Housing Finance in Algeria

Overview

Located in North Africa, Algeria is a country of 44.6 million inhabitants on an area of 2 382 million km².[1] The urban population increased from 60% in 2000 to 74% of the total population in 2021 and is mainly concentrated in cities such as Algiers, Oran, Setif and Djelfa.[2] To support this high rate of urbanisation, the authorities deliver housing as part of housing supply programmes using different formulas accessible according to the applicant’s income. These programmes had enabled the delivery of 320 000 housing units across the different wilayas (administrative regions) by 2021 and have contributed to the eradication of most (90%) of the country’s slums.[3]

The COVID-19 pandemic has weakened the country’s economy which contracted by 4.9% in 2020[4] despite a period of strong economic growth (6% during the last quarters of 2020). This growth was explained by revenues from the marketing of hydrocarbons, which represent 30% of gross domestic product (GDP), 60% of budget revenues and more than 95% of exports.[5] A recovery of the economy was noted in 2021 with GDP growth at 4.1% thanks to the recovery in external demand, mainly for oil, whose production and prices were rising, reducing the budget deficit by 4. 8 percentage points. Inflation increased in 2021 to 7%. This was accompanied by an easing of monetary policy with the minimum reserve requirement being reduced from 10% to 2% and the policy rate from 5% to 3%.[6] The multi-dimensional poverty rate decreased from 2.1% to 1. 4% between 2013 and 2019.[7]

Located on the Mediterranean Sea the country is exposed to natural hazards such as floods, earthquakes, droughts, forest fires, coastal and soil erosion that hinders government action in the housing sector, especially in urban areas.  To guard against this, Algeria has a legal framework, the Disaster Risk Management, focusing on reconstruction rather than prevention and mitigation in a context of increased climate risks.

[1] World Bank (2021). Population, total – Algeria. https://data.worldbank.org/indicator/SP.POP.TOTL?locations=DZ (Accessed 1 August 2022).

[2] World Bank (2021). Urban population (% of total) – Algeria. https://donnees.banquemondiale.org/indicator/SP.URB.TOTL.IN.ZS?locations=DZ (Accessed 1 August 2022).

[3] APS (2021). Eradication of 90% of slums across the country. https://www.aps.dz/societe/128366-eradication-de-90-des-bidonvilles-a-travers-le-pays (Accessed 2 August 2022).

[4] African Development Bank Group. Algeria Economic Outlook. https://www.afdb.org/fr/countries/north-africa/algeria/algeria-economic-outlook (Accessed 2 August 2022).

[5] Mehdi, L. (2017). ‘Algeria’. In F. Bost (ed.), Images économiques du monde 2018 – France: la grande fracture. Paris, Armand Colin. Pgs. 237-238 (Accessed 2 August 2022).

[6] African Development Bank Group. Algeria Economic Outlook. https://www.afdb.org/fr/countries/north-africa/algeria/algeria-economic-outlook (Accessed 2 August 2022).

[7] World Bank (2021). Monitoring report on the economic situation in Algeria – Recovering the Algerian economy after the pandemic 2021. https://documents1.worldbank.org/curated/en/667961640162288726/pdf/Algeria-Economic-Monitor-Restoring-the-Algerian-Economy-after-the-Pandemic.pdf (Accessed 2 August 2022). Pg.16.

Access to Finance

The Algerian financial sector  is composed of a non-banking system including microcredit (82%) and a banking system (73% of GDP).[1] The Algerian banking sector is composed of the Bank of Algeria, 20 commercial banks, nine financial institutions and other financial institutions including a stock exchange  and a clearing company.[2] The country has about 1 200 bank branches, and  public banks dominate with almost 75% of transactions.[3] Public banks control most of the market and collect 85.5% of deposits and grant 87.5% of credits. The banking sector is dominated[4] by six major public banks: Banque Nationale d’Algérie (BNA), Banque Extérieure d’Algérie (BEA), Banque de l’Agriculture et du Développement Rural (BADR), Banque de développement Local (BDL), Crédit Populaire d’Algérie (CPA) and Caisse Nationale d’Epargne et de Prévoyance (CNEP). A private bank with Algerian capital has been active on the local market for more than 15 years.

At the end of  March 2021, outstanding loans from public banks were more than DA9 711 billion (US$66.2 billion), an increase of DA67 billion (US$456.7 million) compared to the end of December 2020. Of this total, DA4 087 billion (US$27.8 billion) was from the private sector.[5] Microcredit has, enabled financing, via the National Agency for the Management of Micro-Credit (ANGEM),  of nearly   DA62 billion (US$422.6 million). Fifty percent of microcredits were granted to women (30% in rural areas and 20% for housewives).[6] However, financial inclusion indicators have seen a modest change from 2017. The percentage of adults with an account increased from 43% to 44% in 2021 with a more pronounced evolution among women, 29% to 31% in 2021.[7]

State subsidies continue to account for a significant proportion of the amounts allocated to housing.  . Public housing subsidies amounted to between 3% and 3.5% of GDP per year for the years 2020 and 2021.[8] The volume of mortgage loans is estimated at less than DA400 billion (US$2.8 billion) or less than 2% of GDP.[9] The vast majority of these mortgages are granted by public banks whose market shares represent 95%.[10] The same is true of the holders of housing loans – 5% of  Algerians held them in 2017 with a marginal proportion among women (2%).[11] Mortgages remain reserved for households with sufficient income (so that one third of the monthly income could be used as a monthly repayment) that is also permanent and regular, which excludes households whose income comes from the informal sector. Banks most often require Algerian applicants to have a stable, regular income equal to at least the National Minimum Guaranteed Salary (SNMG), a minimum personal contribution of 10% of the housing price, with a capacity for constant monthly repayments up to 30 to 40% of their Overall Net Monthly Income, and possibly a deposit.[12] A loan from CNEP, a bank that finances 100% of the amount of acquisition of the property to young first time homeowners, is an exception.  To further boost the sector, the authorities intend to rely on banking digitalisation (electronic payment), privatisation of the sector (opening of capital from public banks to private investors), and the granting of Halal credit.[13]

[1] El Watan-dz (2022). Financial innovations and the modernization of the Algerian financial and banking sector. https://elwatan-dz.com/les-innovations-financieres-et-la-modernisation-du-secteur-financier-et-bancaire-algerien (Accessed 2 August 2022).

[2] Aboura, A and Chahidi, Dr M. (2022). The Algerian banking system: Historical evolution, liberalisation of the sector and modernisation challenges. https://www.researchgate.net/publication/360784695_Le_systeme_bancaire_algerien_Evolution_historique_liberalisation_du_secteur_et_defis_de_modernisation (Accessed 2 August 2022). Pg. 7.

[3] Mebtoul, A. (2022). In order to revive the national economy, 2022-2025: The fundamental condition is the reform…20 Jul 2022. Algeria Invest https://algeriainvest.com/news/afin-de-relancer-leconomie-nationale-2022-2025-la-condition-fondamentale (Accessed 2 August 2022).

[4] Sekak, R. (2021). Where are we and where can we go. 31 Oct 2021. Liberte Algerie https://www.liberte-algerie.com/contribution/ou-en-sommes-nous-et-ou-pouvons-nous-aller-367495 (Accessed 2 August 2022).

[5] Messanh Ledy, N. (2021). Algeria: The Central Bank renews the Covid-19 relief measures for three months. 3 Oct 2021. Financialafrik. https://www.financialafrik.com/2021/10/03/algerie-la-banque-centrale-reconduit-les-mesures-dallegement-covid-19-pour-trois-mois/ (Accessed 3 August 2022).

[6] APS (2021). ANGEM: more than 62 billion Da of loans granted since 2004. https://www.aps.dz/economie/120130-angem-plus-de-62-mds-da-de-credits-accordes-depuis-2004 (Accessed 3 August 2022).

[7] World Bank (2021). The Global Findex Database 2021. https://thedocs.worldbank.org/en/doc/6fa0abd1f7f266f7115adae07278eb97-0050062022/original/Databank-wide.xlsx (Accessed 3 August 2022).

[8] Sekak, R. (2021) The creation of a housing bank is not the solution. 21 Oct 2021. Liberte Algerie https://www.liberte-algerie.com/contribution/la-creation-d-une-banque-de-l-habitat-n-est-pas-la-solution-367016 (Accessed 6 August 2022).

[9] Sekak, R. (2021). The creation of a housing bank is not the solution. 21 October 2021. Liberte Algerie https://www.liberte-algerie.com/contribution/la-creation-d-une-banque-de-l-habitat-n-est-pas-la-solution-367016 (Accessed 6 August 2022).

[10] Sekak, R. (2017). Monograph: Banking sector in Algeria. 6 August 2017. El Watan https://www.elwatan.com/edition/contributions/monographie-secteur-bancaire-en-algerie-06-08-2017 (Accessed 9 August 2022).

[11] World Bank (2021). The Global Findex Database 2021. https://thedocs.worldbank.org/en/doc/6fa0abd1f7f266f7115adae07278eb97-0050062022/original/Databank-wide.xlsx (Accessed 3 August 2022).

[12] Choutri, A. (2018) Loan, loan and mortgage in Algeria: Everything you need to know in 2022. 3 June 2018. Bessa Promotion https://www.bessapromotion.com/blog-immobilier/credit-bancaire (Accessed 3 August 2022).

[13] ALGERI-ECO (2022). CARE: Financial inclusion requires the digitalization of the financial system. 17 March 2022. https://www.algerie-eco.com/2022/03/17/care-linclusion-financiere-passe-par-la-digitalisation-du-systeme-financier/ (Accessed 3 August 2022).

Affordability

 

Despite the state’s efforts to support housing, access to affordable housing is a challenge for a large part of the Algerian population. This is the case of promotional housing units (LPAs), which are  contracted by the state, targeting middle income households (whose incomes are less than or at least equal to six times the national minimum wage) but considered unaffordable for some households, especially those who live in large cities such as Constantine. For example, F2 apartments are sold for more than DA2 500 000 (US$17 040), F3s for DA3 500 000 (US$23 856),[1] F4s for DA4 400 000 (US$29 991), while F5s are worth DA5 400 000 (US$36 807).[2]

According to the National Federation of Real Estate Agencies, real estate prices in Algeria fell in 2022.  The average rent ranges from DA15 000 (US$102) to DA55 000 (US$375) in all wilayas (regions) of the country, depending on the region and the size of the dwelling.[3] The average selling price of a collective dwelling (vertical building with a few dwellings, located on different floors and designed to accommodate several families) of 83m² is between DA3 154 000 (US$21 498) and DA16 185 000 (US$110 319) .[4]  The drop in prices, estimated at 15% for small properties and 40% for large properties in all the wilayas of the country, certainly benefits some Algerians. However, prices  are still high in relation to the purchasing power of the middle class: the average monthly salary is DA42 000  (US$286), lower than the expenses of a family of five, estimated at DA81 000  (US$552)[5] including DA31 100 (US$212) for housing. This brings the number of years needed for the acquisition of a dwelling to 15 years for collective  housing and 39 years for  individual housing.[6]

These different factors combined with the estimated population growth rate of  2. 2% exacerbate the demand for housing, currently estimated at 200 000 units per year,[7] with a high representation of young applicants. The inability to satisfy the latter favours the development of informal markets. These informal markets account for nearly 80% of real estate transactions. [8] To deal with these irregularities, which plague the financing of housing, the state will open the Banque de l’Habitat in November 2022.[9] This aims to make public rental housing of a social nature accessible through finance from state budgets from 31 December 2022. Also being established are real estate loans for emigrants and Halal credits granted by the CNEP, which is included in  the list of banks offering Halal financing (such as Al Baraka Bank, Salam Bank, National Bank of Algeria).

[1] Ghioua, I. (2022) Real estate prices on the rise. 20 Jun 2022. The Expression. https://www.lexpressiondz.com/societe/les-prix-de-l-immobilier-en-hausse-357705 (Accessed 9 August 2022).

[2] Ghioua, I. (2022) Real estate prices on the rise. 20 Jun 2022. The Expression. https://www.lexpressiondz.com/societe/les-prix-de-l-immobilier-en-hausse-357705 (Accessed 9 August 2022).

[3] eBourse DZ (2022). The first time in more than 8 years: The real estate market in Algeria registers a significant decline. https://ebourse.dz/la-premiere-fois-en-plus-de-8-ans-le-marche-immobilier-en-algerie-enregistre-une-baisse-significative/#:~:text=Cette%20ann%C3%A9e%2C%20le%20march%C3%A9%20de,en%20plus%20de%208%20ans (Accessed 9 August 2022).

[4] Ghioua, I. (2022) Real estate prices on the rise. 20 Jun 2022. The Expression. https://www.lexpressiondz.com/societe/les-prix-de-l-immobilier-en-hausse-357705 (Accessed 9 August 2022).

[5] Algeria-Eco (2021). Algeria: A family of 5 needs a minimum wage of 81,000 Da/month. https://www.algerie-eco.com/2021/03/05/algerie-une-famille-de-5-personnes-a-besoin-dun-salaire-minimum-de-81-000-da-mois/ (Accessed 9 August 2022).

[6] Ghioua, I. (2022). Real estate prices on the rise. 20 June 2022. The Expression. https://www.lexpressiondz.com/societe/les-prix-de-l-immobilier-en-hausse-357705 (Accessed 9 August 2022).

[7] Sekak, R. (2021). The creation of a housing bank is not the solution.21 Oct 2021. Liberte Algerie https://www.liberte-algerie.com/contribution/la-creation-d-une-banque-de-l-habitat-n-est-pas-la-solution-367016 (Accessed 6 August 2022).

[8] Algeri-Eco (2021). BTPH: 80% of transactions are informal. 11 November 2021. https://www.algerie-eco.com/2021/11/11/btph-80-des-transactions-se-font-dans-linformel/ (Accessed 9 August 2022).

[9] Algeri-Eco (2022). The Housing Bank launched next November. 7 April 2022. https://www.algerie-eco.com/2022/04/07/la-banque-de-lhabitat-lancee-en-novembre-prochain/ (Accessed 9 August 2022).

Housing Supply

The most important player in the Algerian real estate market is the state, which is committed to providing housing for all citizens, respecting their constitutional rights. This public housing promotion was responsible for 150 000 housing units, compared to 2 000 built by the private sector by 2017.[1] Despite efforts to grant more construction projects to the private sector, private developers are constrained by access to land being difficult.

Algeria has a housing stock of 10 million units with an occupancy rate of 4.4 people per house.[2] The owners are in the majority. At the national level, 74. 8% of owners are homeowners (72. 5% in urban areas) and 10. 4% rent their accommodation (13. 4% in urban areas).[3]   Much of the housing supply is provided through housing programmes.  A total of 320 000 units of all types were delivered across the different wilayas (regions) in 2021[4] as part of the President of the Republic’s programme to build one million homes during the 2020-2024 five-year period (60% of which will be rural housing).[5]  In addition, during the first quarter of 2022, 408 000 housing units were completed under the 1 288 365 housing programme, 391 000 units (30%) are under construction and 345 000 units (26%) are awaiting start-up. Construction of 41 000 units is at a standstill and nearly 72 000 other units (6%) are in the process of being delivered.[6]  The number of dwellings delivered amounted to 45 065 dwellings, of which 12 814 were public rental units (LPL), 17 726 hire-purchase units, 1 768 LPA, 9 678 rural dwellings, 2 941 social housing units and 138 public promotional housing units (LPP).

In summary, since 2020, 700 000 homes have been delivered to three million people.[7] The connection of water, electricity and gas is also considered in housing policy. This brings access rates to high levels: 100% for drinking water supply in urban areas, 91% for sanitation, 99% for electricity and 65% for gas.[8] In addition, an envelope of nearly DA38 billion (US$ 259 million) will be released for the connection to gas and electricity in 2022.[9]

These efforts have resulted in a sharp reduction in precarious housing in Algeria. The country has virtually eliminated 80% of precarious housing in large urban agglomerations that covered about 40% of the area of Algerian cities.[10] A total of 250 000 families have been relocated through state programmes.[11]  Efforts have also focused on the promotion of local building materials.  It was in this context that the government included many building materials (iron, cement) and finishing materials (tiles, earthenware and paint) on the list of products prohibited for import. This resulted in a drop in the bill for imports of building materials: DA117.4 billion (US$800 million) in 2021 against DA 176 billion (US$1.2 billion) in 2019 and DA308 billion (US$2.1 billion)  in 2015.[12] The country achieves self-sufficiency in building materials such as cement, iron, ceramics, and for the first time, housing whose building materials are 100%  sourced in Algeria are being built. However, the increase in the prices of building materials by 45% to 50%, for mainly speculative reasons, increases the price of new housing and constitutes a blockage for the projects of construction and public works companies, which risk working at a loss or bankruptcy. To this must be added the administrative delays in obtaining a building permit, which requires a period of 131 days and a constitutes 6.5% of the cost of the house.[13]

[1] World Bank (2017). FOLLOW UP ECONOMIC MONITORING REPORT – Design an effective and sustainable program for the financing of social housing to promote shared prosperity. https://documents1.worldbank.org/curated/en/903201513097788821/pdf/122030-FRENCH-WP-PUBLIC-P158002-Algeria-Economic-Monitor-publication-11-9-17-web.pdf. (Accessed 2 August 2022). Pg.26.

[2] Algeria (2021). National report on the implementation of the New Cities Programme. https://www.urbanagendaplatform.org/sites/default/files/2021-06/Rapport%20Algerie-Nouveau%20Programme%20pour%20les%20Villes-NUA-mars%202021.pdf. (Accessed 4 October 2022)Pg. 6.

[3] Ministry of Health, Population and Hospital Reform, UNFP, UNICEF (2020). Algeria – Multiple Indicator Cluster Survey (MICS) 2019. December 2020. https://www.unicef.org/algeria/media/1441/file/Enqu%C3%AAte%20par%20Grappes%20%C3%A0%20Indicateurs%20Multiples%20(MICS6)%202019.pdf (Accessed 9 August 2022). Pg. 76.

[4] APS (2022). Housing: distribution of 320,000 housing units, all formulas combined, in 2021. https://www.aps.dz/economie/138067-habitat-distribution-de-320-000-logements-toutes-formules-confondues-en-2021 (Accessed 4 October 2022).

[5] APS (2022). Housing: distribution of 320,000 housing units, all formulas combined, in 2021. https://www.aps.dz/economie/138067-habitat-distribution-de-320-000-logements-toutes-formules-confondues-en-2021 (Accessed 4 October 2022).

[6] APS (2022). Housing: more than 408,000 units completed as of March 31, 2022. https://www.aps.dz/economie/138947-logements-plus-de-408-000-unites-achevees-au-31-mars-2022 (Accessed 4 October 2022)

[7] Algeria-Eco (2022). Launch today of the largest housing distribution operation. https://www.algerie-eco.com/2022/07/02/lancement-aujourdhui-de-la-plus-importante-operation-distribution-de-logements/ (Accessed 4 October 2022)

[8] Algeria (2021). National report on the implementation of the New Cities Programme. https://www.urbanagendaplatform.org/sites/default/files/2021-06/Rapport%20Algerie-Nouveau%20Programme%20pour%20les%20Villes-NUA-mars%202021.pdf. Pg 6. (Accessed 4 October 2022).

[9] The Expression (2022). Gray areas: nearly 38 billion DA for the connection to gas and electricity in 2022. https://www.lexpressiondz.com/info-en-continu/zones-d-ombre-pres-de-38-milliards-da-pour-le-raccordement-au-gaz-et-a-l-electricite-en-2022-329957 (Accessed 4 October 2022).

[10] Djahnine, C. (2021). Fighting precarious housing in Africa: Algeria is an example to follow. 5 Oct 2021. El Mujahid https://www.elmoudjahid.dz/fr/societe/lutte-contre-l-habitat-precaire-en-afrique-l-algerie-est-un-exemple-a-suivre-16007 (Accessed 4 October 2022).

[11] Algeria (2021). National report on the implementation of the New Cities Programme. https://www.urbanagendaplatform.org/sites/default/files/2021-06/Rapport%20Algerie-Nouveau%20Programme%20pour%20les%20Villes-NUA-mars%202021.pdf. Pg.21. (Accessed 4 October 2022).

[12] eBourse DZ (2022). High cost of building materials: The disarray of construction companies. https://ebourse.dz/cherte-des-materiaux-de-construction-le-desarroi-des-entreprises-du-btp/ (Accessed 4 October 2022).

[13] World Bank (2020). Doing Business 2020 – Algeria. https://www.doingbusiness.org/content/dam/doingBusiness/country/a/algeria/DZA.pdf

(Accessed 27 August 2020). Pg. 11.

Property Markets

The real estate market has been experiencing a drop in prices following the COVID-19 pandemic. Real estate prices fell at the end of 2021 and in 2022, for the first time in more than eight years. Prices have fallen by 15% for small properties and by 40% for large properties in all wilayas (regions) of the country. The CNL estimates that the selling prices of collective housing declined by approximately 4% between 2017 and 2021. Over the same period, the average price of an 89m² apartment  increased from DA8.1 million (US$55 211) in 2017 to DA7.5 million (US$51 121) in 2021. Prices for detached houses have fallen by 1% and rent by 14%, with prices for detached houses falling from DA27 million (US$184 036) in 2017 to DA24.5 million (US$166 995), rent from DA30 000 (US$204) in 2017 to DA 25 000 (US$170) in 2021 for multi-family dwellings, and from DA65 000 (US$443) to DA49 000 (US$334) for detached houses. Rents in the western capital region are higher than in the eastern region. Particularly for the wilaya (region) of Algiers, the sales prices of apartments with an average surface area of 91m² were DA189 000 (US$1288) in 2021 against DA195 000 (US$1 329) in 2017, which represents a decrease of 3%.  The price of a detached house has fallen by 23% since 2017. Rent decreased from DA56 000 (US$382) to DA52 000 (US$354) for apartments with a surface area of 90m² and stands were DA60 000 (US$409) in 2021 compared to DA128 000 (US$872) in 2017 for detached houses.[1]

Demand has also shrunk due to the decline in the purchasing power of Algerians and the economic consequences of the pandemic. This is reflected in a decline in real estate transactions. Bank Al-Maghrib and the National Agency for Land Conservation, Cadastre and Cartography recorded a decrease of 22.5% in the number of transactions, in line with the decline of 20.4% of sales of residential property and 37.7% of the land.[2] Real estate development companies sometimes find it difficult to sell houses despite discounts.  In addition, there is a strong predominance of the informal sector in the real estate market. Five hundred real estate agents have disappeared from the market out of a total of 1 900 real estate agencies in 2021, probably in favour of the informal market which represents nearly 70% according to the latest estimates in 2018.[3] The  sales periods are also long: it takes several months to obtain the land register at a cost that can reach 7% of the declared value.

Innovations to revitalise the real estate market concern, for example, the project to the  dematerialisation land conservation activities, launched in 2017 and funded by nearly DA700 million (US$4.77 million), aims to digitise the land register and land registration operations, creating a centralised database and establishing a National Land and State Information Center. The first stage has been completed and nearly 12 million documents were digitised in 2020.[4] Another innovation is  establishment of a digital platform to monitor the progress of the state’s real estate projects.

[1] APS (2022). Real estate: a downward trend observed over the past five years. https://www.aps.dz/economie/139910-immobilier-une-tendance-baissiere-constatee-au-cours-du-quinquennat-ecoule#:~:text=Les%20prix%20ont%20cumul%C3%A9%20ainsi,2021%20%C3%A9tait%20de%2063.000%20dinars (Accessed 9 August 2022).

[2] Bouithy, A. (2022). Obvious decline in real estate transactions. 18 Aug 2022. Algerie9. https://algerie9.com/baisse-manifeste-des-transactions-immobilieres (Accessed 4 October 2022).

[3] APS (2018). Federation of real estate agencies: the informal sector holds 70% of the real estate market. https://www.aps.dz/economie/76102-federation-des-agences-immobilieres-l-informel-detient-70-du-marche-de-l-immobilier (Accessed 4 October 2022).

[4] ECO-ALGERIA (2021). Finances: advances in digitisation in 2020. https://www.eco-algeria.com/content/finances-des-avanc%C3%A9es-dans-la-num%C3%A9risation-en-2020 (Accessed 4 October 2022).

Policy and Legislation

Access to decent housing is a constitutionally guaranteed right. To this end, the state has set up ambitious housing supply programmes with different formulas, such as rent-to-own housing (AADL), promotional housing (APL), LPP, LPL, rural housing, and LPP for the Algerian community living abroad. Access to each of these formulas is defined by decree. The conditions of acquisition depend on the monthly income of the applicant. Thus, the LPL is reserved for Algerians with an income of less than DA24 000 (US$164), the AADL, the LPA and rural housing for incomes between DA24 000 (US$163) and six times the guaranteed national minimum wing (SNMG,) and the LPP for incomes between six and 12 times the SNMG.[1]  The state also provides a direct subsidy  to the beneficiary of the housing ranging from DA40 000 (US$273) to DA1 000 000 (US$6816).

The government has begun drafting the necessary legal texts for the conversion of CNL into a financial institution specialising in the financing of housing projects and the law for the creation of the Housing Bank.  The draft Finance Law (PLF) of 2022, currently being studied and debated at the level of the Finance and Budget Committee of the National People’s Congress, proposes to make non-transferable, from 31 December 2022, housing in the public rental sector of a social nature financed by state budget assistance. In addition, planned from 2022, is a 10% reduction for the benefit of persons with AADL housing who pay the value of the housing or tranches in a single payment. There is also a reduction of 25% on property income from residential rental to be retained in the tax on the overall revenue (IRG). Gross annual rents above DA600 000 (US$4 090) are now subject to the IRG according to the new progressive scale. Proportional tax rates (7% and 15%) for property income whose annual amounts are less than DA600 000 (US$4 090) will be maintained. The PLF also provides, in the context of a Mourabaha contract, for a reduction in the assessment for calculating the IRG equivalent to the amount of the pre-agreed profit margin contracted for the acquisition of housing.

[1] The Ministry of Housing, Urban Planning and the City (2022). Promotional Public Housing. https://www.mhuv.gov.dz/fr/logement-public-promotionnel/ (Accessed 4 October 2022).

Opportunities

The Algerian real estate market offers different opportunities to players.  The state intends to deliver 579 500 housing units in the period 2021-2024 as part of the new programme for the construction of one million homes. Such state-subsidised housing supply programmes leave room for manoeuvre for domestic and foreign private real estate developers with high standards, which are expensive for low income households.  It will be necessary, however, to provide solutions beforehand for the problems of private real estate developers related to credits, customs taxes and the lack of land bases, in addition to the use of public land for housing and public facilities.

Algeria is full of tourism potential with a diversity and variety of landscapes, culture and history.[1] Moreover, the state has taken a number of measures favorable to investors which encourage real estate investments especially in the capital of the country.  The new Investment Law published in the Official Journal on 31 July 2022 aims to simplify and digitise procedures and offers many tax-related privileges for investors. It provides for the establishment of a digital platform where real estate investment projects are published and the creation of a one-stop shop to facilitate the obtaining of a building permit. Foreigners can also invest and benefit from the same conditions for obtaining the land and can pay by self-financing or bank credit.  For the purchase of an apartment, they can benefit from a tax subsidy and tax assistance with customs duties in the case of importation of equipment for work, as well as receive a discount on the customs tax.

Self-sufficiency in building materials for cement, iron, ceramics and almost all materials used in housing construction[2] opened the door to the export of building materials. The state covers 50% of the cost of shipping building materials to allow Algerian producers to export to foreign markets.

[1] Wismayer, H. (2022). A revelatory road trip along the Algerian coast. 22 Apr 2022. The Washington Post. https://www.washingtonpost.com/travel/2022/04/22/algeria-algiers-constantine/ (Accessed 9 August 2022).

[2] Fairuz, T. (2021). Real estate: Algeria would have achieved self-sufficiency.9 Nov 2021. Dzairdaily. https://www.dzairdaily.com/immobilier-algerie-aurait-atteint-autosuffisance/ (Accessed 9 August 2022).

Availability of Data on Housing Finance

The National Statistical Information System is composed of several instruments including the National Statistical Council, the National Statistics Office, the statistical services of administrations and local authorities, public bodies and specialized in statistical polling institutes.

The data used in this profile is mostly collected from reports produced by international bodies such as the World Bank and Oxford Business Group, in addition to statistics from the National Statistics Office, the Ministry of Housing, Urban Planning and the City, and the Central Bank. However, the updating of certain data is problematic, particularly mortgage figures. The number of microfinance institutions, and the total number of residential properties with title deeds could not be obtained. In addition, a data platform on the public-private, urban-rural and also male-female  distribution of housing and real estate development would make it possible to better monitor changes in the sector.

Green Applications for Affordable Housing

President Abdelmadjid Tebboune is committed to encouraging the building and public works sector to adopt energy-efficient environmental standards and to reduce the use of environmentally harmful materials.  The building  sector occupies a prominent place in energy transition policies in particular, as it absorbs 42% of total energy consumption.[1]  Nearly 80%[2] of compliance measures are met for most products, including cement, concrete reinforcing bars, doors and windows, sealing products. The use of PVC in housing projects instead of wood to preserve forest wealth is an illustration of this.

Algeria has a law on energy management and thermal regulations in buildings, revised in 2016.  The DTR C3.2/4 law[3] is based on a verification of compliance for the winter and summer period: for each period, heat losses by transmission through the walls must be less than a reference value.  This law concerns new construction and the authorities are also working on the “thermal rehabilitation” of existing buildings.

Energy efficiency mainly concerns the building, transport and industrial sectors, and aims to achieve an overall energy saving of around 60Mtoe by 2030 and 30Mtoe beyond 2030[4] and to reduce greenhouse gas emissions by 7% to 22%[5]over a period of 15 years. The authorities are now ensuring the use of means guaranteeing energy efficiency in the construction of social housing: LED lamps, thermal insulation techniques, double-glazing systems and the use of solar panels for public lighting.  To this must be added the housing thermal insulation programmes,[6] the creation of a commission for  renewable energies and energy efficiency, the development of Algerian Thermal Regulation software  for the thermal calculations necessary for the new thermal regulation, the DTR C3.2/4 law, and the implementation of a green consumer credit (solar panels and water heaters). To apply DTR C3.2/4 effectively, it is necessary to rely on a synergy between public and private financing, by adapting the supply of financing to the needs of the energy efficiency market, and to support local manufacturers  of thermal insulation.

[1] Econostrum (2020). Algeria wants to beef up its energy efficiency policy. https://www.econostrum.info/L-Algerie-veut-muscler-sa-politique-d-efficacite-energetique_a26625.html (Accessed 9 August 2022).

[2] Benali, A. (2018). 20% of building materials do not comply with standards.16 Jul 2018. ALGERIA ECO. https://www.algerie-eco.com/2018/07/16/20-des-materiaux-de-constructions-ne-sont-pas-conformes-aux-normes/ (Accessed 4 October 2022).

[3] Imessad, K, Kharchi, R, Bouchaib, S, Chenak, A, Hakem, S, Hamidat, A, Larbi-youcef, S, Sami, S and Sahnoune, F. (2017). Implementation of the new Algerian thermal building regulations. Renewable Energy Review. https://www.cder.dz/download/Art20-4_5.pdf (Accessed 9 August 2022).

[4] Imessad, K, Kharchi, R, Bouchaib, S, Chenak, A, Hakem, S, Hamidat, A, Larbi-youcef, S, Sami, S and Sahnoune, F. (2017). Implementation of the new Algerian thermal building regulations. Renewable Energy Review. https://www.cder.dz/download/Art20-4_5.pdf (Accessed 9 August 2022).

[5] APS (2022). APM: Algeria determined to reduce its greenhouse gas emissions by 7% https://www.aps.dz/economie/137501-boughali-l-algerie-determinee-a-reduire-ses-emissions-de-gaz-a-effet-de-serre-de-7-a-l-horizon-2030 (Accessed 9 August 2022).

[6] APS (2022). Energy efficiency: the APRUE achieves “encouraging” results during the 1st half of 2022. https://www.aps.dz/economie/144063-efficacite-energetique-l-aprue-realise-des-resultats-encourageants-durant-le-1er-semestre-2022 (Accessed 9 August 2022).