afrol News, 9 October - Countries like Morocco, Egypt and Cape Verde have seen a property market boom over the last few years fuelling their national economy and stock markets. As a consequence of the global finance crisis, investments in these boom sectors are now quickly drying up and the outlook is bleak. Analyses regarding the tourism industry's future however vary.

Only last week, the Moroccan stock exchange had to suspend the shares of property firm Addoha ADH, following an uncontrolled drop in its value. Despite what sounded a really encouraging result - net profits had increased by 40 percent - the market was deeply disappointed by the company's result. The earlier flamboyant growth of Addoha apparently had stopped, confirming widely held fears that the bottom was falling out of Morocco's property boom.

Moroccan property development is doubly hit by the global financial crisis. First, foreign investments in this capital intensive sector are drying up as cash becomes harder to get on global markets. Second, the typical buyers of Moroccan property are Europeans looking for a holiday home in the pleasant North African climate, but these are now insecure about their personal economy and also have less access to credits. Analysts therefore fear that foreign property buyers will postpone their decision to buy.

Morocco is not alone. The same crisis already hit Spain early this year, setting off a deep economic crisis in Morocco's northern neighbour. As in Spain, Moroccans fear that their vibrant construction industry - a major employer - may diminish and create more unemployment.

In Egypt, together with Morocco the largest tourist property market in Africa, the situation is the same. Egypt's pleasant Red Sea coast has seen a remarkable construction boom that has contributed strongly to the country's economic growth. At the Cairo stock exchange - the most severely hit by the financial crisis in the region - investors take it for granted that the property boom has come to an end.

The picture in Egypt is somewhat different, however. A greater part of the property boom is attributed to Middle East and Arab investors, which are not expected to pull out of construction and property investments as quickly as European tourists. But on the other hand, the Egyptian economy has a larger financial sector than Morocco, which seems to be slipping into a deep crisis. Domestic capital, which has been very important for constructions, has already dried up.

Egypt's construction and its building materials sectors are however already strongly noting the deteriorating times. Both are among the principal losers at the Cairo stock exchange and analysts expect rising unemployment rates stemming from these sectors.

Meanwhile, in Cape Verde, the small island state has yet to develop a market of such size and stability that the new downward trends can be measured. But the archipelago is doomed to be among the most severely hit by the crisis, as the poorly regulated property market and the financially weak government restrict swift action.

The Cape Verdean tourist property boom has almost exclusively been driven by foreign capital, mostly from Spain, the UK and to some extent the US. Many of the offshore companies investing in Cape Verde are now struggling on their domestic markets and may have to cancel their risky Cape Verdean investments on a short notice.

While European property companies still try to maintain Cape Verde's image as "the best place in the world to invest in property this year" in a desperate attempt to sell off properties, local analysts hold that a "property crisis" in within sight. Economist Paulino Dias of the Cape Verdean bank Caixa Económica told the local press already last month that the archipelago's property market would have to expect negative effects from the financial crisis evolving. Now, it seems certain, also the construction sector will be strongly affected.

While the African countries making good money on a tourist property boom may head for serious problems, it is not sure that the tourism sector at large will go in the same direction. European and American consumers are bound to change their behaviour, but some African nations may even benefit from the crisis.

The American and European middle class, according to market research, already plans to make fewer short holiday trips, while hoping to be able to afford one long summer vacation, looking for reasonable offers. For the American middle class public, this would in most cases rule out an Africa trip. For Europeans, sub-Saharan Africa and in particular the Indian Ocean may currently seem too luxuriously, already creating fears in the tourism industry in countries such as Tanzania and Mauritius.

However, North Africa may still be very competitive in the 2009 season. The region already has seen great market gains during the last years and may stay a winner among Europeans. Flights to North Africa remain relatively cheap and as holiday destinations, Tunisia, Morocco and Egypt are considered the cheapest places to stay, eat and drink well for European travellers.

By staff writers

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