7
7 Al Waha, Libya
Libya, perhaps even more than the others, demonstrates the huge commercial changes underway in the North Africa region
market’s prospects due to extensive pent-up demand for high quality space, intensified by new demand created from strong economic growth. Demand is expected to continue to outstrip supply over the next three years, provided no new major projects are announced. The likelihood of development delays is expected to reinforce our anticipated demand-supply dynamic.’ According to Cushman & Wakefield, there is currently an adequate supply of expatriate apartments and houses after a sustained period of growth and significant development. However, the residential market is now slowing as a result of the global economic downturn. Colliers International adds that a large section of the Egyptian population is unable to purchase or rent homes due to ‘low income levels and a poorly developed mortgage market’. It con- tinues: ‘The problem is compounded by a reluctance on the part of landlords to enter into tenancy agreements with low-income tenants because of historic difficulties in evicting tenants.’ The report observes that villa rentals, apartment rentals and apartment sales all registered an increase in value between 2009 and Q1 2010, following a dip between 2008 and 2009. Yet it noted that property prices in the Zamalek district continued to increase throughout the economic downturn. Research conducted by Colliers shows that approxi-
mately 72,000 high-end residential units will be delivered to the market between 2009 and 2015, provided scheduled completion dates are met. Current supply of approximately 281,000 units is set to increase by 27 percent over the next six years. It states that economic growth, increased capital inflows, occupancy saturation in central Cairo and population growth trends all point towards demand outstripping supply over the next three years. Colliers estimates a pent-up demand of approximately
35,000 units within the high-income demographic, based on the segment’s 5.2 percent share of overall demand. Con- sidering additional demand is estimated at 12,800 units per year between now and 2015, Colliers expects moderate levels of price appreciation in the new communities over the next six years. It also anticipates owner occupier demand within the high-income segment to increase as the new commu- nities become more developed. This is demonstrated by the current premium enjoyed by Kattameya Heights and Palm Hills in New Cairo and 6th
October respectively.
LIBYA
Libya’s substantial revenues from the energy sector and its small population have helped it achieve one of the highest per capita GDP levels in Africa. Yet for decades, the country’s tremulous economic and political conditions effectively made it a no-go zone for international investors. However, the situation has now changed, as Cushman & Wakefield’s van den Bergh elaborates: “For many
years Libya was regarded by the international market with suspicion. It was perceived as an unstable and immensely risky market with economic entry barriers and a volatile administration. “The recent relaxation of embargos to the banking sector has resulted in a number of high profile financial institutions planning to set up in Tripoli including HSBC, Standard Chartered and Uni Credit. Similarly international retail brands have begun to enter the market with the release of the retail sector into the private sector.” One of the largest projects in the country
is Al Maabar’s Al Waha, a US$500 million mixed-use community in the heart of Tripoli, which will contain residential, hospitality, retail and office components. According to Cushman & Wakefield, Tripoli is
now the third most expensive office destination in the whole of the Middle East and Africa region. Most large office buildings suitable for corporate use are clustered to the west of the medina and the centre of Tripoli. Cushman & Wakefield’s report states that this area has effectively become the new CBD, although there is prac- tically no office space currently available. Due to the lack of space – and demand from the oil and gas sectors – a number of occupiers are converting villas into offices in high quality resi- dential areas such as Gargaresh. The report continues: ‘There are only three
office buildings in the traditional CBD, one of which is the El-Fateh Tower. Around the tower a great deal of space has been cleared for a number of developments. In terms of outlook, there is little current office construction, and development in the medium term is likely to be piecemeal and concentrated along the major thoroughfares in Tripoli. There are plans for new office developments within the city but these will not arrive onto the market for a number of years. In the meantime, businesses will largely resort to operating out of converted residential property.’
Colliers International’s report adds: ‘The delivery of
249,400 square metres NLA of grade A stock was expected by 2013, based on coverage of forthcoming supply. However, 53 percent of the development is cur- rently on hold. Although these forthcoming properties will deliver a significant amount of stock given the city’s current supply, there appears to be little risk of an oversupply.’ When it comes to the residential market, the areas most favoured by expatriates are to the west of the city, which is also the location of the largest new residential complex of Palm City. Cushman & Wakefield’s report comments: ‘There is a large amount of residential development taking place as a result of the recent increase in the demand for good quality accommodation, both from expatriates for housing and from commercial occupiers for office space. The Airport Road is the focus for much of the development activity, although there are a number of other schemes planned for other parts of the city.’ Colliers International identifies the Libyan hospitality
industry as a hot market. It comments: ‘Although the Libyan hospitality market is currently in relative infancy, the gov- ernment expects considerable growth of tourist arrivals to Tripoli over the short to medium term. With demand for five star properties increasing, a number of international hotel chains have now entered the market, driven by the increased openness and economic growth of the country.’ For van den Bergh, the nation epitomises the rapidly
evolving North African market. “Libya, perhaps even more than the others, demonstrates the huge com- mercial changes underway in the North Africa region,” he comments.
jun-sep 2010
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