North African property markets slowing dramatically
Emerging property markets in North Africa are experiencing a slowdown with some of the tourism based developments having a troubled time.
One real estate agent in London selling properties in Morocco said that the market is 'dead'. The problem is that it has been investors from the UK and France that have been buying and because of the recession that investment stream has dried up.
Giles Wickham, a negotiator for Winkworth International in London said there is simply no interest from buyers. 'Morocco is very dead. There is no interest. Things are plodding along and we are just hoping for the market to pick up again,' he explained.
The major investors in developments in countries like Egypt, Morocco, Libya and Tunisia are from the Middle East and they are becoming more cautious because of the credit crunch.
The value of Gulf-backed projects in Morocco is put at $30 billion while there are multi billion projects underway in Cairo.
'North Africa will continue to be of interest to Gulf investors. However a lot of funds are looking very carefully at their strategy and will be reassessing risk. The risk profiles are changing in some of these markets,' said Jonathan Hull, executive director of EMEA (Europe, Middle East and Africa) capital markets for property adviser CBRE in London.
Publicly developers are upbeat. 'We do not plan to make any fundamental changes in our current business activities even though the general property market is experiencing difficulties,' said Peter Riddoch, chief executive of Dubai-based Damac Properties, which is building the upmarket $7 billion, Hyde Park villa project in Cairo.
As is Emaar, 'North Africa is a promising market and like much of the Middle East is has been able to largely withstand the global financial crisis because of growth,' said a spokesman. 'Our projects in Morocco and Egypt are principally led by tourism, and as such they have strong growth potential. Work on our projects is progressing as per schedule,' he added.
But Blair Hagkull, managing director of real estate consultant Jones Lang LaSalle in the Middle East and North Africa, confirmed that the speed of construction is slowing across the region.
'Up until now, Gulf developers in North Africa have been focused on planning and approval. Now they are looking at building the infrastructure and their plans have become less aggressive. There will also be a slowing down in the proposed rate of development,' he explained.
'Although investor sentiment in the Middle East is still relatively strong no one will be immune from what is happening globally,' he added.
But Egypt has reduced its economic growth figures, inflation is at a three year high in Tunisia and there are liquidity concerns in North African countries just as there are in the rest of the world.