It is not surprising that this small country of 10 million people is beginning to capture the attention of holiday makers. Its sunny weather, beautiful sandy white beaches on an 800-mile Mediterranean coast, historic towns with narrow meandering streets and varied landscape that includes the Atlas Mountains and the Sahara Desert make it an ideal destination. It has something for everyone.

Tunisia has several international airports that can take most visitors directly to their chosen destinations. The number of tourists, especially those from Europe, has been steadily increasing. The capital city, Tunis, is just a two-hour flight from Paris and London and 45 minutes away from Rome. 

Word is also getting out about the tiny country’s real estate sector. Attracted by its stable, albeit autocratic, political and economic policy, major companies have begun investing in developments. Individual foreign buyers are trickling in and snapping up affordable holiday homes in prime locations. 

“The country has many beautiful beaches, cultural and historical attractions, combined with days of endless sunshine and hot summers, which help make any investment have the potential of high rental yields, as well as providing an excellent holiday home,” Melanie Benna, owner of the The Tunisian House, a real estate agency that aids foreign residental property investors, said. “Education is excellent and the literacy rate is one of the highest in Africa.  Health care is on a par with Europe.” In short, Tunisia is an-up and-coming property market. 

A country snapshot

Sandwiched between Algeria and Libya, Tunisia, the northernmost African state, was a French colony until 1956. The country’s official language is Arabic, but many Tunisians speak French also. Roughly 99 percent of Tunisians are Muslims, and Islam is the religion of the state, according to Tunisia.com. 

Although it is much smaller and has fewer natural resources than its neighbors, according to an October 2007 TIME Magazine article, it has overcome the type of poverty-related problems from which Libya and Algeria suffer. It has revamped its economy by investing in education and instituting policies that are largely business- and trade-oriented. 

Tunisia is ranked first in economic competitiveness among African countries and members of its peer group countries in the Arab World in the Global Competitiveness Report prepared by the World Economic Forum. Though the government has made major strides toward good fiscal policies, it still must address issues that hamper the country’s ability to do business efficiently. Some of its top challenges include complex tax regulations and high tax rates, lack of access to financing and a cumbersome bureaucracy. 

Tunisia’s economy is 59.3 percent free, above the regional average of 58.7 percent but slightly below the world average of 60.3, according to the 2008 Index of Economic Freedom prepared by The Wall Street Journal and The Heritage Foundation. Its relatively low score is partly a result of its protectionist economic policies that have limited foreign investment. 

Since the early 1990s the government has been working to address obstacles to international investment by taking measured steps towards a free-market economy and away from its previous socialist system. 

Tunisia’s main economic sectors are tourism, agriculture, energy and mining.  The country has benefited significantly from its 1998 trade agreement with the European Union. 

In 2007, Tunisia’s economy grew by 6.2 percent, the highest performance in 10 years, according to The Oxford Business Group, a political and economic intelligence publisher. The country’s main source of income, tourism, brought more than 7 million visitors last year. Tunisia is working to raise its profile among international travelers to the level of some other well known North African destinations, such as Egypt. 

The Tunisian real estate market

Real estate in Tunisia is a growing market that is beginning to attract international investment. Financiers of big property projects come mainly from Gulf countries such as The United Arab Emirates. 

New office buildings are popping up in the capital Tunis, according to TIME Magazine. Multinational companies such as Pfizer, Eriksson and Siemens are moving in and setting up shop. Advertisings for luxury estates priced upwards of million dollars are beginning to be spotted.

A number of massive investments into the sector have also been announced.  In 2007, Sama Dubai inaugurated a $14 billion development known as the Century City and Mediterranean Gate, according to ArabianBusiness. The project is a joint venture between Dubai Holding and the Tunisian government. According to Sama’s Century City website, the plans include transforming more than 2,000 acres of land into a satellite city that will house more than 2,500 firms, retail and recreation centers, 14 luxury hotels and residential properties. The project is expected to take 15 years from start to finish. 

Another large scale development is known as Tunis Sport City, a project by Emirati Boukhatir Holding, according to a recent article at Tunisia Online News. This development will see the construction of, among other things, a residential district with an 18-hole golf course, 49 luxury mansions, two residential villages, 10 high rise buildings, a sports complex with outdoor 10,000-seat and indoor 5,000-seat stadiums, Olympic swimming pools and gyms.

Emirati Boukhatir Holding has also plans to develop Tunis Garden Golf, which will be designed with the participation of the PGA.

Notable Gulf property developers such as Damac, Al Maabar and the Gulf Finance House have also taken notice of Tunisia, according to The Oxford Business Group. Both international and local investment in the real estate sector is expected to continue to grow, leading to a tremendous expansion of the market. “I believe the next couple of years will see an explosion of interest in buying in Tunisia,” said Benna. “People have moved on from Morocco, Turkey, and Egypt and are looking for something new. Tunisia provides something just as different and exotic, but more European thinking, more relaxed, and definitely more upper class.”

Purchasing real estate in Tunisia

At first glance, the rules for foreigners purchasing property in Tunisia seem simple: “...a foreigner, including American citizens, can buy any property in Tunisia except agricultural land," said Malek Rejiba, an attorney whose practice, Malek Rejiba & Associates, helps non-citizens navigate the real estate purchasing process in the country.

However, it is a little more complicated than simply jetting to Tunisia, picking out a property and signing documents. According to Mr. Rejiba, it is important to hire a lawyer or an agent to help to distinguish purchasable land from agricultural land before going through the lengthy process of preparing the extensive paperwork needed and applying for authorization to buy the property. He said getting the permission alone may take three to six months and more if there are complications.

The application for authorization of purchase needs to be submitted to the governor of the region in which the property of interest is located before any transaction can be completed. According to Melanie Benna, this procedure helps avoid errors that lead to problems later. Before sending an application for purchase to the governor, all paperwork must be in place and checked by the local council. “If just one paper is missing or the customer is applying to purchase land that has not been designated for building, for example, the council will not approve the application to be forwarded to the governor, therefore making it extremely difficult for costly mistakes to occur,” Benna said. Regardless, the three to six months time it takes to process applications can be discouraging for some investors.

The potential risks and problems associated with investing in Tunisia aren’t all that clear yet; the international property scene in the country is still in its infancy. What is apparent is the real estate market in Tunisia is growing and its future is promising.