Posted by: Martin | April 3, 2010

Fundamentals of the property market: Politics

On a couple of occasions I have sat down with a few friends that share my somewhat geeky interest in the Ivory Coast, and tried to predict what would happen next in Ivorian politics, or at least to try to draw up scenarios.  It’s been very, very difficult, but the safest bet has usually been (at least during the last six years) that not much is going to change and Gbagbo is going to stay in power. One model for prediction regarding Gbagbo that seems to be working is that given alternative courses of action, Gbagbo will pick the one is most likely to allow him to stay in power or consolidate his power. Beyond that it’s just very unpredictable.

The way I see it is that events in the political realm in the last 10 years have had an unusually negative impact – even with West African standards – on the economy and on property market prices.  While things can clearly get worse I think the upside is greater than the downside. The upcoming elections, whenever they will take place, are likely to cause some sort of civil strife, but for the economy to get even worse than the current situation, more than that is required such as sustained violence in Abidjan over a longer period of time, or outright war reaching Abidjan.

I think people are pretty tired of conflict and also out of pure reversal to the mean, my main scenario is that the economy will get better.  If the threat of violence and especially against westerners as in 2004 (which is not good for property prices in attractive locations to put it mildly) is reduced and the visa regime relaxed, then tourism could pick up again and that’s one big upside.

I am currently in France, and today I went to a travel agent and asked for voyages to the Ivory Coast. As expected they only offered (expensive) flights and no package tours. But when package tours (along with cheap flight seats) will be offered in French-speaking parts of Europe – as they were before the crisis – it will do wonders for the property market in attractive and touristy areas of the Ivory Coast.

When buying property in these parts of the Ivory Coast it’s like you get a free out of the money call option on tourism to resume.


Responses

  1. In an interesting aside, is that I think the Club Med resort at Assinie (sold in the last 12 months to Pierre Fakoury, a local architect/business man) was apparently largely filled by Italian tourists in its glory years. The resort is featured in the French classic comedy, Les Bronzes.


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