New development initiatives will be welcomed by young Algerians keen to get away from the family home
HOUSING

URBAN population growth began at independence and grew during periods of strife – now 65 percent of people live in the cities

Rapid economic development has its downsides, and for many young Algerians one significant disadvantage is finding a home of their own. There is an acute housing shortage, especially in the northern cities, with the result that many young people live in crowded conditions with their families far longer than they would like.
The root cause of the housing deficit is often identified as a rapidly growing, predominantly young population. But according to Abdelmadjid Tebboune – who until the government reshuffle earlier this year was Minister of Housing and Urban Planning – the reality is not as straightforward as that. He identifies three other major factors.

The first is the amount of empty properties, whose owners live elsewhere and who, up to now, have been unwilling to rent them out. Mr. Tebboune estimates that there could be as many as 700,000 of these. “The system we used to have favored the tenant, not the landlord,” he argues. “That meant that landlords preferred to keep their properties empty, rather than rent them out. Moreover, income from rents was subject to a 40 percent tax.”
That situation has changed with the 2002 Finance Bill, which tries to encourage landlords to rent. “The tax rate has gone down from 40 percent to 10 percent,” says Mr. Tebboune, “and for those who rent to students, the tax is only five percent.”

A second factor that has contributed to the housing problem, according to Mr. Tebboune, is also due to development, and involves the movement of the population in recent years. “There is a great concentration of people in the north of the country,” he explains. “Accordingly, more than 85 percent of Algerians live on just 15 percent of the land.”
In effect, there has been an inversion of the proportion of people living in urban and rural areas. “These days, 65 percent live in towns and cities, and 35 percent in the countryside,” says Mr. Tebboune. “The rural exodus began at the time of independence, and accelerated during the time of civil strife.”

The third factor is money. “The financial problems that affected this country from the mid-1980s to the end of the 1990s brought a halt to big house-building programs,” says the former Minister.
Add to these elements the fact that some of the older housing, for example in the casbah in Algiers, is in urgent need of refurbishment, then one begins to appreciate the scale of the problem faced by the Ministry and the various agencies involved in finding solutions.

Moreover, it has become glaringly obvious that while a rich minority can afford to buy property or have homes built, and the very poorest families qualify for housing assistance programs, the people who are finding the current situation most difficult are often those caught in the middle – teachers, office workers and factory hands for example, who do not earn enough to buy their homes outright, but earn too much to qualify for project housing.
It was mainly in their interests that rent-to-buy mortgage schemes were devised. Applicants put down 20 percent of the cost of a property, and then pay off the rest in monthly installments, often over a period of 25 years. This has been a very popular innovation, so much so that it is heavily over-subscribed, as there just aren’t enough properties to go around.

IT IS VITAL to create accommodation for middle-income employees, such as office workers, who do not qualify for project housing

Hence the government’s new drive to interest foreign construction companies in housing developments in Algeria. For some time, there has been foreign involvement in housing finance, not least from Saudi Arabia. But the emphasis now is on attracting foreign direct investment in bricks and mortar. “Firms of various nationalities have shown an interest,” says Mr. Tebboune. “American, Chinese, Egyptian, Turkish and so on.”
The potential of foreign participation is also stressed by Lazhar Bounafa, General Manager of AADL, the national agency for housing improvement and development, which falls under the auspices of the Ministry of Housing and Urban Planning. “The rent-to-buy option offers enormous opportunities for foreigners to invest in housing,” says Mr. Bounafa.

American companies GHV Housing and American Worldwide have already expressed an interest. Three main criteria are at play in deciding which companies make desirable partners. Cost is obviously a major factor, but so too is the quality of the buildings they can offer, and the time they estimate it will take to put them up. Local construction companies are often notoriously slow and poor at keeping to schedule.
Some of the new housing development is taking place in satellite towns around major cities. Not only is land often more readily available in these locations, but the quality of life – for example the amount of green space per inhabitant – can be higher than in urban centers.

Nonetheless, there are opportunities in the larger cities, too. “It is important to note that, although there may be as many as two million properties in ruinous condition, some cities such as Oran, Annaba and Constantine
also have high-potential land within them,” says Mr. Bounafa. “The cost of this land is very reasonable, and we could make it available to developers or American companies that would like to come and set up here.”
In the meantime, the government would like to accelerate the rate of construction of project housing for the low-paid and socially marginalized groups. Most of the direct responsibility for this falls on the shoulders of the district offices for housing promotion and management, the OPGIs.
The most important real estate businesses in the country, the OPGIs ensure the upkeep of 80,000 apartments and have launched an urban regeneration program.

There are three OPGIs in metropolitan Algiers, of which the largest is Hussein Dey. OPGI Hussein Dey’s CEO, Mohamed Rehaimia, emphasizes the importance of persuading people who don’t qualify for social housing to follow up the alternatives. “The OPGIs were created as the State’s solution to housing. In particular for the construction of social housing, to be placed at the disposal of citizens whose incomes are modest. This is our principal mission, but at the same time we are also pursuing other operations that consist of restoring old buildings from the colonial period and big investment real-estate developments,” he says.

Mr. Rehaimia is working on “two very important projects, which represent an overall investment of $77.2 million”. The projects are to build two residential complexes equipped with commercial space, offices and parking lots in the Annassers quarter and in the town of Mohammedia, a suburb of Algiers. “Certain buildings will be pulled down, others restored. The ground freed up will enable us to build better accommodation and to make Algiers a city on a par with other capitals,” he says. “Using expert advice our objective is to demolish where necessary and build houses or modern estate blocks, offices and hypermarkets,” he adds.

The three OPGIs operating in Algiers are working together. “We have formed a subsidiary that deals with housing promotion. Its first project, valued at $38.6 million, concerns six high-rise blocks,” Mr. Rehaimia says.
One of OPGI Hussein Dey’s main aims is to keep the cost of housing as low as possible. But, as Mr. Rehaimia explains, this depends on the quality required, the speed of building and the technology used. “We need more modern means and greater manpower,” he says. “If we had more up-to-date technology available we could control the delays and the costs,” he adds.
Mr. Rehaimia wants to increase the number of partnerships on future building sites to broaden OPGI Hussein Dey’s range of technological expertise. “We are already involved in two projects with a multinational from the Gulf,” he says.

FUNDAMENTAL
shift in attitudes helps re-shape the mission to accommodate low-income families

FOREIGN construction companies may soon get directly involved in housing

There are almost 50 state housing offices, or OPGIs, in Algeria, organized on a geographical basis, with a mission to promote and manage public housing projects for low-income families. The biggest OPGI is in Oran, covering not only Algeria’s second city, but also the surrounding area. OPGI Oran has handled more than 100,000 housing units since it came into existence, though nearly 70 percent have subsequently been handed on as part of the privatization process that has been under way in Algeria since 1981.

According to OPGI Oran’s General Manager, Nadir Imadali, his office is currently managing about 26,000 properties. In addition, several important projects are in the pipeline, not least the resettlement of 9,000 families currently living in an unstable area of Oran. OPGI Oran’s pledge is to have all of these families rehoused within three years.
Though Mr. Imadali believes that there will always be a need for the state to provide housing for the most disadvantaged sectors of the population, he says a fundamental shift in thinking has been taking place, both at government level and among people seeking a home.

“A while back, people were told: ‘Don’t worry. The state is there. It will do everything for you.’ In fact, under the previous constitution, housing was a right,” he points out. “We have to change that mentality. Education, health and housing are hugely costly. The state cannot carry on supporting such a welfare policy indefinitely.”
As it is, the government is unable to meet the demand for subsidized housing. Its aim in 2001 was to build 150,000 units, whereas only about 100,000 were completed. “Given the current national capacity, I don’t think it is possible to exceed 150,000 units a year,” says Mr. Imadali. “We need the help of big companies with far more experience than us. And we need new building techniques, which would speed up the rate of construction.”
In principle, this could mean that, in the future, foreign construction companies would get directly involved in the housing sector in Algeria. “More than financing, what we need are partners who would be willing to invest not only in the business, but in building the housing itself,” says Mr. Imadali.

Meanwhile, the waiting list for assisted housing is so long that some people do manage to find other ways of overcoming the shortage. There are other options, such as co-financing and rent-to-buy. “However, the government will never be able to avoid the necessity of providing the sort of social housing handled by OPGIs,” adds Mr. Imadali. “But it will limit the number of units being built each year, while at the same time doing more to help people with middle incomes, who for so long have been marginalized in housing policy.”
When OPGI Oran decides to go ahead with a housing scheme, it opens this up to competitive tendering by architects. “We set parameters of type and space,” says Mr. Imadali, “and then the architects’ offices submit proposals that go before a selection committee.”

For the time being, however, public housing projects dominate OPGI Oran’s activities. “This means we are aided in financing, in building and in rents,” Mr. Imadali explains. “Land is made over to us free, and we are able to build on that thanks to credits provided by the Treasury at advantageous rates. At the end of the day, we are able to charge rents that are not commercial rents. Obviously, the difference between the investment cost and the return is covered by the state.”