Small and medium-sized real estate companies are reportedly growing concerned following the Housing Ministry’s offering of units at an unsubsidized cost of EGP 198,000, which will result in taking away a huge number of a buyers from a certain class from developers, reported Al Borsa.
Developers have in the past aired their fears regarding the ministry’s use of New Urban Communities Authority’s (NUCA) lands to offer units at a cheap rate of EGP 2,000 per square meter, which is 50% lower than the actual price in the real estate market.
The Housing Ministry previously announced it would accept applications for social housing units from single homebuyers with a monthly income of EGP 4,000 and married homebuyers with a monthly household income of EGP 5,000 to apply for 95 square meter apartments in new cities.
Other units expected to be delivered within one year are located in 6th of October City, Badr City and Obour City, with applicants requested to pay a downpayment before the middle of next December.
The intervention of the Housing Ministry into the real estate market will eventually trigger small and medium-sized developers to invest abroad rather than buying Egyptian lands, or will result in their complete shutdown, according to Mostafa El Shebeni, Board Member at Redcon for Development.
The Housing Ministry, however, does not intend to compete with real estate developers, claiming instead that it is only attempting to meet the housing gap in light of the high prices of units offered today in the real estate market, which makes housing an unavailable option to residents living in low-income areas and informal settlements, according to unnamed sources from the housing ministry speaking to Al Borsa.
Ehab Galal, Chairman of Vision Group Contracting and Real estate Investment, demanded drafting of laws to protect small investors from the government’s invasion into the market, as several small developers have recorded losses due to the appearance of such state projects.
The current actual price for units that have been completed is EGP 198,000 and will be delivered in a year but the price for the units that are being finalized is EGP 180,000, and 5% from the actual price of the units will be used for maintenance that will be paid during unit purchase as the down payment costs EGP 15,000 according to Mai Abdel Hamid, Chairman of the Mortgage Finance Fund.