You have often expressed your strong optimism about the real estate sector in egypt, while other voices in the market speak about the risk of a bubble. What are the rationales behind your optimism?

A study published in 2019 forecasted that Egypt may become the seventh economy in the world by 2030, with a GDP that may grow from a current 370 billion to several trillions, while demography may increase by 20 percent during the same period. I personally do not trust mathematical models and I believe that no one can forecast the future accurately. However, if we look at the last 10 years, we realize that Egypt has been going through a tremendous transformation. This process, that is now accelerating, is visible in most of the areas of the Egyptian society and economy. Deep transformations have occurred in real estate, F&B, shopping, consuming behavior, technology, startups, manufacturing, fashion, infrastructure, finance, energy and so on. Other areas such as data, logistics, healthcare and education are showing strong potential and their development is being planned and supported by the authorities. This transformation is backed by a stable environment and improving macro-economy indicators. This is turning Egypt into one of the fastest growing and the most attractive and stable investment destinations in the world. The country is attracting hundreds of multinational companies and steady foreign investments in most of the economy’s sectors.

While residential real estate is driven by demography and faces liquidity and purchasing power challenges, professional real estate on the other hand is driven by economy growth and is expected to develop. Economy actually cannot grow without real estate. Economy growth requires office spaces, factories and so on, and the growth of the middle class stimulates consuming and development of retail space. The challenge here is to be able to fund the growth of real estate and to balance funding resources between investing in property and investing in the productive economy. To resolve this equation, we will need to change the mindset of real estate in Egypt and place the country on the global real estate map.

What do you mean by changing the mindset and why do we need to attract institutional investors?

Ten years ago, a couple of entrepreneurial Egyptian minds transformed the real estate from an industry driven by production and cost management into an industry focused on customer experience, marketing and creating emotional value. Instead of selling bricks and mortars, the sector started selling experience. This was a revolution that has lifted-up the whole real estate sector and turned Egyptian real estate into one of the most sophisticated sectors in the world. However, the market did not diversify enough in terms of asset classes, nor in terms of investment and asset management. We are still driven by off-plan sales and we concentrate on what institutional investors call “speculative development”. This is highly positioned on the investment risk curve and does not attract large international equity investors.