After nosing around the market for the past few years, Emaar of the UAE now appears ready to dive head first into the Algerian real estate market. On October 3, the company announced plans for four multi-purpose developments in and around Algiers. Worth $20 billion, Emaar’s new venture represents the largest single investment in the Algerian property sector.
The new scheme dwarfs the company’s previous largest development in North Africa, the $14 billion Century City in Tunisia, where work began in August this year under the aegis of Sama Dubai.
The center piece of Emaar’s Algerian venture will be in Sidi Abdullah, an upmarket development covering up to 1500 hectares some 30 kilometers from the capital. The Sidi Abdullah project, slated to be an “education” city by the Algiers government, had long been stalled owing to the political uncertainty of the 1990s. Although infrastructure and roadwork will need to be brought, a number of developers are beginning to now move in on the creation of this new satellite city for the capital. Emaar’s other three endeavors include a modern health care city at Staouali and a tourist resort at Colonel Abbes to the west of Algiers, as well as a mixed-use waterfront redevelopment on Algiers Bay.
Creating a positive investment climate
Emaar’s management said that, when finished, the four developments will create several thousand jobs in the tourism, information technology and health sectors, and will encourage foreign direct investment in the Algerian economy.
According to Mohamed Ali Alabbar, chairman of the Dubai developer, Algeria’s strong growth rate and its program of economic reforms were among the motives behind Emaar buying into the country.
“Radical economic changes proposed by President Abdelaziz Bouteflika and Prime Minister Abdelaziz Belkhadem have created a favorable investment climate that complements Emaar’s plan for international expansion,” he said.
Emaar is not the only Dubai firm with projects envisioned or already underway in Algeria. Harbor and cargo handling management firm Dubai Ports World is still seeking to clinch an agreement that will see it take a 50% stake in the Djen Djen container terminal. However, while the deal could earn Algeria $70 million and see a further $150 million in investments and upgrading of facilities, it is being opposed by local trade unions, who fear job losses if the Emirate’s company wins control of the port.
In March, the Dubai Aluminum Company (DUBAL) joined forces with Abu Dhabi’s Mubadala Development Company and Algeria’s national oil and gas company Sonatrach to develop the country’s first aluminium smelter. With a $5 billion budget, the project was the largest foreign investment in Algeria at the time.
While good news for the Algerian economy, Emaar’s entry into the Algerian property development sector is not exactly recent news, with the projects first being floated last year.
However, the at times lengthy negotiation and approval process for foreign projects in Algeria has added to the time lag between the developments first being discussed and the ink drying on contracts. This is despite the fact that the Algerian president has close ties to a number of Emirati notables, having spent a period of political exile in the UAE during the 1980s. In fact, it was in October last year that Hamid Temmar, Algeria’s minister of participation and investment promotion, announced that the government had initially approved the Emaar projects, which were first presented to the president in August 2006.
During a visit to Abu Dhabi in mid-June, Belkhadem said that developers whose projects had been waiting to be granted final approval for up to a year would be getting “good news” soon. One of those on the waiting list was Emaar.
The time lag for many projects in Algeria was underscored by the annual report issued by the World Bank in late September on ease of doing business. The report showed that Algeria had actually slipped nine places down the rankings, placing it 125th out of 175 countries, and stated that investors had to go through 14 separate stages to register and open a business.
Nevertheless, these difficulties do not appear to be enough to deter potential developers as foreign investors continue to show enthusiasm for Algeria.
