Tunisia Construction Report 2025: Output to Rise 1.2% on Strong FDI and Infrastructure Growth
A new report titled “Tunisia Construction Market Size, Trends, and Forecasts by Sector – Commercial, Industrial, Infrastructure, Energy and Utilities, Institutional and Residential Market Analysis to 2029 (H1 2025)” has been released by ResearchAndMarkets.com, shedding light on the current status and future prospects of Tunisia’s construction industry. Despite persistent economic headwinds and structural challenges, the construction sector is showing signs of modest recovery, supported by rising foreign direct investment (FDI), robust energy-related developments, and ambitious infrastructure modernization plans.
Modest Rebound Forecasted in 2025
According to the report, Tunisia’s construction industry is projected to grow by 1.2% in real terms in 2025. While this may appear modest, it marks a crucial turning point for the sector, which has struggled in recent years due to political instability, inflationary pressures, and fluctuating demand. The expected growth will be largely underpinned by an upsurge in FDI inflows and renewed government focus on large-scale infrastructure and energy initiatives—particularly in renewables.
FDI Uptick Boosts Investor Confidence
One of the most positive indicators for the construction sector is the recent surge in foreign direct investment. According to the Tunisian Agency for the Promotion of Foreign Investments (FIPA), FDI inflows totaled TND2.9 billion (approximately $896.4 million) in 2024, marking a significant 21.4% increase from the TND2.4 billion ($738.1 million) recorded in 2023.
This upward trend reflects growing international confidence in Tunisia’s investment climate, especially in manufacturing and energy. The manufacturing sector alone accounted for TND1.8 billion ($548.2 million) in FDI, registering a growth of over 20%. Meanwhile, the energy sector attracted TND689.4 million ($212.3 million), a robust 43% increase, underscoring rising investor interest in Tunisia’s push for energy diversification and clean energy generation.
Major Solar Projects Set to Transform Energy Landscape
The energy sector is one of the key drivers of the construction industry’s future growth. In March 2025, the Ministry of Energy revealed that the government had granted licenses to four international firms to develop solar farms with a combined capacity of 500 megawatts (MW). These solar projects are expected to involve a total investment of TND1.3 billion ($386.3 million) and are slated to commence operations in 2027. Once operational, the farms will contribute approximately 1.1 terawatt-hours (TWh) of clean electricity annually, marking a significant milestone in the country’s transition to renewable energy.
These developments follow the November 2024 announcement of a government plan to allocate TND7.1 billion ($2.2 billion) toward the development of the national power sector in 2025. A large portion of this funding is being directed toward renewable energy generation, which is vital to addressing Tunisia’s recurring power supply deficits. This pivot toward clean energy not only supports sustainable development goals but also creates a wealth of construction opportunities in related infrastructure such as power plants, transmission lines, substations, and control facilities.
Longer-Term Growth Outlook (2026–2029)
Beyond 2025, the Tunisian construction industry is poised to gain more momentum. The report forecasts an average annual growth rate of 3.1% between 2026 and 2029, signaling a more stable and optimistic medium-term outlook. This period will likely benefit from the cumulative effects of investment made in preceding years, as well as the maturing of multi-year projects.
Three primary drivers will underpin this growth:
- Transport Infrastructure Upgrades – including roads, highways, and urban mobility networks.
- Renewable Energy Projects – with a focus on solar, wind, and hybrid installations.
- Hydrogen Industry Development – an emerging sector receiving major government attention and funding.
In January 2025, a notable development came in the form of financing from the African Development Bank (ADB), which approved a TND283.6 million ($87.3 million) loan to support Phase 3 of the Road Infrastructure Modernization Programme. This loan covers nearly 93% of the total project cost, which stands at TND305 million ($93.9 million). The government of Tunisia is covering the remaining portion, contributing TND21.4 million ($6.6 million).
The road modernization initiative will rehabilitate and upgrade 188.9 kilometers of classified roads, spanning seven key regions: Kef, Kasserine, Sousse, Sfax, Kairouan, Siliana, and Gafsa. These upgrades are expected to significantly enhance inter-regional connectivity, improve transport efficiency, and boost trade logistics, all of which will have spillover effects on other construction sub-sectors, including commercial and residential real estate.
Tunisia’s Hydrogen Vision and Green Energy Investment
Perhaps the most transformative long-term vision lies in Tunisia’s bold plans for green hydrogen production. The Ministry of Industry, Energy, and Mines has outlined an ambitious strategy to produce 8.3 million tonnes of green hydrogen by 2050. To meet this target, the country expects to attract up to TND424.5 billion ($130.8 billion) in investments over the next two decades.
The hydrogen strategy is not just an energy goal—it represents a new industrial frontier that will require the development of entirely new infrastructure: hydrogen production plants, electrolyzers, pipeline systems, storage facilities, and export terminals. This offers significant long-term opportunities for construction firms, engineering consultants, material suppliers, and skilled labor.
While the hydrogen plan is still in its infancy, the early stages will begin shaping project pipelines and capital investment strategies over the next five years. Given the scale and scope of the initiative, it is expected to act as a catalyst for both domestic and international partnerships in the construction and energy sectors.
Sectoral Outlook: Opportunities and Challenges
The report provides a detailed sector-by-sector breakdown, offering insights into expected trends across commercial, industrial, residential, institutional, infrastructure, and energy & utilities segments.
- Residential Construction: Remains subdued due to affordability constraints and high interest rates but could rebound slightly with improved lending conditions and increased urbanization.
- Commercial Construction: New retail and office developments are limited, but there is potential for logistics and warehousing space linked to transport upgrades.
- Industrial Construction: Supported by rising FDI in manufacturing and export-oriented industries, particularly in regional economic zones.
- Infrastructure: The primary growth engine, especially roadways and renewable energy-linked projects.
- Energy and Utilities: Continued to gain traction, thanks to Tunisia’s energy diversification strategy.
- Institutional: Modest growth expected, mainly from healthcare and education-related public works.
Final Outlook
While Tunisia’s construction industry faces several structural and macroeconomic challenges—including inflationary pressures, bureaucratic inefficiencies, and a relatively slow permitting process—it is nonetheless beginning to chart a recovery path. With public and private sector investments flowing into infrastructure and clean energy, the groundwork is being laid for long-term sustainable growth.
The report concludes that if policy support remains steady and global investor interest continues to grow, Tunisia has the potential to transform its construction sector into a more dynamic and resilient engine of national development over the next decade.
