Test time for Tripoli

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Construction continues in Tripoli despite uncertainty.

Having been somewhat isolated for many years, Libya has remained something of an untapped resource for developers in the MENA region. However, according to a report by Research and Markets, there are several opportunities, particularly within the capital, Tripoli.

According to a report, Libya is "set to enjoy real annual GDP growth of over 8% from 2008-2011 and remains relatively immune from the international financial crisis". Economic growth is accompanied by a population growth of around 2% per year in Tripoli - a city drastically under-supplied when it comes to quality housing. Office space also appears to be a likely area for growth.

There is almost no international A-grade office stock and less than 100,00m² of dedicated office space in the city. Meanwhile, R&M suggest that purchasing power and demand is increasing. "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," states the report.

As a result, the country has a US $127 billion (SAR476 billion) five-year redevelopment plan to modernise water and sanitation facilities, and schools and housing.

With this in mind, Tripoli holds a great deal of promise. However the practicalities of doing business in the Libyan capital appear to be discouraging developers.

"Everyone's now flocking to Libya. From what I hear, anyone who's been to Libya will not go back but those who haven't been there are quite enthusiastic," says Simplex Infrastructure country director Ani Ray.

His view is supported by Six Construct GM Philippe Dessoy.  "We used to work in Libya but we closed the office there. Everything takes a lot of time. You never know when they will start - we had to wait for one or two years to get a contract. I don't see anything changing."

How contracts are drawn up appears to be a particular flashpoint for developers. "What I understand is that they have a rate contract - it is government controlled," says Ray. "So if they like you, they'll tell you to go by their rates. If the parties agree, they'll give you the contract but even that is very loose."

 R&M suggest there are still deterrent factors, particularly the fact that most foreign individuals cannot buy property or land in Libya, although in joint ventures with Libyan companies 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."

Therefore, it is clear that Tripoli holds potential for developers - but questions still remain over whether realising that potential is still possible.

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