Office space in Libya 'vastly undersupplied', says report
Source: BI-ME , Author: BI-ME staff
Posted: Sun January 25, 2009 12:00 am

LIBYA. A new report 'Tripoli Residential and Office Real Estate 2009' shows the extent to which Libya is emerging from years of isolation into one of the Middle East's most exciting prospects.

This is the first publicly-available report to cover the residential and office markets in the Libyan capital, Tripoli, with information current at November 2008. It profiles 19 districts of the cities, with sales and rental price brackets, indicative price growth over 2007-2008 and area descriptions. It also profiles more than 25 upcoming real estate projects in the city, highlighting the key local and international players active in the market, and is an essential resource for investors, developers, suppliers, architects and consultants.

The report shows Libya's economy being transfored, with international sanctions greatly limiting the flow of capital and goods into the country. With sanctions now lifted and foreign and private-sector investment rising quickly, the country is in a state of transition which creates significant opportunities across most sectors;

Macroeconomic prospects are strong, with Libya set to enjoy real annual GDP growth of over 8% from 2008-11 and remain relatively immune from the international financial crisis. Despite some diversification and transition, though, the economy will remain over-dependent on hydrocarbons and the public sector;
Tripoli is the business and administrative capital of Libya, enjoying 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 residential market in Tripoli is characterised by aging, poor-quality and low-rise stock, 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 2007-2008, rising to 150% in certain areas;

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, although Frontier estimates that at least 400,000 square metres of new, A-grade office tower space is expected to come online between 2010 and 2012.

Key demand drivers for residential real estate in Tripoli include rising consumer incomes, falling household sizes, an influx of high-income expatriates and renovation of dilapidated stock. Office demand is being driven by Libya's high-potential economy, with a rising number of multinational companies establishing a presence in the capital.

More than 25 major real estate projects are either under construction or in planning in Tripoli, varying from mixed-use towers to diverse tourist-based developments. The highest concentration of sites is found in the emerging central business district around the Corinthia Bab Africa, the city's only international 5-star hotel. International developers exploring the market include companies from the UAE, Qatar, UK, Bahrain and Malta.

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;
Important restrictions still hamper the growth of the property market in Tripoli. The most prominent is that foreign individuals, except those from certain North African countries, are not permitted to own land or property in Libya.

Other uncertainty has been prompted by the delayed release of the city-wide masterplan, which is expected to be completed in second quarter 2009, and the proposed 'dismantling' of most government ministries, which may take place in 2009.

The outlook for residential and office property in Tripoli is sound, the report says, with demand set to exceed supply for at least the short to medium-term. Much, however, will depend on the direction of the Libyan economy and there is expected to be a period of uncertainty during which the success of this first phase of projects will provide a vital litmus-test for future investment prospects.

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