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DEMAND FOR AFRICAN PROPERTY DRYING UP

Monday, 13 Oct 2008

Over the last couple of years the demand for property in Morocco, Cape Verde and Egypt has been high, and has boosted the respective countries’ stock markets and economy considerably. However, the current international financial crisis is causing these property markets to dry up quickly and many, although not all, feel that there is no hope of recovery in the near future.

Just last week Morocco property company Addoha ADH saw its shares in the stock exchange suspended due to a massive downward spiral in value, despite the fact that the company’s net profits had risen by at least 40%. The halt in Addoha’s previous growth has confirmed fears for many within the industry that Morocco is seeing the end of its previously-enjoyed property boom.

Developers of property in Morocco are twice hit by the international financial crisis. Firstly, overseas investments in the property market are becoming fewer and fewer as funds become harder to obtain on international markets, and secondly, the usual types of people who buy accommodation in Morocco, those from the UK who want holiday accommodation in an enjoyable climate, are now too unsure about their own economy to be willing to lay out that type of expense, plus they are less likely to be able to obtain the credit required to purchase a property.

The situation with property in Morocco is similar in Egypt, with Cairo stock exchange investors being convinced that the property boom in Egypt has ended. The situation in Egypt is slightly different to the one in Morocco, albeit with the same devastating effects. Investors from Arabia and the Middle East, who contribute to most of Egypt’s property sector, are expected to continue investing for a time, unlike Europeans, but Egypt’s domestic capital has already run dry and the financial sector in Egypt is spiraling into a major crisis.