Libya
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The Libyan Property Market
Source: Oxford Business Group
Building up tourism is one step to enhancing the national infrastructure
Libya has the ninth-largest oil reserve on the world, and the economy remains heavily dependent on oil wealth. Hydrocarbons account for 96% of export earnings, 87% of government receipts and 73% of the country's GDP. Flush with oil revenues, the government is now seeking ways to entice foreign investment into the country. Politically, Libya remains heavily controlled. It seems increasingly likely that revolutionary leader Muammar Gaddafi will be succeeded by one of his sons.
Construction and real estate presents some of the greatest opportunities for investors seeking to take advantage of Libya's new economic wealth since infrastructure development and rejuvenation of the exhausted building stock are priorities.
The majority of building in Libya date to the 1970s and 1980s. Constructed under government tender, the quality of design and construction is not high. Building materials are of secondary quality and state control of construction has created a building stock concentrating more on functionality rather than aesthetics.
Those developers who have launched projects in Libya have not always found the endeavor an easy one. The process of acquiring permission is extremely opaque, and plans can be subject to sudden and arbitrary change. With outside interest in the market a new concept to Libya, pricing can be irrational.
Sales prices for neighbouring buildings of almost identical design and footprint in prime areas can vary hugely according to the date of construction and quality of maintenance, while the prices for land by foreign investors have doubled, as local authorities work out how far Gulf and international investors will go for market entry.
The increasing number of construction projects in Libya reflects the market interest: from 17 in 2000 to 84 in 2005. International developers with projects now in the planning stages are typically second-tier firms with interests in other economic fields. Local developers have proven reluctant to take on projects of any scale, and often have limited ambitions to construction of single hotels or residential towers, which may thereafter be converted to commercial use.
The key factor that is keeping projects compact has been a lack of funding and access to lending. International banks take some persuading before lending in the Libyan market, and the majority of smaller projects - including hotels, residential towers and restaurants - are developed speculatively by landowners. The market structure is now changing, with increasing numbers of international developers acquiring land.
The presence of big-name developers such as Emaar, Tameer and Majid Al Futtaim is a new development over the past year. Major projects include the Zowara-Abu Kemash mega-project city development; Ghazala Towers. A $240m project in Tripoli; and Tameer's $20bn planned residential city of Wadi Al Sharqui.
Local Libyan companies are unable to deal with the demand for large grade-A construction projects, spanning all sectors. Although local costs are significantly lower than international company prices, construction costs are bound to increase as international developers are recruited to satisfy construction demand.
Main | Residential | Commercial | Hospitality | Retail
The Libyan Property Market
Source: Oxford Business Group
Building up tourism is one step to enhancing the national infrastructure
Libya has the ninth-largest oil reserve on the world, and the economy remains heavily dependent on oil wealth. Hydrocarbons account for 96% of export earnings, 87% of government receipts and 73% of the country's GDP. Flush with oil revenues, the government is now seeking ways to entice foreign investment into the country. Politically, Libya remains heavily controlled. It seems increasingly likely that revolutionary leader Muammar Gaddafi will be succeeded by one of his sons.
Construction and real estate presents some of the greatest opportunities for investors seeking to take advantage of Libya's new economic wealth since infrastructure development and rejuvenation of the exhausted building stock are priorities.
The majority of building in Libya date to the 1970s and 1980s. Constructed under government tender, the quality of design and construction is not high. Building materials are of secondary quality and state control of construction has created a building stock concentrating more on functionality rather than aesthetics.
Those developers who have launched projects in Libya have not always found the endeavor an easy one. The process of acquiring permission is extremely opaque, and plans can be subject to sudden and arbitrary change. With outside interest in the market a new concept to Libya, pricing can be irrational.
Sales prices for neighbouring buildings of almost identical design and footprint in prime areas can vary hugely according to the date of construction and quality of maintenance, while the prices for land by foreign investors have doubled, as local authorities work out how far Gulf and international investors will go for market entry.
The increasing number of construction projects in Libya reflects the market interest: from 17 in 2000 to 84 in 2005. International developers with projects now in the planning stages are typically second-tier firms with interests in other economic fields. Local developers have proven reluctant to take on projects of any scale, and often have limited ambitions to construction of single hotels or residential towers, which may thereafter be converted to commercial use.
The key factor that is keeping projects compact has been a lack of funding and access to lending. International banks take some persuading before lending in the Libyan market, and the majority of smaller projects - including hotels, residential towers and restaurants - are developed speculatively by landowners. The market structure is now changing, with increasing numbers of international developers acquiring land.
The presence of big-name developers such as Emaar, Tameer and Majid Al Futtaim is a new development over the past year. Major projects include the Zowara-Abu Kemash mega-project city development; Ghazala Towers. A $240m project in Tripoli; and Tameer's $20bn planned residential city of Wadi Al Sharqui.
Local Libyan companies are unable to deal with the demand for large grade-A construction projects, spanning all sectors. Although local costs are significantly lower than international company prices, construction costs are bound to increase as international developers are recruited to satisfy construction demand.
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