The report says the country is emerging from years of isolation with an economy that is functioning well now that international sanctions have been removed.
Some 19 urban districts saw property price rises last year and more than 25 upcoming real estate projects involve both local and international players active in the market, it says.
There are opportunities for investors, developers, suppliers, architects and consultants with foreign and private-sector interest rising quickly.
Macroeconomic prospects are strong according to the Tripoli Residential and Office Real Estate 2009 Report, with Libya set to enjoy real annual GDP growth of over 8% from 2008 to 2011 and it is expected to remain relatively immune from the international financial crisis.
The capital, Tripoli, is predicted to be one of the hubs for investment as it enjoys a strategic location on the Mediterranean Coast, between southern Europe, Africa and the Levant. Its population of 1.5 million is growing at more than 2% annually, with a rising number of high-income expatriates and falling household sizes, the report points out.
Currently the residential market in Tripoli is characterised by aging, poor-quality and low-rise property despite the emergence of some premium villa and apartment areas favoured by high-income Libyans and expatriates.
Growth in sales/rental prices has been exceptionally high, with an average increase of approximately 65% to 70% in 2007 to 2008, rising to 150% in certain areas.
The report also shows that office space in Tripoli is vastly undersupplied, with almost no international A-grade stock and less than 100,000 square metres of dedicated office tower space. Many multinationals present in the city tend to convert residential villas into offices.
International developers exploring the market include companies from the United Arab Emirates, Qatar, the UK, Bahrain and Malta. However, foreign developers entering the real estate market are strongly urged, if not required, to form joint ventures with Libyan companies in which the foreign party may hold a stake of up to 65%. Significant incentives are offered to large-scale investors, including a five-year corporate tax holiday and reduced tariffs on imports.
The biggest issue preventing more investment is the restrictions that prevent foreign individuals, except those from certain North African countries, from owning land or property in Libya, the report points out.
It is hoped this will be eased and officials are currently working on a masterplan which is expected to be completed in the second quarter of 2009.
