Algerian land and property prices are sky-rocketing following Renault's decision to start a joint venture with the Entreprise National des Vehicules Industriels (SNVI).

The agreement provides for the construction of a manufacturing plant in Oued Tlelat, south west of Oran, to build Renault Group passenger cars and LCVs, mainly for the Algerian market, with the project formerly named 'Renault Algeria Production' at a ceremony in Roubia.

Renault and SNVI will work with Algeria's Fonds National d'Investissement (FNI) to produce cars from 2014 in a move announced during a recent visit by French President, Francois Hollande, keen to build commercial bridges with the country's former colony.

Reports in Algeria focus on spiralling land and property costs near the planned site that appear to have risen two and half times, with an initial 500 jobs created and up to a further 5,000 potentially in the pipeline.

Other speculation notes up to 30 small and medium sized businesses could be created in the automotive supplier field.