Tunisia Memo

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Modern... Mysterious... Exotic...Modern... Mysterious... Exotic...

TunisiaTunisiaThe new Dubai of the MediterraneanThe new Dubai of the Mediterranean

Investment

Guide


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ContentsContents

Factsataglance........................3

GettingThere............................4

TheessenceofTunisia...............5

TunisianCuisine.........................6

NorthernTunisia.......................7

Hammamet...............................8Sousse.......................................9

PortElKantaoui.......................10

TunisiasEconomy...................11

WhyInvestinTunisia...............12

TheRental

Market...................14

RentalExpectations.................15

ReturnonInvestment.............16

TheDunesGolf&Spa.............17

5starResort

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Tunisia is the northernmostcountry in Africa lying just 50 milessouthwest of Sicily. It measures 465 miles from north

to south and only 93 miles from westto east making it comparable to thesize of England. The northern and easterncoastlines are bordered by theMediterranean, while most of thesouthern half of the country is withinthe Sahara Desert.

GEOGRAPHY Facts at aFacts at a

glanceglance

Summers are hot and dry. In Julyand August daytime temperatures onthe east coast average 30C with 12hours of sunshine. In the desert it canreach 45 C. In the far north, winters are mildbut quite wet, with occasional snow. Daytime temperatures average 20C all year long, however in the desertthey rapidly fall at night to freezing.

CLIMATE

Tunisia has a population of

around 10 million with more than halfthe population under the age of 18. The Berbers are generallyconsidered to be the originalTunisians. Arabic is the official languagewhilst French is considered to be thelanguage of business. English andGerman are spoken mainly on thecoast and in the tourist areas.

PEOPLE

TunisiaTunisia

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Getting ThereGetting There

BY AIR

Tunisia has long been established as atourist destination with many direct andindirect flights from the UK and Europe.Currently there are five airlines offeringdirect flights from UK airports with thisfigure set to increase once the new airportopens in 2009, which will allow budgetcarriers such as EasyJet and Ryanair tofly into the country. Thomas Cook &Thomson Fly offer direct flights from thefollowing UK airports to Monastir:

London Gatwick London Luton Manchester Birmingham Coventry Bristol Doncaster Newcastle Glasgow

The following airlines also offer directflights from the UK to either Tunis or

Monastir airports:

British Airways Tunis Air Nouvel Air Tunisie XL airlines

Additionally there are many excellentindirect connecting flights from most

UK airports to Tunisia via Air France.

BY SEA

There are many frequent andinexpensive ferry services from Europeto Tunis, the capital, leaving fromMarseille in France and from Genoa,La Spezia, Naples, Palermo andTrapani in Italy.

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The essence of TunisiaThe essence of Tunisia

Many visitors have been drawn to Tunisiafor its sunny climate and its bargainbeach-resort holidays: the white sandybeaches are glorious, the sea a clearturquoise, and some of the resorts are

among the best the Mediterranean has tooffer. However, this small country has somuch more to offer, mostly within easyreach of the coast, and is now at laststarting to promote it: friendly people,well-preserved whitewashed medinas,green forests in the north, a vast desertand lush oasis in the south, an amazingwealth of archaeological treasures inland,as well as an exciting and deliciouscuisine, based on fresh local produce.

Tunisia is a mainstream holidaydestination but it still attracts a lot offirst time visitors to the country. Thosethat visit tend to come back again andagain each time absorbing more and

more of the culture. In the mysteriousmedinas, there is the feeling that athousand secrets lurk behind everystudded door; shops and stalls in thesouqs and surrounding streets springto life to serve the homeward boundwith the freshest food. Fish are onlyminutes out of the sea, bread is bakingon the spot and stacks of colourfulvegetables are haggled over withshouts and handshakes! 5


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Tunisian CuisineTunisian Cuisine

Although international food is served inmost resorts, many holidaymakers willwant to try at least some local cuisine.The Arabs, Turks and French have all hadan influence on the countrys cooking.

With such a long coastline, fish is givenpride of place on any menu andrestaurant owners compete with eachother to display the freshest catch.Bream, grouper, sea bass and red mulletare amongst the most widely available,while seafood speciality dishes are basedon prawns, lobster and squid. In all butthe cheapest restaurants customers arenearly always welcomed withcomplimentary hors doeuvres which may

of black olives and some deliciouscrusty bread. In most places the breadwill also be accompanied with a smallsaucer of fiery red harissa paste madefrom hot chillies. A popular starter is

the famousbrik

, a unique Tunisian dishwhich consists of a triangular-shapedenvelope of crispy pastry containing alightly cooked egg, often topped withfresh herbs, prawns or tuna. Couscousis an obvious main course, a tastyvegetable, meat or fish stew served ona bed of steamed semolina grains.Dessert is often a choice of fresh fruitor very sweet pastries like baklava,filled with nuts and honey. 6


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Northern TunisiaNorthern Tunisia

For a small country, Tunisia offers plentyof variety besides its glorious beaches.The north, particularly around Ain

Draham, has large oak forests and lakes,making it feel more like Europe thanAfrica. Tabarka is emerging as Tunisiasnorthern flagship resort, while thecharming old port town of Bizerte is stilldebating whether it really wants to enticeinternational tourists or is quite content toremain a sleepy fishing town. For morethan 3000 years, Tunis, the capital hasbeen among the great cities of the Medand it still has plenty to offer.

Carthage is one of the best known ofTunisias archaeological sites on theoutskirts of the capital. Founded in 814

BC by the Phoenicians, by the fourthcentury BC, Carthage had become thecentre of their vast maritime empire. In146 BC it was destroyed by theRomans who only 25 years later beganrebuilding on the same site to becomethe 3rd largest city of the Romanempire. Today ancient ruins still remainand are a firm favourite with visitingtourists.

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HammametHammamet

Hammamet, the longest establishedresort in Tunisia has been attractingholidaymakers since the 1960s. Less than

an hours drive from Tunis airport andonly slightly more than that from Monastirairport, Hammamet is geared up to year-round tourism.Easy-going and lively, with a good choiceof restaurants, Hammamets first hotelswere built in the centre close to themedina but shortly afterwards startedstretching along the coast almost as faras Neubul, making the most of some ofthe finest beaches in the country.

10km from the centre is the new resortof Yasmine Hammamet which boasts alarge marina with 740 moorings, a

walled medina area with coveredmarkets, luxury 5-star hotels, casinos,many Thalasso therapy centres, atheme park and much more. The townoffers an excellent promenade linedwith shops and cafes, gardens andparks, and entertainment complexes.Two 18-hole golf courses, Yasmineand Citrus are situated only 5kilometres away from Hammamet.

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SousseSousse

Sousse used to be just an excursiondestination for day trippers; now it is abusy holiday centre in its own right.

Packed with atmosphere and hundredsof years of history, Tunisias leading citybeach resort offers a great selection ofquality hotels, a wide choice of affordablerestaurants and endless possibilities forshopping in both traditional markets andexquisite boutiques to rival those inEurope. Along with Carthage, Soussewas one of the Phoenicians three greatcoastal cities, with the earliestarchaeological finds dating from

the 6th century BC. The charmingmedina seen above is the old heart ofthe city. A popular choice for Tunisians

and foreign tourists alike, Sousse is adestination open for business all yearround. The beaches stretch as far asthe eye can see and the widepromenade is bustling with familiesenjoying their ice creams andtraditional Tunisian sweets.Situated less than 20 minutes fromMonastir airport, Sousse is an excellentchoice for a rental investment due to itspopularity and year round appeal. 9


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Port ElPort El KantaouiKantaoui

Purpose built around a picturesquemarina which now draws luxury yachtsfrom all over the world, Port El Kantaoui

opened in 1979 and has been Tunisiasmost outstandingly successful touristcentre. With the look and feel of an eliteresidential district, it is the second homeof the President, top politicians, diplomatsand the fabulously wealthy. Millions ofdinars have been poured intolandscaping, with palm trees, shrubs andgrass borders immaculately lining everyroad. The resorts hotels are equallysparkling; whitewashed palaces with

terraced gardens awash withbougainvillaea. Port El Kantaouis prideand joy are its beautifully manicured

18-hole championship golf courses.There are no membershiprequirements and while golfers withtheir own equipment are welcome,whose who prefer to travel light canrent everything they need from clubs tocaddies at very reasonable rates.Dubbed as Tunisias Puerto Banus,Port El Kantaoui is the most exclusiveTunisian resort situated minutes fromSousse and 30 mins from Monastir. 10


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TunisiaTunisias Economys Economy

Tunisia has for the past decade been a shining example to other African and Middle

Eastern nations on how to grow and prosper as a developing nation. In 2007 theWorld Economic Forum ranked the country as the number 1 most competitiveAfrican economy (29th in the world) with also the highest ranking out of all thecountries in the Arab speaking world. Comparing with other nations in the region,Morocco ranked 64th and Egypt came in 77th place out of 131. In the same report,Italy was placed 42nd on the list.

Inflation within the country has averaged

just 3% p.a. for the past 10 years whilsteconomic growth has averaged 5%p.a. for the same period. In 1996 Tunisiaentered into an "Association Agreement"with the EU which removes tariff and othertrade barriers on most goods by 2008.

Tunisia has had to work extra hard to develop its industry and economy to the level it

is at today. Unlike its larger neighbours, Libya and Algeria, Tunisia produces verylittle oil and so the country has had to develop and excel its other industries such astourism, manufacturing and agriculture. Needless to say, Tunisia's economic reformprogram has been lauded as a model example by international financial institutions.

Tun isian Economic Fac t s a t a g lance Highest economic competiveness in all

of Africa and the Middle East. Highest GDP growth rate in Africa Consistently low inflation levels Government is very eager to encourageforeign investment into the country Free trade agreement signed with theEU. Member of the World tradeOrganisation and GATT.

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Why Invest in Tunisia?Why Invest in Tunisia?

Considering the strong economic factors you have read on the previous page, youmay be asking yourself why hasnt Tunisia already exploded on the internationalproperty market?

Well the question is fairly easy to answer. The forward-thinkinggovernment wanted to ensure that the Tunisian populationwouldnt be out-priced out of their home market preventingthem from buying homes in their own country, much likehas happened in Morocco in recent years. They had preventedforeigners from purchasing property in Tunisia for a considerablelength of time and nationals of some countries are still unable to

buy there. Once the local home ownership figure was over 80% (higher than in theUK), where it stands today, they introduced an approval system whereby eachforeigner would require approval from the Governor of the region before beingentitled to buy. This permission still stands today but is pretty much a formality andthere are generally never any problems with Europeans buying in Tunisia.

The fact that the home tenure figure is so high in Tunisia is excellent news for theforeign investor as it means that there is a strong local market in place when they

need to realise their investments and sell their properties. This is particularlyimportant when dealing with new and emerging markets as investors always need aclear exit strategy and be able to realise their investments when the time is right.

Tunisians are very wealthy in comparison to other countries in the region and thecurrent GDP per capita stands at $8,800. The country is situated only 50 milessouth-west of Sicily and this proximity to Europe has enabled them to forge strongties with the EU which hasnt gone unnoticed elsewhere in the region.

The largest developers from Dubai have recently started toinvest very heavily into Tunisia, realising the stability of thecountry and the proximity to Europe making Tunisia an ideallink between Africa, Middle East and Europe. In the capitalTunis, they are currently investing over $20bn in projects suchas Tunis Financial centre and Tunis Sports City. Further south,Emaar, the Dubai developers of the worlds only 7-star hotelare investing $2bn on the coast, creating an artificial marina, a world class golf

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Why Invest in Tunisia?Why Invest in Tunisia?

Tunisia is perhaps best compared to one of their western neighbours, Morocco.Although Morocco doesnt bode as well as Tunisia in terms of economic growth andstability, UK and European Investors have been buying property there for a few

years now and the price of Moroccan property has risen considerably during thattime. It is difficult to determine exactly how much prices have risen, as with anyemerging market, but reports from developers tend to suggest that the selling pricehas tripled in some areas.

Infrastructure and transportation to and within and the country are excellent asTunisia offers 7 international airports ensuring that no matter where you are in thecountry you are never further away than 2 hours from an airport. The largest airportin Northern Africa is currently under construction in Tunisia scheduled for completionin late 2009 which will offer cheap and inexpensive flights with carriers such asRyanair and Easyjet. Within 10 minutes drive of this airport, the largest deep waterport in the southern Mediterranean is also being built enabling the globes biggesttrade ships and cruise liners to dock in Tunisia.

Rental yields are very high in Tunisia (discussed in detail on the following page). Tosummarise, below are the key points explaining why you should be buying in Tunisia.

Low property pricesow property prices High Rental Yieldsigh Rental Yields Dubai developers investing heavilyubai developers investing heavily High rate of growthigh rate of growth Low rate of inflationow rate of inflation Most stable country on the continentost stable country on the continent Very cosmopolitan societyery cosmopolitan society Modern thinking nationodern thinking nation Excellent relations with EUxcellent relations with EU Relaxed restrictions on foreign ownershipelaxed restrictions on foreign ownership Fantastic Infrastructureantastic Infrastructure Many direct flights from the UK & Europeany direct flights from the UK & Europe 3 hours from UK / less than 2 from Europehours from UK / less than 2 from Europe Great weather all year roundreat weather all year round

Why buy property in Tunisia?

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The rental market in Tunisia is very strong due to the high domestic demand forrental accommodation in addition to the demand from Europe and Tunisiasneighbours Algeria and Libya. Furthermore, due to the countrys location, Tunisiabenefits from all year sunshine ensuring the rental season is much longer than inEurope. In fact, over the past years temperatures in early spring have been recordedas high as 40 degrees Celsius, however most of the time they are in the region of25C to 35C.

Having the highest home-ownership rate in Africa and certainly one of the highest inthe world, Tunisia is a middle-income country which has outperformed most of itsAfrican neighbours both in terms of economic growth and political stability. As a

result of their relative wealth, the Tunisian people are able to take frequent holidaysin the most popular regions of Tunisia such as Sousse and Hammamet boosting thedemand of the rental market.

Tunisias larger neighbours, Libya and Algeria do not offer tourist facilities, resorts orhotels anywhere near the scale that Tunisia does, and as a result many Libyan andAlgerian nationals tend to take their holidays in Tunisia boosting the demand forrental properties even higher.

Last, but not least, we have the European contingent of holiday makers who arrive inTunisia in their millions each year looking for a warm, sunny climate to spend theirholidays. Being less than 3 hours from the UK and most of Europe, Tunisia offerssomething new and exciting for everyone and has been an established touristdestination with Europeans over the past 2 to 3 decades.

Generally, tourists who visit Tunisiatend to come back year on year, and

those on their return trips will preferto rent accommodation giving themmore flexibility than a hotel does. As aresult, there is considerable demandfor rental properties all yearround. In the summer, couples andfamilies with younger children tendto visit the country whereas in thewinter we see a lot of retirees and

Golfers in particular. Whatever theyare looking for, Tunisia offers it all!

The Rental MarketThe Rental Market

Tunisian weather chart from the BBC website

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We have carried out a comprehensive survey of a number of different rentalagencies located in Tunisia and abroad. The following rates are based on durationsof one week and split into 3 seasons, low, medium and high. The resorts considered

are the most popular ones with holiday makers, and the rental stock comprises ofapartments currently available to rent in 2008.

Rental ExpectationsRental Expectations

Low Season Medium Season High Season

1st Nov - 31st March 1st April - 15th June 16th June - 14th Sep

15th Sep - 31st Oct

1-bed Apartment 300 400 500


The difficulty with comparing rental potential of existing properties to those of TheDunes Golf & Spa Resort is that currently there are no other true 5-star resorts inTunisia offering all of the below:

24hr gated security Spa centre on-site 2 swimming pools

Supermarket and Caf on-site On-site rental management agency Exclusive private beach for residents ONLY 20% residents discount on Spa and Golf facilities All-inclusive optional Platinum service

As a result, we believe that there will be approx a 15% premium (excluding priceinflation over the 2 year build time) on top of the above quoted prices for the DunesGolf & Spa Resort giving the estimated rental figures below. (Please note rental

values may vary. The figures below are merely estimates.)

Low Season Medium Season High Season

1st Nov - 31st March 1st April - 15th June 16th June - 14th Sep

15th Sep - 31st Oct



*Someoftherentalagenciessurveyed: holidaylettings.co.uk,locasun.co.uk, villarenters.com,rentholidayhomes.com

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Using the estimated rental figures on the previous page, we can work out theprojected rental yield on the properties. We will make the following assumptions:

Return on InvestmentReturn on Investment

Rental YieldRental Yield

Property is a 1-bed apartment priced at 47,900 Property is rented out for 13 weeks per year (quarter of the year) 6 weeks rental in the peak season at 575 per week 4 weeks rental in the medium season at 460 per week 3 weeks rental in the low season at 350 per week

Total annual rental return = 6,340

Gross Yield = 6,340 / 47,900 = 13.24%

Net Yield (gross yield minus 10% rental management charge) =11.92%

Time taken to pay off the property = 100 / 11.92 = 8.39 years

The above figure shows that even using a conservative rental window of only 13weeks per year you may be able to pay off the property in just over 8 years usingrental income alone. (Please note that rental rates can vary and are not guaranteed.)Below we examine the potential capital growth using the same apartment.

Capital Growth PotentialCapital Growth Potential

Current price 47,900 Initial Investment (on exchange) of 50% = 23,950 Appreciation during construction potentially up to 25% per year Possible value of apartment on completion in 2 years = 71,850

Profit of 71,850 - 47,900 = 23,950 potentially made during construction alone.

Since only 23,950 was invested, potential return on capital in only 2 years =

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Pricesfrom

20,000

Development Overview

Situated on Tunisias Gold Coast, within easy reach of its most exclusive resort, Port El

Kantaoui, The Dunes Golf & Spa Resort is a beachside development situated conveniently

between two of Tunisias busiest airports offering direct and inexpensive flights to major

European cities. The development itself comprises of studios, one, two and three bed

apartments in a low rise setting in a prime residential area close to all facilities including two 18-

hole golf courses, marina and restaurants. The Dunes Golf & Spa resort is directly located next

to glorious white sandy beaches that stretch as far as the eye can see. The resort offers on-site

world class Thallasso Spa facilities including an indoor swimming pool, Turkish baths, a sauna,

gymnasium and beauty & massage treatment rooms with discounts for residents. One can enjoy

a massage on the exclusive private beach set aside for residents only or play a round of golf at

the finest African golf courses located on your doorstep. The Dunes is a gated 5 star resort

offering 24hr security and concierge facilities as well as on site amenities including a restaurant,snack bar, supermarket, bank, bakery and a rental management company. Rental income is high

in this region due to the strength of the local, neighbouring and European markets ensuring

yields can reach 10% to 14% per year.

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Development Facilities

5-Star beach, spa and golf resort 100m from an exclusive private beach for residents only with sunbeds and umbrellas On-site 1st class Spa facilities with 20% discount for residents Gated community 24hr Security and Concierge

Underground and off-street parking Two outdoor pools with lounge facilities (one adult and one childrens pool) Whirlpool Jacuzzi Poolside cabana bar Indoor pool in the Spa centre On-site rental management agency with low fees (10% current estimate) Laundry and cleaning service from as little as 1 per hour Optional Platinum service for seniors offering full services including airport transfers andwelcome packages Satellite Television Video Entry System

Private beach Electrical and water connection included Low community fees Show flat on-site

Pricesfrom

25,995

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Nearby facilities

On the doorstep of two world class 18-hole golf courses 20% Golf Discount Card for residents Water Sports/Fishing/Diving and Boat excursions running all year round Cultural excursions including Arabian nights and Belly dancing shows Shopping centres

Excellent international cuisine Palm tree lined promenades Childrens water and theme parks including a petting zoo Horse and camel riding Hospital and Pharmacies nearby Traditional Medina offering bargain shopping

HighRental

Yields

Payment terms

3000 euro reservation50% on exchange of contracts10% in March 2009Balance on completion by the end of 2010

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Property Specification

Stainless Steel door handles Phonic and Thermic isolation between floors Solar power system throughout the development Aluminum external carpentry with rolling blinds manufactured in Germany Outdoor solar lighting throughout the project

Excellent interior carpentry First choice sanitary and electrical equipment and fittings Pre-installation for hot and cold air conditioning throughout the apartments Pre installation for washing machine Italian style kitchen including oven, hob and extractor, stainless steel sink and fridgefreezer Anti slip ceramic tiles in kitchen and bathroom Fine Tunisian marble floors in lounge, bedrooms and corridors Satellite Television with over 5000 channels 24-hour concierge service Underground (at extra cost) and open-air car parking

Freehold Land ownership Certificate

FantasticCapital

GrowthPotential

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Tunisia Memo