Thriving revenues from hydrocarbons led to a period of widespread residential building in Algeria, with the housing segment leading the construction sector as the largest market in 2011-15, accounting for 41% of the total. Sustained growth is forecast until 2020, driven by an urbanisation expansion rate of 2.7% and a rising population surpassing 40m.

The minister of housing and urban development at the time, Abdelmadjid Tebboune, who also served as prime minister, said in early 2017 that Algeria’s housing stock would reach 8.9m units by 2018, and that 2m more will be delivered by 2019. The main cities provide ample opportunity for real estate developers. The Mutual Guarantee Fund for Property Development has a register of more than 4700 developers, of which fewer than 200 are state owned. Most belong to the private sector, with several of them backed by foreign capital.


Although Algeria’s real estate market stagnated as a result of a decline in transactions in 2016-17, there was no plunge in property prices, contrary to expectations. In fact, leasing rates began to rise in the second quarter of 2016.

The market currently comprises some 8.5m dwellings, 50% of which are managed by the state. However, demand continues to outstrip supply and the growth of cities creates a need for affordable, high-quality residential property.

It is a difficult market to monitor, but according to local real estate agency Lkeria the rental stock totals more than 2.5m properties. The two main housing types on offer are three-room apartments of 50-100 sq metres, and detached houses no larger than 200 sq metres. Rents are high in the main cities, and grew by 6% in 2016. The average monthly rent for a three-bedroom apartment in Algiers was AD62,100 (€515) in 2016. Taking into account the Algerian average monthly income of AD30,000 (€249), these prices are unaffordable for much of the population.

A shortage of properties in the capital has resulted in significant price augmentation in some neighbourhoods, particularly Hydra and Kouba. The cities of Oran, Constantine, Béjaïa and Annaba have also registered a progressive rise in property prices. In Oran rent for a three-bedroom apartment is as high as AD36,954 (€307) per month. In Annaba rent in a quiet neighbourhood can be up to AD34,300 (€285). In the case of detached houses or villas, rents can reach AD69,600 (€577) in Algiers or AD39,000 (€323) in Blida, Algeria’s fifth-largest city.

Legal Framework

The 2017 Finance Law reorganised taxation for real estate, raising the tax liability for some. For instance, the tax exemption that has benefitted tenants renting properties smaller than 80 sq metres since 2009 has been set aside.

New property taxes – alongside increased taxation and the import ban on building materials (see Construction overview) – will impact real estate prices, affecting both tenants and owners. Many have been left unable to afford housing as a result. This situation has also led to informal or illegal practices such as the involvement of anonymous intermediaries, who now manage 80% of housing transactions, further raising prices, according to the Federation of Real Estate Agents Intermediaries.

Many real estate agents have found that regulation of the segment is insufficient and have suggested the implementation of a legal framework to address issues such as the increase in anonymous intermediaries and the regulation of short-term rentals – a growing practice in the country, especially during seasonal periods – that often result in non-traceable, illegal transactions.

In its May 2016 Article IV Consultation, the IMF stated that Algeria’s business environment continues to be hampered by “pervasive bureaucracy and cumbersome administrative procedures”. To address these challenges, and as part of efforts to diversify the economy, authorities amended the country’s investment code in July 2016, simplifying the administrative requirements for investors and thereby reducing the bureaucratic burden.

Quality Adjustment 

This intervention is welcome given the rising interest from international investors in the rapidly growing and still-maturing market. However, a comprehensive approach to the local environment beyond macro-investment schemes is required. In the World Bank’s “Doing Business 2018” report, Algeria dropped 10 places to 166th out of 190 countries, down from 156th in the 2017 ranking. The country fell 10 places in the acquiring a construction permit category. The World Bank’s quality of land administration index gives Algeria seven out of 30 possible points and one out of eight on reliability of infrastructure.

“The government should open the market to investors as there are still too many constraints to entry,” Paul Magera, CEO of specialty chemicals firm Sika El Djazaïr, told OBG. “Algeria needs to ease its business environment to convince small and medium-sized enterprises, and not only big groups.”


The mortgage market contributes less than 1% to GDP. As many households cannot afford a mortgage, the finance sector registers down payments through non-mortgage credit or microfinancing. The government is trying to encourage property purchasing with subsidies of up to 20% of down payments for low-income households. However, obtaining a loan from Algerian banks is complicated and involves high interest rates, and many are turning to informal markets. Total bank lending for mortgages amounted to $31.4m in 2015.

National Policy 

There is pressure on the government to provide low-income housing to a fast-growing population. For two decades the effort to tackle the housing shortage has been successful, having reduced the deficit from 3m in 1999 to 350,000 in 2016. Subsidised provision for low- and middle-income segments forms the majority of the government’s social aid and investment allocation to ensure access to property for insolvent and disadvantaged households. It takes into consideration the variable incomes and the development of underprivileged neighbourhoods by addressing areas such as public rentals, state housing, rural housing, rent-to-buy schemes and subsidised housing.

Launched in 2004, Algeria’s Public Promotional Housing (Logement Promotionnel Publique, LPP) allows the acquisition of public housing by private tenants. It has proved efficient for middle-income citizens, and is designed to mitigate dependence on the state. The management of this operation was assigned by the Ministry of Housing, Urban Planning and the City to the Office of Property Development.

Buyers benefit from price reductions of 10% if payment is made up-front, 7% if payment is made within three years, and 5% if within three to five years. The programme also allows for undocumented occupants of social housing to regularise their situation. However, it forbids tenants to lease their property unless it is to a close family relation.

The Agency for Improvement of Housing Development, which is in charge of the rental management, construction, renovation and analysis of public lands and heritage sites, is expected to deliver 350,000 housing units between 2015 and 2019, 50,000 of which will be part of the LPP programme. As of 2017, 8567 units had been delivered.

Private Sector

Shifting focus from the high-income population and luxury segment, where they have a large share of the market, private developers have begun to expand their services to mid- and lower-income segments. Hasnaoui Group is developing El Ryad City in Oran, a real estate project extending over 450,000 sq metres with contemporary buildings surrounded by greenery. The project was awarded the energy-tempered climate award at the Green Building & City Solutions Awards 2016. The design is in line with sustainability goals, an issue typically neglected in Algeria’s housing sector.

The drive to boost tourism is a boon for developers, which can now pursue projects such as shopping malls, hotels and more sophisticated marina infrastructure. However, state control over the market is a major obstacle limiting their activity.

Moreover, throughout 2017 the halt in many construction sites as a result of a lack of resources, cutbacks and unpaid debt has led to foreign companies threatening to leave the country, which could slow things down further and affect Algeria’s image.


The Algerian real estate sector depends on the government’s ability to supply the infrastructure to satisfy residential and commercial demand while overcoming the existing deficit. Affordable pricing is of the utmost importance, provision of which during the current economic deceleration will be a challenge due to price inflation. However, sector growth should be assured for the next several years as it is a strategic priority of the government, providing a range of opportunities for developers.