Tunisia's Real Estate Sector in Crisis
According to the "Study on the Real Estate Promotion Sector in Tunisia" recently unveiled by CAF, a member of the PwC international network, the construction sector in Tunisia has gone through a deep crisis, exacerbated by socioeconomic challenges and the COVID-19 pandemic.
Economic Downturn
The study revealed that in 2019, the GDP only grew by 1%, and the recession, with a 9.2% decline in 2020, is the most severe since the country's independence.
Impact on Businesses
This difficult context has heavily impacted construction companies: according to a 2020 survey by the same company, 54.3% of them are at risk of closure. Demand in this sector has plummeted by 79.7%, and 18.1% of companies have had to lay off employees.
Factors Contributing to the Crisis
The collapse of real estate demand is also linked to monetary policy, which, to curb inflation (5.4% in 2020), has increased bank interest rates, reducing citizens' borrowing capacity. The depreciation of the dinar between 2013 and 2018 has also worsened the situation, increasing construction material costs, with a 84.5% rise for red products and 82.9% for cement between 2010 and 2020.
Market Imbalance
The number of real estate developers has increased by 60% between 2010 and 2020, but housing production has not kept pace, mainly due to the lack of regulation on inactive developers' activities. Moreover, the real estate market is oriented towards high-end properties, leaving an unsatisfied demand for mid-range and social housing.
Diagnosis
This diagnosis reveals an increase in land, labor, and construction material costs, in a sector struggling to meet the demand for affordable housing, despite attempts at regulation and public intervention.
