Dakar, October 19, 2008 - “In general, depending on whether the dollar depreciates or appreciates in relation to the Euro, the profile of our immigrant clientele moves back and forth between Europe and the United States. However, if the United States and Europe both face a recession, this will clearly have a negative impact, in the medium term, on the real estate transactions of our immigrant portfolio.†The view expressed by Mr. Mamadou Karim Diop, a Senegalese in his thirties who has held the positions of Administrator and Director of SAGEF, (Société d’aménagement et de gestion d’équipements fonciers, a real estate company) for eight years, is in line with the assessment of most Senegalese who head real estate companies. They all fear a slowdown in home construction if Senegalese expatriates are affected by the crisis in their host countries, given that the flow of transfers may then decline sharply. In fact, Mr. Diop explains, citing the most recent AfDB report, “30 percent of the one billion Euro sent to Senegal is allocated to the housing sector,†in particular to repay loans and pay for construction and rent. While Senegalese immigrants in Spain, France, the United States, and Italy make up a portion of SAGEF’s clientele, the other portion is composed of officials and mid-level staff, in particular teachers. The mission of this company, which specializes in social housing and operates under the slogan “One Family, One Roof,†is to lower the price of social housing to CFAF 8 million over time. At the moment, in Senegal, social housing is defined as a home priced under CFAF 25 million, a figure that remains high for the average Senegalese. Mr. Diop is, however, calling for in-depth reforms in order to meet current demand for 200,000 homes in the real estate sector, with another 20,000 requests being added each year. In fact, he maintains that the social housing sector does not have such government benefits as available land, exemption policies, or even, as is the case with Morocco, “one stop shopping for real estate companies that offer the services of banks, insurance companies, notaries, and government units such as Taxes.†These reforms would trigger, ipso facto, a decline in prices, given that “such benefits will be passed on to the client who, in our case, would be able to buy his home for CFAF 8 million instead of CFAF 10 million.†However, the Director, a graduate of Bentley University in Boston (USA), seems somewhat anxious about the future. “We think that the international financial crisis will eventually affect Senegal and we are getting ready for this within the country, by improving the quality of our financial information and our quality certification,†Diop said. However, he added: “I think that had it not been of the crisis, the sector would have experienced a boom, given that Senegalese banks, which had very conservative lending policies for social housing, are undergoing change, owing to the competition created by the emergence of new banks on the financial market, which have no choice but to assume greater risk vis-à -vis the client in order to gain market share.†However, even without the international financial crisis, Diop warns of a crash in the high-end housing market in Dakar, given that “the speculative bubble, fueled by the Ivorian crisis and speculation by real estate agents, will burst.†Indeed, people built homes during the period of peak demand while most company heads, senior staff, etc. from Côte d’Ivoire have returned home or have moved to France and the supply of luxury homes already far exceeds demand. He expressed regret over the fact that companies involved in the real estate sector seem unaware of the crisis, since, “at the moment, we should be holding talks to assess the situation and plan solutions.†Clear signs do exist, given that several big Senegalese construction companies are already experiencing cash flow problems. “The buildings and public works sector, once a driver of the Senegalese economy, is experiencing a complete meltdown fueled by domestic debt,†said Abdoul Mbaye, Chairman of the Senegalese Professional Association of Banks and Financial Institutions (Association professionnelle des banques et établissements financiers, APBEF). “If on top of that we are impacted by the international crisis, the situation will deteriorate,†warned Diop. |
