Although Algeria was a province of the Ottoman Empire for 300 years, its capital city bears the unmistakable stamp of the French colonial rule that was in place between 1830 and 1962. Lined with grand white buildings with windows and balconies adorned in sea-blue paint, the main street, Rue Didouche Mourad, looks like it could be in Marseilles.

Under French rule, the development of Algiers was haphazard, partly because of a lack of planning and partly because of the difficulty of making a coherent whole out of a flat band of Mediterranean coastline and the steep hills on which the city’s historic centre is located.

In the years since the end of colonial rule, the capital’s development has stagnated. A succession of socialist governments in the 30 years since independence put little focus on attracting overseas investment, and the decade-long civil war that began in 1992 brought an end to what international interest had developed.

Inward investment

As a result, the city lacks a modern commercial centre that can do justice to President Abdelaziz Bouteflika’s ambitions to attract investment.

However, in recent years, Bouteflika’s government has taken steps to address the situation. “Algiers was off the agenda for the construction business throughout the 1990s and early 2000s [due to the country’s civil war],” says Ahmed Rashed, vice-chairman of Egyptian engineering consultant Hamza Associates. “But the government now has a lot of money to invest from accumulated oil revenue, and many projects are under way. Most of the projects are state-financed, so the market does not seem to be affected by the global economic situation.”

In Algiers, land has been allocated to private companies at preferential rates to develop the city’s first large-scale, mixed-use real estate projects. The first phase of a 70-square-kilometre development in the Bab Ezzouar area near the domestic and international airport to the east of the city is nearing completion.

“The wilaya [municipality] of Algiers has distributed land for company headquarters and hotels, and five to six buildings are complete,” says Ezzat Aoun, head of the local branch of Lebanese construction firm Khatib & Alami.

The scheme is being promoted by Agence de Gestion & de Regulation d’Alger, Algeria’s land regulation agency, which local sources say has sold up to 70 individual parcels of land for development. Construction work is understood to be under way, carried out by a mixture of international contractors, including companies from the Gulf, China and Portugal.

Several major companies have signed up to buy towers at the scheme, known as the Quartier d’Affaires d’Alger (Algiers business quarter), including French bank BNP Paribas, French shipping group CMA-CGM and local firms Air Algerie, Algerie Poste, Mobilis Telecom, Aigle Azur and Credit Populaire d’Algerie.

French hotel chain Accor is developing a 261-room Hotel Ibis on the site, which will also feature a 7 sq km park, a 5,000-seat conference centre and the country’s first shopping mall, including restaurants, shops, a multi-screen cinema, a supermarket under the Uno brand of the local conglomerate Cevital, and a 300-bed luxury hotel designed by Abu Dhabi-based PRP Architects International. The development will be connected to the city centre by road, rail, bus and tram links.

The estimated E90m ($122m) first phase of the project, comprising the shopping mall and supermarket, is being managed by Geneva-based Valartis Group and is expected to be completed by October. “Eighty per cent of the commercial space is already booked and you can see from the site that it is going quite well,” says one senior banking executive in Algiers.

Tourism development

The local Arcofina group is also developing a real estate and tourism project known as Alger Medina. The $2bn development, located in the Pin Maritimes area between the city centre and the airport, will feature more than a dozen business towers, a shopping mall, a marina, a water park and a convention centre. The development, scheduled for completion in 2012, is expected to generate 11,000 jobs.

But the project has suffered setbacks in recent months. On 18 February, French supermarket chain Carrefour pulled out of a partnership deal with Groupe Dahli, an Arcofina subsidiary, under which the two companies planned to build 18 hypermarkets by 2012, including one in the Alger Medina mall. Arcofina chairman Abdelwahab Rahim cites an inability to find appropriate land for the planned chain of supermarkets as the reason for Carrefour’s withdrawal, but insists the Alger Medina facility will still go ahead. Although talks are under way to find a new partner for the venture, local sources say it is likely to be opened under Groupe Dahli’s own brand.

The scheme suffered a further setback in late February when an AD8.3bn ($114m) bond issued by Groupe Dahli, having already been delayed by two weeks, raised just AD2.4bn. The lack of appetite for the bond from local banks is a genuine concern for the development, and although Rahim remains bullish, independent sources say the future of the project is unclear.

“It is a huge project, but I do not know how they will fund it,” says the banker. “The money raised from the bond is insufficient to complete the current phase of work. For the time being, work on the project has been frozen.”

A third major mixed-use development, known as Dounya Park, is also being planned. The details of the $5bn scheme, which is being developed by Abu Dhabi-based Emirates International Investment Company (EIIC), were unveiled in the capital on 11 February. Covering 6.6 square kilometres, the focus will be on parkland, with just 25 per cent of the space dedicated to real estate.

Project delays

Similar projects, though on a smaller scale, are also under development in Oran and Mostaganem, Algeria’s second and third cities respectively. Oran, a city in the northwest with a population of more than 700,000, has become the focus of the government’s decentralisation policy. A regional office of state energy company Sonatrach, the country’s single-largest employer, and the city’s first business tower, Burj Noria, are already complete, while other projects are under way.

Abu Dhabi real estate company Al-Qudra is working on a AD400m city centre development in Oran that is due for completion by the end of the year, along with a similar development in Mostaganem worth $17.2m.

While private developers are being brought in to develop the country’s commercial and retail facilities, the government has committed to a massive infrastructure development programme. In 2005, President Bouteflika launched a five-year infrastructure development plan called Plan Complementaire de Soutien a la Croissance Economique. The rapid upturn in the country’s oil revenues enabled him to incrementally increase the plan’s budget from $60bn to the current $150bn.

Significant progress has been made on several projects under the plan, which includes a metro scheme to relieve traffic congestion in the capital, a 1,216km motorway across the north of the country to link the country’s borders with Tunisia and Morocco, and the construction of more than 1 million homes.

But the plans have fallen substantially behind schedule. In early December, the acceleration of the plan was approved, a move that many sources in Algiers say was calculated to ensure progress is made on as much as possible of the scheme before the presidential elections scheduled for April (see Agenda, page 24).

Prime Minister Ahmed Ouyahia announced at the end of December that between 2009 and 2013, the government will spend a further $150bn on infrastructure projects. But problems in implementing the last five-year plan have undermined confidence that the government will achieve its goals.

However, the country’s concerted efforts to develop its real estate and infrastructure sectors to cater to the expectations of modern international businesses offer the prospect that by the middle of the decade, the skylines of its major cities could be transformed.