. The long-term prospects of Tunisian real estate sector also hinges on the development of the much delayed, Tunis Sport City project valued at around $5 billion. The multi-purpose project will combine sports facilities with luxury homes to place Tunisia on the world map of mega real estate projects. The occupancy rates and property prices in trendy residential areas are also witnessing an upward trend, as investors remain optimistic about the industry’s future.
The government must make all out efforts to ensure steady recovery of Tunisia’s real estate market in larger interest of the national economy. It must undertake broader initiatives and curb harmful industry practices to spur investment in the sector. Recent government action against speculators selling cement at a price higher than the official rates is a positive step in this regard. A speedy recovery is to a large extent dependent on the return of foreign investors to coastal resorts and access to property by Tunisia’s lower-income households. Therefore, the government must also accelerate its plans to develop social housing units throughout the country and promote an investor friendly image of Tunisia