North Africa holds massive potential in Mena development

Abu Dhabi: The exponential development activity in GCC countries has been impressive over the last couple of years but North Africa is quickly catching up, a report has said.

Colliers' latest real estate overview on the Middle East and North Africa (Mena) region confirmed as much, pointing out that Abu Dhabi, Cairo, Damascus and Tripoli are the places to be in the Mena region.

"Cairo is the best for office development. There is little existing supply and nothing completing [current supply] within the next three to four years," said John Davis, chief executive for Colliers International's Middle East operations.

"It may come as a surprise but Damascus is the one for residential development as there is a huge undersupply. We reckon over 100,000 units are required over the next five years," he added.

Libya is tipped for hotel developments and Abu Dhabi got the thumbs up for more retail.

"Abu Dhabi will have the same number of shops than Dubai in the future. The latter is challenging as it is oversupplied and so is Bahrain," said Manu Jeswani, director of the Landmark Group.

Expansion plans are also focusing on Egypt, with a potential market of 70 million, as well as Lebanon, Syria and Libya.

"We would consider Iraq and Iran in the future. The reason we're doing so well is because [of] mid-market value," Jeswani added.

Philippe Baretaud, Accor Hospitality Middle East's director of development, said hotel rates and revenues in Abu Dhabi had reached their peak.

"Abu Dhabi still holds great potential but it is at the top of the cycle as far as RevPAR (Revenue per available room) is concerned [and] it will go down over the next couple of years."

He said there were too many upscale hotels coming on-line at present, whilst there is a lack of quality branded economy hotels in the capital.

"We need a balanced supply across the segments."

Accor sees a lot of growth opportunities in Saudi Arabia, driven by religious tourism and the concept of economic cities as well as business in Jeddah and Riyadh.

He, however, said occupancy rates are low compared to what hotels think they can charge.

"The market needs to mature. The visa policies are still a little too restrictive. However, infrastructure work at the economic cities and connections to airports are progressing fast," he said.

Accor is one of the many international hotel operators looking with enthusiasm to the Levant region.

UAE-based architectural firms, focused on hospitality and leisure projects, are following the trend.

"Dubai is not dead by any means and we still have work in Sharjah and just opened an office in Abu Dhabi. And we're still working in other GCC countries, such as Oman," said Michael Dawson, partner at Godwin Austen Johnson (GAJ) chartered architects.

Diversification

"But we decided to diversify three years ago into North Africa... and have escaped a significant part of the trouble in the GCC [region]," Dawson said.

"We got work in Tunisia, Egypt and Morocco, for example. Libya has opened up and there is a significant amount of work there from office and retail to hotels."

The firm was the designer behind major hotels such as the Bab Al Shams in Dubai. Perceived to be a five-star hotel, its design has helped to make it a favourite among visitors and Dubai residents.

"It is very important when it comes to designing a successful hotel for architects to be involved [in] right from the start to understand the client's vision and the business side of the project," Dawson said.