Sunday, October 12, 2008

End to Property Boom in Morocco, Egypt

afrol News, 9 October - Countries like Morocco, Egypt and Cape Verde have seen a property market boom over the last few years fuelling their national economy and stock markets. As a consequence of the global finance crisis, investments in these boom sectors are now quickly drying up and the outlook is bleak. Analyses regarding the tourism industry's future however vary.

Only last week, the Moroccan stock exchange had to suspend the shares of property firm Addoha ADH, following an uncontrolled drop in its value. Despite what sounded a really encouraging result - net profits had increased by 40 percent - the market was deeply disappointed by the company's result. The earlier flamboyant growth of Addoha apparently had stopped, confirming widely held fears that the bottom was falling out of Morocco's property boom.

Moroccan property development is doubly hit by the global financial crisis. First, foreign investments in this capital intensive sector are drying up as cash becomes harder to get on global markets. Second, the typical buyers of Moroccan property are Europeans looking for a holiday home in the pleasant North African climate, but these are now insecure about their personal economy and also have less access to credits. Analysts therefore fear that foreign property buyers will postpone their decision to buy.

Morocco is not alone. The same crisis already hit Spain early this year, setting off a deep economic crisis in Morocco's northern neighbour. As in Spain, Moroccans fear that their vibrant construction industry - a major employer - may diminish and create more unemployment.

In Egypt, together with Morocco the largest tourist property market in Africa, the situation is the same. Egypt's pleasant Red Sea coast has seen a remarkable construction boom that has contributed strongly to the country's economic growth. At the Cairo stock exchange - the most severely hit by the financial crisis in the region - investors take it for granted that the property boom has come to an end.

Read it all here.

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