The Tunisian real estate development industry is fragmented, with a large number of developers for a comparatively small market. Property and especially land prices have seen consistently strong growth in recent years, but 2015 was a difficult year for developers due to factors such as rising construction costs, land shortages and reduced banking sector liquidity; however industry figures indicate that revenues could improve in 2016 as several important projects under construction come on-line.

The government is also looking to stimulate activity by increasing housing access for lower-income families and providing targeted support for larger developments. Mohamed Salah Arfaoui, minister of public works and housing, confirmed in October 2015 the strategy would include revisions to the system for housing finance, in addition to new legislation on real estate development, a focus on development in old towns and the creation of a new housing observatory. This observatory would provide data on the sector, as well as planned efforts to bring in modern, sustainable construction techniques to reduce buildings’ water and energy usage.

Sector Players

There are around 2960 real estate developers active in the country according to the National Association of Real Estate Developers (Chambre syndicale nationale des promoteurs immobiliers, CSNPI). However, the Centre for Affordable Housing Finance in Africa (CAHFA) notes that many developers are primarily registered to benefit from tax incentives, and hence are barely active in the market, while Nadhir Ben Ammar, CEO of local developer Edifia, told OBG that many of these firms, even if they opt to pursue projects, tend to be smaller and lacking in knowledge or expertise. “There are maybe 800 or 900 active developers in Tunisia, which is a lot for a small country. Many are set up by professionals such as doctors who have decided to invest money in a real estate development company as a side investment, which means that large swathes of the sector are not very professional,” he said, while adding that levels of professionalism have been rising in recent years.

Market Activity

In terms of units, the bulk of the activity occurs in the residential sector, although tourism and commercial properties also maintain a significant profile. Developers built around 8000 housing units in 2014, down from a recent peak of 14,000 in 2010, according to figures announced by the Ministry of Public Works, Housing and Territorial Development. Activity was also weak in 2015.

“The market was fairly stagnant in 2015 as there was a lack of liquidity in the banking system, which constrained bank lending, and in general people feel that there is a lack of visibility as regards the future in Tunisia,” Ben Ammar told OBG. Development costs are also rising, putting pressure on developers’ budgets. Fahmi Chaabane, president of the CSNPI, explained to OBG that the price of land, labour and material has all increased in recent years, which hurt the industry.

“The sector’s main competitive advantage use to be that labour wasn’t expensive, but wages have risen rapidly,” Mohamed Fendri, CEO of local developer El Imrane, told OBG. It is also true that wages for specialist professions in the construction industry had doubled since the revolution. Exchange rate developments have also been pressuring margins and have made it increasingly difficult for construction operators to carry out large-scale projects. Hence, a slowdown in construction over the past couple of years.

However, Bassam Neifer, an analyst at the Tunisia-based equity market research firm AlphaMena, said in October 2015, that the fortunes of the industry could improve as it moves from a current construction-dominated phase of its business cycle into sales-oriented phase in coming years. “The year 2015 was a difficult one for the sector; however, revenues could rise in the second half of 2016 or 2017 as projects under construction begin to come on stream.”

Land Shortage

One of the reasons for the spike is the rising price of land in recent years – the French embassy’s economic service puts the rise in development costs of between 5% and 7% over the last 15 years, but at 13% in 2013, while Fendri suggested that one of the reasons that land prices had been rising by as much as 20% annually over the last five years is a growing lack of availability.

“Scarcity of land has become a major problem in Tunisia, in particular in high-end areas in major towns such as Tunis, and lots of developers are chasing the same plots as a result,” Ben Ammar told OBG. “There used to be some supply around the Lac de Tunis but much of it was given over to the Tunis Sports City project.” The Tunis Sport City project was put on hold in 2012, but has since been restarted.

Speculation has also played a role. “The instability of the post-revolution period has prompted people to secure their investments. A consequence has been an abnormal growth of the real estate sector during the first three post-revolution years, resulting in a speculative bubble in the market,” Fendri told OBG.

Residential Segment

National housing stock stood at 3.29m in 2014, according to that year’s census – up 24% since the last census a decade before – with 17.7% of units standing vacant. 79.2% of Tunisians own their own home. According to a 2014 report from the Ministry of Public Works and Housing based on the census, annual housing growth stands at around 79,000 units, of which 37% is unlicensed – a common problem in North Africa, although somewhat lower than elsewhere on the continent.

CAHFA states that around 80% of licensed housing units are self-builds or financed directly by the owners, versus 18% by commercial property developers and 2% by state-backed developers; furthermore almost all housing construction by professional real estate developers takes place in the Tunis, Sfax, Sousse and Nabeul areas.


According to CAHFA, residential real estate prices have grown at an average rate of 8% a year since 1990. In 2014, according to the local publication the Tunisia Real Estate Guide (Guide de l’Immobilier en Tunisie), average real estate purchase prices vary between TD1200 (€550.32) per sq metre and TD3000 (€1375.80) in parts of the capital, Tunis.

CAHFA put the unit price of the cheapest newly built houses (which are around 50 sq metres in size) available from developers in the country at $25,500, which is affordable for just over 70% of the population, making Tunisian housing amongst the most affordable, relative to the income of the local population, in North Africa and the continent as a whole.

Ben Ammar forecast that prices would likely remain stable throughout 2016. “Industry margins are already fairly tight so there is not much room for developers to reduce prices in a significant manner,” Amar told OBG. On the flip side, prices also appear unlikely to rise substantially over the coming year.

This assessment was shared by Fendri, who told OBG that residential prices usually go up by around 10% a year, but that this year they are likely to remain stable as sales activity is low.


The mortgage market is well developed by regional standards. 10.7% of adults had an outstanding mortgage as of 2014 according to the World Bank’s Global Findex database, compared to 3.9% in Algeria, while according to CAHFA the value of mortgages was equivalent to 9.25% of GDP in 2013, the sixth-highest level out of 54 African states and well above Maghreb peer Morocco’s figure of 3.85%.

The value of retail housing loans to individuals in Tunisia stood at TD7.97bn (€3.7bn) in September 2015, according to the latest available data from the central bank, equivalent to 43.9% of total outstanding retail bank lending to individuals. The figure was up from TD7.33bn (€3.4bn) in 2014.

According to CAHFA, average mortgage interest rates stand at 7.78%, while the average current mortgage term rate is 15 years. Banks are permitted to issue mortgages of up to 25 years in duration but are obliged to fix the rates for mortgages more than 15 years long, which makes financing them difficult; as a result most mortgages are for 15 years or less. Loans are capped at 80% of the value of the property (rising to 90% for subsidised loans for low income households) and monthly repayments are one third of the borrower’s salary, Chaabane called on these limits to be relaxed to help deal with the rising cost of land.


The Banque de l’Habitat (BH), in which the Tunisian state owns a 57% controlling stake, was, until 2001, the only mortgage lender; however, following the liberalisation of the market, other banks began moving into the segment, which has become strongly competitive. Nevertheless, the BH remains the market leader, with a real estate lending market share of 23%, according to figures cited in the local press. The bank, having suffered from high levels of non-performing loans and failing the minimum solvency ratio of 10%, was recapitalised by the government in September 2015 to the tune of TD110m (€50.4m).

Subsidised Lending

The BH provides state-subsidised loans to low-income households offering interest rates of between 2.5% and 5.75% under an initiative called Le Fonds de Promotion de Logements Sociaux (FOPROLOS). However, CAHFA states that in recent years FOPROLOS homes have become inaccessible to poorer households, due to loan ceilings not having risen in tandem with purchase costs. This has led to low uptake rates for the scheme, with approved FOPROLOS homes only representing 6% of approved housing units in the decade to 2013. Preliminary recommendations made in 2014 as part of efforts to formulate a new national housing strategy included plans to change aspects of the scheme in order to address such issues.

Social Housing

In 2013 the government launched an expansive new social housing strategy, including plans to build 30,000 new social housing units, supported by government investment of around €45m. In order to incentivise developers to enter the segment, the government has made a number of critical changes to the regulatory framework, including exempting developers’ profits derived from social housing construction from tax. As with purchasers of social housing, developers can also receive subsidised loans for projects in the segment; the BH can provide up to 80% of the development financing for social housing projects at a subsidised interest rate of 6.78%, and 70% of the financing for “economic” housing projects at a rate of 7.28%.

However, despite the existence of such incentives, Chaabane told OBG, that rising costs were making it difficult for developers to build social housing, leading to weak production in recent years. “Previously, the industry built around 4000 social housing units a year but this has fallen to several hundred due to the high cost of land, and the industry is concentrating mainly on the medium and higher end of the market as a result,” he said, adding that the federation was calling on the government to provide developers with free land for the purposes of building low cost housing to address the issue. “Margins on social housing have disappeared and it is difficult to see how the government can build more given the high cost of land and labour,” Fendri told OBG.

The authorities are working to address obstacles to the sector’s development, and in October 2015 they announced that between 6000 and 10,000 new social housing units would be built in 2016, as part of plans to construct a total of 50,000 units under the 2016 to 2020 five-year plan that also stated they were working on a new initiative under which the government will pay for between 30% and 50% of the development costs for plots on which social housing is being built. In November 2015 the government announced a tender for the construction of 4650 social housing units across 10 governorates. Fendri said that another option to boost the development of the segment would be to improve transport links to take advantage of less costly land away from city. “Developing transport infrastructure between those regions with cheap land and those regions with lots of economic activity would help incentivise developers to initiate social housing projects,” Fendri told OBG.

Foreign Buyers

Currently foreigners seeking to purchase non-industrial land in Tunisia outside of some designated tourism zones require government authorisation, something Chaabane called on the government to abolish. “Allowing foreigners to buy real estate without prior authorisation would be a major boost for the industry,” Chaabane told OBG. “The current timescales for getting authorisation is an issue that is particularly problematic.”

In 2014 the government decided to reduce the maximum amount of time it could take to deal with a request for authorisation to three months, but this has not been reflected in practice, and it can take up to two years to complete the entire process. “There have been discussions about further efforts to reduce waiting periods but no official decisions yet,” Chaabane told OBG. However, he thought a change to the requirements was unlikely to happen in 2016 as the government does not currently appear to view such a move as beneficial.

Office Space

Cushman & Wakefield, an international real estate services company, put average annual office rental costs in Tunis at $113 per sq metre in the first quarter of 2015, down 11% on the same period a year earlier, which made Tunisia one of the most affordable countries in Africa – though it forecast that rents were likely to either remain stable or to rise in 2016. The company also ranked Tunisia’s real estate market 10th out of 42 emerging and frontier markets in its 2015 Emerging Market Risk Index, based on factors such as the transparency of the local market and the ease and speed for foreign firms to acquire and lease local property.


One of the largest real estate development projects in the pipeline is the UAE-based Bukhatir Group’s Tunis Sports City complex, which is due to eventually house 30,000 people on the northern edge of the Lac de Tunis. The project, which also involves the construction of a number of sporting venues including a 10,000-seat outdoor stadium and a 5000-seat indoor stadium, was announced in 2006, and in 2012 the group said that construction work on the 256 ha $5bn first phase of the project was 15% complete. However, work on the project was put on hold later that year as the group called for changes to the project specifications, and in particular for some of the sport infrastructure envisaged in the development plan to be replaced by further housing developments, which the area’s master-developer the Société de Promotion du Lac rejected.


The tourism industry has traditionally played an important role in the real estate sector. However, in 2015 the sector was impacted by a pair of terrorist attacks. Despite a difficult 2015, several international brands have proceeded with projects in Tunisia. Hilton has signed a franchise agreement with local hotel chain El Mouradi Hotels & Resorts Group to rebrand the company’s El Mouradi Africa Hotel as the Double Tree by Hilton-Tunis.

The hotel chain is expected to invest $5m dollars to refurbish the hotel. The Switzerland-based Mö venpick, which already operates in Tunisia, is expected to open a new hotel in 2017 in the high-end Tunis neighbourhood of Les Berges du Lac.


Tight land availability appears set to continue to put upwards pressure on land prices in coming years, which should in turn push property prices higher while at the same time constraining development activity by reducing affordability. Levels of development will also depend on broader economic factors such as banking sector liquidity, which will in turn be determined in large part by issues such as the development of the country’s current account balance. Moves to relax restrictions on foreign ownership of property could give the sector a boost, though the extent of this action would depend on international perceptions of the local security environment.