* Police teargas, arrest those protesting against Turkish embassy
* Dakar's property boom is swallowing up coast, squeezing the poor
* President Sall seeking to develop area outside Dakar
* Money laundering may be fuelling property boom
By Alec Saelens
DAKAR, April 20 (Reuters) - Protests over the construction of a new Turkish embassy in the Senegalese capital Dakar have highlighted anger in the West African nation over a property boom that is swallowing the coastline and squeezing ordinary people's budgets.
Riot police teargased protesters and arrested 23 people at a demonstration last week alongside a breeze-block wall constructed to house the embassy compound on a picturesque stretch of Dakar's coast, where luxury villas, hotels and shopping centres have sprung up in recent years.
Built on a peninsula reaching into the Atlantic Ocean, the city of three million is growing at breakneck speed, fuelled by migrants from rural Senegal and neighbouring countries. Hemmed in by water on three sides, Dakar's population is on track to hit five million by 2025, experts say.
Civil society groups have formed a movement called "No to the wall" to oppose the embassy's construction amid growing opposition to the development of coastal areas used by residents to relax, walk and exercise. They say the embassy's compound wall blocks access to a long stretch of pristine coastline.
"We call on all Senegalese with patriotic blood in their veins to say 'no to the wall' because if we let this happen, people will no longer be able to enjoy the beach," said Djilly Bagdad of Y'en a Marre, which means 'Fed Up' in French - a group of rappers who mobilised in 2012 to defend civil rights and help vote then-President Abdoulaye Wade out of office.
Some rights groups accuse new President Macky Sall's government - which authorised the embassy's construction on the protected coastline despite opposition from Dakar's city council - of riding roughshod over civil liberties by banning and dispersing protests.
Between 1994 and 2010, Dakar house prices soared by 256 percent, the Senegalese National Statistics Agency said. Regarded as a safe haven in turbulent West Africa, Dakar's property market is a favoured investment for regional elites.
Many apartments stand empty as locals cannot afford to rent them. The shortage of affordable housing has pushed residents of the Ouakam neighbourhood near Dakar's international airport to build illegal dwellings near the runway - prompting clashes with police sent to stop them.
"Access to property...has become unaffordable for the poor. All our money goes to rich landlords," said Amina Toure, a 60-year-old woman selling fruit on Dakar's streets.
RENT CONTROL LAW
With more than half of Senegalese living below the poverty line, Sall's government passed a law in January to impose rent reductions. These range from 29 percent for payments below 150 000 CFA ($315) a month to 4 percent from those over 500,000 CFA.
"I've been able to save some money," said Mariama Sarr, who now pays 43,000 CFA a month for the small flat she shares with her husband and young daughter. "With the saving, I can buy a 25 kilo bag of rice and oil that will last for a few months."
Yet, many wonder if the law will bring only temporary relief, given the shortage of space in Dakar. A decree setting prices per square meter for land and property was signed in 2010 by former President Wade but failed to prevent rents soaring.
Opposition legislator Thierno Boccoum said that, with no mechanism in the law to regulate future rises, there is a risk rents will climb as soon as new contracts kick in: "This decision will spur unfortunate tensions between owners and tenants without decreasing rents or hampering speculation."
The relocation of the airport to a new site 30 km outside Dakar next year may alleviate land shortages. Sall also hopes a $21 billion raft of infrastructure developments by 2018 will encourage more economic activity outside the capital.
"We're launching a new economic hub in Diamniadio, 30 km from Dakar," he told Reuters in an interview, outlining plans to build 1,000 km of roads and refurbish a railway to the interior.
Around 80 percent of Senegal's industry is concentrated in Dakar, according to Djibril Diop, a researcher on urban development in Senegal at the University of Montreal in Canada.
Mouhamadou Bodj of Forum Civil, the local branch of Transparency International, said Dakar's property boom was fuelled by money laundering. Real estate under construction in Dakar in 2009 was worth 240 billion CFA, but only 10 billion could be traced to bank loans, he said.
The National Cell for the Treatment of Financial Information (CENTIF), a state agency, said suspicious money flows accounted for nearly one-fifth of Senegal's of economic activity between 2004 and 2011.
"The property boom is related to stolen money, corruption derived from drug trafficking linked with neighbouring Guinea-Bissau," Bodj said, referring to Senegal's southern neighbour. (Additional reporting by Daniel Flynn; Editing by Daniel Flynn and Rosalind Russell)