Published on : 05/Sep/2008

Major Middle East developers are investing in Tunisia which property analysts believe is the new emerging market set to make an impact in the next five years.

The property market is very new. Foreign ownership of residential property was only allowed three years ago. Prices are low, just like they were in Morocco five years ago.

Those investing vast sums of money include United Arab Emirate's Sama Holding (a subsidiary of Dubai Holding) with a $14 billion mixed development project and Dubai-based Emaar have investment projects totalling $1.9 billion.

Official figures are promising. The International Monetary Fund describes Tunisia as having a stable and growing economy with 5.5% GDP growth predicted for 2008 and 5.9% for 2009. Unemployment is dropping and inflation is in check.

Tourism figures are also encouraging. The World Travel and Tourism Council forecasts an annual increase of 4.3% between 2009 and 2018. However, growth may actually be considerably higher since tourism rose by 4.7% during the first half of 2008 with the second 6 months expected to produce similar results.

TripAdvisor ranked Jerba number one among its top 10 emerging tourism spots for 2008. A New York Times article at the end of last year put the country at third place in its list of 53 countries to visit in 2008.

Analysts say it is clearly beginning to attract the attentions of holidaymakers. 'The country has many beautiful beaches, cultural and historical attractions, combined with days of endless sunshine and hot summers, which means that any investment has the potential of high rental yields, as well as providing an excellent holiday home. Tunisia is an up and coming property market,' said Melanie Benna, owner of the The Tunisian House real estate agency.

'Tunisia's property market may just be in its early stages but with its strong economy and tourist sector, large-scale property investment by Middle East developers and low-entry prices, Tunisia looks well set to become one of the most interesting emerging markets,' said James Gonzalez, market analyst at Obelisk.

Although it is much smaller and has fewer natural resources than its neighbours it has overcome the type of poverty related problems from which Libya and Algeria suffer. The economy is growing and the government is investing in education, tourism and business. It is ranked first in economic competitiveness among African countries according to the World Economic Forum.

On the downside issues that still need to be addressed include high taxes, lack of access to financing and a cumbersome bureaucracy. Foreign investors can buy any property except agricultural land.