ALGERIA FREES UP PUBLIC LAND FOR DEVELOPMENT

UNCLAS SECTION 01 OF 02 ALGIERS 000773

SENSITIVE
SIPDIS

CAIRO PASS TO TREAS ASEVRENS AND OTA JROWE
EUCOM PASS TO TREAS OTA CKELLY
STATE PASS TO OPIC DERB

E.O. 12958: N/A
TAGS: EFIN EINV ECON AG
SUBJECT: ALGERIA FREES UP PUBLIC LAND FOR DEVELOPMENT

REF: ALGIERS 385

THIS CABLE CONTAINS COMPANY PROPRIETARY INFORMATION NOT TO BE
SHARED OUTSIDE USG.


1. (U) SUMMARY: Algeria has moved to free up industrial and
commercial property for private development by auctioning
parcels of land in the growing community of Blida, near
Algiers, a move Industry Minister Abdelhamid Temmar called a
"micro-revolution." The newly-formed National Agency for
Land Regulation and Transfer (ANIREF) plans for more public
auctions and property sales across the country to help
alleviate the real estate crunch that drives up both
residential and commercial real estate prices and hampers
industrial development. If successful, these moves could
help spur commercial investment in Algeria, both domestic and
foreign, by reducing a key obstacle to locating new
businesses here. END SUMMARY.

NEW AGENCY AUCTIONS PUBLIC PROPERTIES
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2. (U) On June 30 ANIREF auctioned seven parcels of
commercial land in Blida, a growing industrial and
residential community amid farmland just outside the
southwest edge of metropolitan Algiers. Ahmed Saddi, Chief
of Records and Statistics and acting Director of Investor
Relations for ANIREF, told us on July 7 that all seven
parcels were purchased by Algerian investors, while four
additional parcels that were up for auction went unsold.
According to Saddi, ANIREF has already opened six of ten
intended regional offices to manage the conversion of
publicly-owned commercial lands to private use. Saddi said
his agency will conduct public auctions like the one in Blida
for plots in or near major metropolitan areas, where demand
is high and the need for transparency greatest. ANIREF will
publicly list properties in more rural or remote areas for
sale, much like the traditional method for home sales, and
the agency will accept offers it deems best suited for the
situation. Saddi also noted that ANIREF is developing a
database of public lands to be transferred to private hands,
which should eventually be accessible on the agency's
website. The site already lists properties for sale in Blida.


3. (U) In the Blida auction, only individuals or entities
deemed to be "project investors" were qualified to bid. The
auction notice specified that both national and foreign
investors were welcome to bid. Saddi told us that ANIREF
will be transferring three basic types of properties: plots
in government-designated industrial zones; "residual" plots,
meaning those associated with a dissolved state-owned
enterprise; and "excess" plots, referring to parcels owned by
state enterprises but not in use. Land transfers from ANIREF
do not necessarily convey permanent title to bid winners. Of
the 11 parcels up for auction in Blida, 10 were
"concessions," offering long-term rights to develop and use a
plot for industrial or commercial use, with installment
payments made over 20 years. One plot up for auction was an
actual "transfer" property, giving the buyer outright title.
In general, Saddi said, concession parcels already have
buildings on them, while transfer properties tend to be empty
lots. In Blida, the opening bid price for the concession
properties ranged from USD 15,000 to USD 280,000 per year for
20 years, while the minimum bid price for the transfer
property was roughly USD 150,000. The results of the auction
were published on the ANIREF website, and the final price
paid on the seven closed deals ranged from 130 percent to 300
percent of the opening bid price.

MINISTERIAL PRIDE
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4. (SBU) In a meeting with Codel McCollum on June 30
(septels),Minister of Industry and Investment Promotion
Abdelhamid Temmar highlighted the Blida auction as proof that
Algeria was moving forward with land reform. He admitted
that land acquisition was often a stumbling block for the

ALGIERS 00000773 002 OF 002


creation of new businesses and a deterrent to foreign
investors looking to Algeria. Temmar also said that the
bottleneck over property acquisition for American company
Guardian Industries, which is interested in manufacturing
windshields and possibly other glass products for domestic
use and export, has been resolved. A Guardian executive told
us on July 7 that, in fact, the government has offered the
company two parcels in the Oran area to consider for the site
of their factory, and that Guardian will shortly dispatch
engineers to conduct site surveys.

COMMENT: MUCH NEEDED RELIEF
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5. (SBU) As we reported earlier this year (reftel),land use
policies and titling problems, combined with a high rate of
public ownership of land and rampant real estate speculation,
have limited access to and driven up the cost of both
commercial and residential properties in Algeria,
particularly in urban centers. This first successful auction
of commercial property by ANIREF proves that there is not
only a demand for these plots, but that investors are willing
to start or expand industrial or other commercial enterprises
in Algeria. We heard from a delegation of American
businessmen in April that the major obstacles they saw to
investing in Algeria were government bureaucracy, archaic
financing rules and procedures, and limited access to
commercial property. Minister Temmar may be right in
boasting that his ministry, which established and oversees
ANIREF, has taken a step forward toward real investment
promotion in Algeria by opening up state-owned properties to
private ownership, or at least to private management.
DAUGHTON