Tunisia Residential Property Market Analysis 2023

Tunisia’s housing market is stabilizing, amidst modest economic growth and recovering tourism sector.

For apartments, nationwide prices rose by a modest 2.7% (but declined 6.7% when adjusted for inflation) to an average of TND3,076 (US$1,014) per square meter (sq. m) in April 2023 from a year earlier, based on figures from real estate platform Properstar. When compared to two years ago, apartment prices actually increased 22.1% (3.2% inflation-adjusted).

For houses, the average price rose strongly by 16.5% (5.8% inflation-adjusted) y-o-y to TND3,291 (US$1,085) per sq. m in April 2023. House prices were up by 11.6% (but down by 5.7% inflation-adjusted) when compared to two years earlier.

Tunisia’s house price annual change

Currently, apartment prices in the country range from TND218,411 (US$72,010) for studio-type units to TND707,009 (US$233,101) for five-bedroom apartments. On the other hand, houses are sold from TND813,614 (US$268,249) for four-bedroom units to as high as TND1.2 million (US$395,641) for six or more bedroom houses.

By location:

  • In Tunis, the median price of apartments increased by 6% y-o-y to TND2,535 (US$836) per sq. m in April 2023, according to Properstar, while house prices fell by 11% to TND3,258 (US$1,074) per sq. m over the same period.
  • In Nabeul, apartment prices dropped sharply by 29% y-o-y to TND3,409 (US$1,124) per sq. m but house prices rose modestly by 3% to TND3,458 (US$1,140) per sq. m.
  • In Ariana’s most affordable locations, the median price of apartments increased slightly by 2% y-o-y to TND2,434 (US$802) per sq. m but house prices dropped 5% to TND2,835 (US$935) per sq. m.
  • In Hammamet’s most affordable locations, both apartment and house prices were more or less steady, at median prices of TND3,409 (US$1,124) and TND3,841 (US$1,266), respectively.

From 2011 to 2021, residential property prices in Tunisia surged by more than 100%, based on the nationwide real estate price index published by the National Institute of Statistics. Though when adjusted for inflation, prices were up actually by just less than 20% over the said period. Apartment prices soared by a cumulative 110% (21% inflation-adjusted) while house and villa prices increased by 102% (16% inflation-adjusted).

Land prices were also up by 98% (14% inflation-adjusted) over the past decade.

Though overall, residential property price movements in the past decade have been erratic, as the country suffered from an ailing economy, struggling tourism, and political crisis, then exacerbated by the adverse impact of the Covid-19 pandemic.

Tunisia annual house price change

The housing market is now showing some signs of improvement, as foreign homebuyers, such as European pensioners, primarily Italian and French, are slowly returning to the country. Moreover, several property developers and investors have signified their interest to launch real estate developments in Tunisia. For instance, UAE-based Bukhatir Group has recently said that it is reviving a US$5 billion real estate project in Tunis – the first big project in Tunisia since the 2011 revolution. The project, which covers 250 hectares in the north of Tunis, will offer luxury villas and will include various amenities including a golf course, sports academies, and hotels.

“This project will change the face of the capital Tunis,” said Bukhatir Chairman Salah Bukhatir.

For the overall economy, Tunisia registered a real GDP growth rate of 2.5% in 2022, following a 4.4% expansion in 2021 and an 8.8% decline in 2020, according to the International Monetary Fund (IMF). It is slightly higher than the annual average growth of just 2% from 2009 to 2019, before the Covid-19 pandemic.

Yet, the IMF expects the Tunisian economy to slow in the medium term, projecting a real GDP growth rate of 1.3% this year and another 1.9% in 2024. The World Bank’s forecast for the country is more optimistic at 2.3% growth this year.

Tunisia annual land price change

Property Hotspots in Tunisia

Tunis, the capital, is a modern city. It is filled with historic sites including the 8th-century Zitouna mosque. It is also the gateway to the ruins of the ancient city of Carthage.

The favorite residential areas for Tunis’ political and business elite are the northern suburbs, the city center, and the business district of Tunis Berges du Lac. These have the most expensive houses, with prices ranging from TND 1,800 (US$594) to TND 3,500 (US$1,154) per sq. m.

Well-located and with good infrastructure, this affluent neighborhood has been developed since the 1980s after building polders in Tunis Lake. It harbors many embassies, prestigious companies, and institutions. Residential apartments in Berges du Lac are typically 2 or 3-bedroom units of 110-150 sq m. Berges du Lac I is now almost fully developed and therefore provides more services and facilities than Berges du Lac II, but as the buildings are somewhat older in Berges du Lac I, there is little difference between the rental levels achieved in the two areas.

Other popular locations for expats are the northern suburbs of Greater Tunis such as Carthage and La Marsa. There is a relatively strong market for residential units to lease and for sale. Tunis Ennasr, a small posh neighborhood in the farthest northern corner of the urban sprawl of Tunis, is also a growing real estate hotspot.

Cheap districts are Tunis Ain Zaghouan, a historic site known for its 90-km aqueduct supplying Carthage with water, and the southern suburbs of Tunis, mostly hilltop villages, having the lowest house prices in the capital.

Another area of interest to property buyers includes Jardins de Carthage. South of the historic site of Carthage, this new neighborhood has become a hotspot for luxury real estate. With a popular tourist site in close proximity, Jardins de Carthage is an attractive option for luxury real estate developers, and house hunters, looking to invest in upscale property. Prices in Carthage range between TND 3,000 (US$989) to TND 4,200 (US$1,385) per sq. m.

Tunisia residential property price indices

Coastal towns along the Mediterranean

Hammamet, 65 km southeast of Tunis, is a popular destination for swimming and water sports due to its exceptional white beaches. It is among the tourist zones in Tunisia with the most expensive houses. Residential units cost TND1,600 (US$528) to TND5,000 (US$1,649) per sq. m.

Sousse, 140 km south of Tunis, has world-class resorts and sandy beaches, adjoining orchards, and olive groves. The Medina (Old City) of Sousse is listed as a UNESCO Heritage Site. House prices range between TND1,800 (US$594) and TND3,000 (US$989) per sq. m.

Monastir, a traditional town 165 km south of Tunis, is famous for its well-preserved Ribat, a fortified Muslim monastery overseeing the Mediterranean Sea. Houses are priced from TND 1,100 (US$363) per sq. m. to TND2,200 (US$725) per sq. m. In Djerba, a Mediterranean island in the southern coast of Tunisia, houses are fairly priced at TND1,400 (US$462) per sq. m. to TND2,400 (€791) per sq. m.

Sfax, an industrial city located 270 km southeast of Tunis, is however very modern and pleasant. It is also one of the towns in Tunisia with the cheapest housing units. In Sfax, house prices are around TND900 (US$297) per sq. m.

Tourist arrivals rising again

During 2022, the total number of tourist arrivals in Tunisia soared by about 170% to 6.44 million people, following a 17.2% growth in 2021 and a huge 78.7% decline in 2020. Yet it remains far below the record 9.43 million arrivals registered during the pre-pandemic year of 2019.

Likewise, tourist revenues also surged by 83.3% in 2022 to TND4.28 billion (US$1.41 billion) as compared to a year earlier, according to the Tunisian Ministry of Tourism and Handicrafts.

A sizeable portion of tourists chooses to rent while vacationing in Tunisia. Foreign rental demand, mostly from Europe and neighboring countries such as Libya and Algeria, therefore complements strong domestic rental demand.

Tourism is of vital importance to the Tunisian economy, representing about 14% of the country’s GDP and accounting for nearly 400,000 direct and indirect job opportunities.s

Though, Tunisia’s tourism sector had experienced the worst crisis in the past decade, mainly due to the Arab Spring uprising in 2011 and two militant attacks on tourists in 2015. The tourism sector had a short-lived recovery in 2017-19 because of the Covid-19 pandemic.

Tunisia tourist arrivals

Foreign ownership of Tunisian property

In 2005 the government passed a law permitting foreign ownership of properties for economic and tourism purposes. Since it became effective in 2006, the government has continuously encouraged foreign companies and tourists to invest in the country and buy properties in its prime cities.

A foreigner can buy a property in Tunisia, a villa, or an apartment, but cannot own agricultural land. In fact, agricultural land cannot be sold to foreigners, whatever the reason of the purchase.

According to Giambrone Law, if the land is included in the national development plan, it must be considered as “residential”; but if not covered by the plan, it should be considered as agricultural and, therefore, not available for acquisition by a foreigner.

Purchase of property in Tunisia by a foreigner is subject to prior authorization, to be given by the governor of the region where the property is located. Despite this, in recent years more favorable legal provisions have been recognized as regards to certain land and real estate operations carried out by foreigners. All purchases of real estate by non-resident foreigners are also necessarily subject to authorization by the Central Bank of Tunisia, according to the actual legislation of monetary exchange.

According to the latest World Bank’s Doing Business report, registering property there requires 5 procedures, takes 35 days, and costs 6.1% of the property value. Globally, Tunisia stands at 94th in the ranking of 190 economies on the ease of registering property (with first place representing the greatest ease of doing business). Tunisia is 13 notches down from Morocco (81) but higher than the Middle East and North Africa average.

Summary of time, cost, and procedures for registering property in Tunisia

No. Procedure Time to Complete Cost to Complete
1 Consultation of pending encumbrances on the property at the Regional Land Registry Agency: The parties generally conduct a search for pending encumbrances of the property prior to the notarization of the contract. They can do this by going to the property registry and looking up the property on the computers there, where titles are kept electronically. The property registry delivers to the parties (requesting it) a certificate showing the legal situation of the land (or the building). 1 day TND 20
2 Preparation and notarization of the contract: The contract agreement is prepared by a lawyer, notary public, or local council clerk (redacteur CPF employee) at the Land Registry (Conservation de la Propriété Foncière) after consultation with the property registry services. Both parties are summoned to sign it. Then the contract is notarized by a public notary or local council clerk (redacteur). Costs for this procedure vary according to who prepares the contract agreement. Businesses considered in the Doing Business case are likely to consult a lawyer even if fees are slightly higher. The lawyer fees are set freely between the parties while the notary fees vary from 1% to 5% of the property value. It is useful to note that local council clerks charge a minimum of TND 30 and a maximum of TND 300 for their service depending on the property and type of contract. In the case study, TND 300 would be the applicable fee for the preparation. The fees charged by the local council clerks are based on decree No 92-2114 of November 30, 1992. 7 days TND 300.75; (TND 300 (contract) + TND 0.750 per signature (notarization))
3 Pay the transfer tax and the registration fee at the Local Tax Office: Fees and taxes should be paid during the application for registration at the local tax office. 1 day TND26,408.72; (5% of property value (transfer tax) + 1% of property value (registration fee)
4 The buyer files for a title deed at the Land Property Administration: The Land Registry studies the application. If accepted, the operation is deposited and transcribed onto the Regional Land Registry. The documentation shall include:
-Power of attorneys
-Identification of representatives to the parties
-Certificate of Company Registration
-Topographic plans of the property provided by the seller
-Notarized contract (obtained in Procedure 2)
-Payment receipts for transfer tax and registration fees (obtained in Procedure 3)
25 days TND 45
5 The seller must inform the Municipality of the change of ownership: By law, (article 17 of the Code de la Fiscalite locale), Law 97-11 of February 3, 1997, the former owner must inform the local municipality that the building has been sold and provide the proof of sale. Both the seller and buyer are jointly responsible for paying any outstanding taxes. 1 day No charge
Source: World Bank Doing Business report

A buying guide is published by the Global Property Guide.

Rental yields are moderate to good

Gross rental yields are moderate to good in Tunisia, according to a Global Property Guide research conducted in December 2022.

  • In Tunis, rental yields currently range from 3.31% to 9.67%, with a city average of 6.59%.
  • In Ariana, one can expect the rental yields to be between 3.52% and 5.29%, with an average of 4.78%.
  • In Nabeul, rental yields range from 2.74% to 6.24%, with an average of 4.18%.
  • In Ben Arous, gross rental yields fall between 3.59% and 5.13%, with an average of 4.6%.

Home in Tunisia provides a property management service for owners wishing to rent properties either for long-term or short-term.

Taxes are much lower than in comparable developed countries. There’s no taxation on unfurnished property rentals, and the taxes on furnished properties are low.

Overall, round-trip transaction costs are low for buyers of residential property.

The mortgage market is still underdeveloped

Tunisia’s mortgage market remains underdeveloped. More than 70% of housing projects in the country are self-financed. In fact, only 4% of households take out a mortgage to build a house, as most of them do not meet bank credit conditions. Currently, about 37% of adults in Tunisia have a bank account.

The total value of residential mortgages outstanding in Tunisia amounted to TND 13.39 billion (US$4.41 billion), according to the Africa Housing Finance Yearkbook 2022. This was equivalent to about 9.5% of GDP, only slightly up from 6.5% of GDP in 2003.

However, non-performing loans accounted for nearly 10% of the total mortgage loans.

The money market interest rate, on which housing loans are based, has been rising rapidly in the past three years. In April 2023, the money market rate stood at 8.01%, up from 6.26% in April 2022 and 6.25% in April 2021, according to figures from the Central Bank of Tunisia.

The prevailing residential mortgage interest rate ranges from 5% to 13.15%.

Tunisia interest rates
Of the 44 banks and financial institutions operating in Tunisia, roughly 30 banks offer housing loan programs for individuals, mainly targeting middle and upper-income families. Mortgage loans are granted for a period of 10 to 25 years.

Banks are allowed to issue mortgages of up to 25 years in duration but are obliged to fix the rates for mortgages that last more than 15 years, which makes financing them difficult. As a result, most mortgages are for 15 years or less. Loans are capped at 80% of the value of the property (rising to 90% for subsidized loans for low-income households). Monthly repayments are around one-third of the typical borrower’s salary.

The present competitive mortgage market is a great improvement from the situation up till 2001, when the Banque de l'Habitat (BH), in which the Tunisian state owns a 57% controlling stake, was the only mortgage lender, offering loans for house purchases, home improvement, and residential land acquisition. It now only accounts for 23% of real estate lending according to figures cited in the local press.

In February 2017, the government launched the “Programme Premier Logement” which benefits middle-class families (with income between 4.5 and 10 times the minimum wage) who want to purchase their first home. The program helps those families to finance their downpayment up to 20% of the total house price. The loan can finance houses priced TND 200,000 or less (US$65,940) over a period of 12 years with no repayment during the first 5 years.

Other institutions and funds helping the poor include:

  • The Housing Promotion Fund for Salaried Persons (FOPROLOS, Fonds de Promotion des Logements pour les Salariés), is managed by BH. Loan rates for mortgages range from 2.5% to 5.75% for three different income eligibility brackets, targeted at households earning a regular salary between minimum wage and up to 4.5 times minimum wage (set at US$152 a month - from May 2015 onwards);
  • The National Fund for House Improvement and Rehabilitation (FNAH, Fond National pour l’Amélioration de l’Habitat), disburses loans for home improvement to those whose salaries are below a set minimum; and,
  • The National Solidarity Fund 26-26 (Fonds de Solidarité Nationale 26-26) supports the poorest of the poor, mainly through funding housing improvements for the very poor who live in upgrading and rehabilitation areas in Greater Tunis and other large towns.

In January 2022, decree-law n° 2022 was promulgated, which provides for a legal framework to govern the activity of credit bureaus in an effort to support better tracking of the credit behavior of consumers. Accordingly, these credit bureaus collect information from banks, financial institutions, and other credit companies.

Al Jadid Savings

The BH has recently added a range of three “supplemental” loan schemes, which are based on prior family savings, called Al Jadid 1 Al Jadid 2, and Al Jadid 3. These target families with incomes higher than those qualified for the FOPROLOS schemes. All interest rates are fixed at 7% per year for a maximum loan term of 15 years.

In essence, Al Jadid Savings schemes are at or near money market rates. Also, they do not have maximum income requirements to qualify, nor is the amount of the downpayment set (presumably to encourage larger equity contributions by beneficiaries). Thus Al Jadid Savings can be considered a “liberal” housing loan system, one much more in tune with market realities.

MAIN INDIVIDUAL HOUSING LOAN SCHEME, MANAGED BY BH
Loan Scheme FOPROLOS 1 FOPROLOS 2 FOPROLOS 3 Al Jadid (HP1) Al Jadid (HP2) Al Jadid (HP3)
Income 1 to 2 times SMIG 2 to 3 times SMIG 3 to 4.5 times SMIG variable variable variable
Unit Area Individual 50 sqm; Family 65 sqm 75 sqm 80-100 sqm variable variable Variable
Nominal Cost of Unit TND39,000 TND50,000 TND54,000 – TND67,500 variable variable variable
Downpayment 10% of cost 10% of cost 15% of cost 4 years prior saving 5 years prior saving 6 years prior saving
Term 25 years plus 3 years grace 25 years plus 3 years grace 20 years plus 1 year grace 15 years 15 years 15 years
Interest Rate 3.5% 5.0% 5.75% 7.0% 7.0% 7.0%
Maximum Loan Amount 90% of cost to maximum of 130 times SMIG 90% of cost to maximum of 179 times SMIG 90% of cost to maximum of 210 times SMIG TND53,000 TND67,000 TND83,000
Source: UN-HABITAT

Housing is a key national priority

Tunisia has successfully reduced its housing shortage and cut the number of substandard dwellings in recent decades. The ratio of statistically defined ‘rudimentary dwellings’ has declined from almost 24% in 1975, to 4.9% in 1989, and to 0.4% in the 2014 census.

Tunisia has also eliminated its ‘housing deficit’ (i.e. the number of un-housed households) and now has 580,000 more housing units than households, hence a 17.7% national vacancy rate. Total housing stock stood at 3,289,910 units, increasing by 789,103 units since the last census in 2004. The number is now well above the number of households, which is 2,712,976.

Of formal units, about 80% are built by individual households, 2% by public developers, and 18% by registered developers, catering to middle to high-income groups.

Acquiring permits to build houses is relatively easy and cheap by international standards. Tunisia ranked 42nd out of the 190 economies in the “dealing with construction permits” category in the World Bank’s 2020 Doing Business report (the latest available), sharply up from 77th in the previous year.

Though obtaining a building permit requires 14 separate administrative procedures, the process is quite fast, taking an average of 133 days, higher than the 123.6 days across the region as a whole but lower than the 152.3 days for wealthier OECD countries. The costs involved represent 3.4% of the value of a standard warehouse, as compared to 4.4% and 1.5% for MENA and high-income OECD countries, respectively.

Modest economic growth; unemployment remains high

Tunisia’s economy grew by a modest 2.5% in 2022, following a 4.4% expansion in 2021 and an 8.8% decline in 2020, according to the International Monetary Fund (IMF). Though, it is slightly higher than the annual average growth of just 2% from 2009 to 2019, before the Covid-19 pandemic.

The IMF expects the Tunisian economy to slow further, projecting a real GDP growth rate of 1.3% this year and another 1.9% in 2024. The World Bank’s forecast for the country is more optimistic at 2.3% growth this year.

“Tunisia's economic recovery was slow in 2022 due to regulatory barriers to growth and rising global energy and food prices,” said The World Bank. “Tunisia's GDP growth for 2023 is expected to be around 2.3 percent, subject to considerable variation depending on the progress of financing conditions and structural reforms.”

Tunisia GDP growth and inflation

The jobless rate remains high. In Q4 2022, the nationwide unemployment rate stood at 15.2%, almost unchanged from the previous quarter’s 15.3% but significantly down from 16.2% a year earlier and 17.4% two years ago, according to the National Institute of Statistics. Unemployment averaged 16% annually from 2011 to 2021.

In March 2023, overall inflation remains elevated at 10.3%, slightly down from a four-decade high of 10.4% registered in the previous month, amidst surging commodity and energy prices, as well as housing costs.

Tunisia’s high trade deficit has been one of the main problems of the country. During 2022, the trade deficit reached a record TND 25.21 billion (US$8.29 billion) as compared to a shortfall of TND16.22 billion (US$5.33 billion) in 2021, amidst a sharp rise in the value of commodity import bill, according to the National Institute of Statistics.

This led to currency weakness. The dinar, whose exchange rate is controlled by the Central Bank, has depreciated in relation to the dollar and the euro. In March 2023, the dinar lost more than 11% of its value against the US dollar from two years ago, to reach an average exchange rate of TND 3.1128 = USD 1. Likewise, the dinar also depreciated against the euro by about 1.5%, at an average exchange rate of TND 3.3306 = EUR 1 in March 2023.

Tunisia monthly average exchange rate

Saied’s dictatorial regime

Tunisia, the first Arab country to rebel against dictatorship, inspired similar revolts across other Arab countries - giving birth to what is now known as the Arab Spring Revolution.

The 2011 revolution ousted President Zine al-Abidine Ben Ali; and a new legislative body, the National Constituent Assembly, was elected to navigate Tunisia’s political transition. In October 2014, successful Parliamentary elections went smoothly, and Habib Essid of the anti-Islamist Nidaa Tounes (Tunisia’s Call) party, which won the most seats in October 2014’s parliamentary election, was nominated prime minister. This was followed by the victory of the 87-year-old Beji Caid Essebsi, also of Nidaa Tounes, in the November and December 2014 presidential elections. Mr Essebsi also served in the governments of post-independence leader Habib Bourguiba as well as Ben Ali.

The Islamist party Ennahda, which led Tunisia’s last government but was beaten by Nidaa Tounes in October’s parliamentary election, did not field a candidate. Essebsi’s main opposition came from Moncef Marzouki, the interim president and a human rights campaigner who has cast himself as a guardian of the spirit of the revolution.

However, security risks remained as terrorist operations have been staged by jihadi groups affiliated with al-Qaeda such as Uqba Bin Nafi Battalion, and others by groups pledging allegiance to the Islamic State.

Since the terrorist attack of June 2015, there has been just one significant terror attack in Tunisia. Terrorist attacks have killed over 70 civilians including foreign tourists. Tourism, one of the biggest contributors to Tunisia’s economy, took a major hit. It was only in 2018 that tourism showed a major comeback.

The 2019 presidential and parliamentary elections represented the country’s first peaceful transfer of power. Retired law professor Kais Saied won a landslide victory over media mogul Nabil Karoui during the October 2019 presidential election run-off. Saied promised to fight corruption. Ironically, in 2021 he carried out a series of measures to enhance the power of the presidency, resulting to a political crisis. These exceptional measures included the freezing of the powers of parliament, the dismissal of the prime minister, and the issuance of legislation by presidential decree.

Opposition parties shunned the 2022 parliamentary elections, accusing the president of staging a coup after shutting the parliament in the prior year and giving himself almost unlimited powers. Some asserted that Tunisia’s dictatorial regime has reached a new low, amidst the unprecedented crackdown on the critics of Saied. Dozens of public figures, including politicians, judges, lawyers, protesters, union leaders, business leaders, and the head of a leading independent radio station, have been arrested in violent night raids.

Sources:

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