As Egypt undergoes a new era of mega developments, Invest-Gate Egypt successfully held on January 16, 2018, its first comprehensive “Executive Strategic Roundtable” to tackle trending issues in today’s real estate market, highlighting its opportunities and challenges.
With an overwhelming attendance from private developers, as well as, a strong presence from the government, the roundtable, held in partnership with the Egyptian chapter of the international real estate federation FIABCI Egypt, provided accumulative thoughts in developing the largest real estate market in the Middle East and proposed resolutions across the sector.
The introduction to the roundtable saw an overview of the real estate sector in the country. Abdel-Nasser Taha, Head of the Egyptian chapter of the International Real Estate Federation (FIABCI), said that Egypt’s economy cycle went from a state of crisis to a recovery phase.
“We should bring together the experiences of the real estate sector’s experts to develop an image for the urban development in Egypt,” Taha added.
H.E. Former Investment Minister and Chairman of AUR Capital Ashraf Salman said that the real estate sector alone outperformed the country’s overall economy in the first nine months of 2017, contributing to 15% of the total gross domestic product (GDP) in the same period.
He added that the sector grew 4.6% year-on-year during that period, while the overall economy grew by 3.8% year-on-year. “The sector is expected to grow 7-8% in 2019,” Salman forecasted.
In the first session titled “Residential and Commercial Economic Issues & Trends,” a multitude of issues in the real estate sector were discussed, such as new investment opportunities, new cities, and the real estate market in Upper Egypt.
Hussein Sabbour, Chairman of Sabbour Group stated, “Developers would continue to build and improve on the real estate sector in Egypt,” adding that the sector will offer long-term investment opportunities in the coming period.
“Construction costs after the floatation of the local currency increased by 44%,” Sabbour confirmed, but offered a silver lining by adding that, “Egypt continues to offer the lowest housing unit prices in the region, and maybe even the world.”
Meanwhile, Fathallah Fawzy, Founder of MENA Group said, “A total of 16,000 acres per year needs to be developed,” in order to meet Egypt’s growing demand, and offer more job opportunities. Fawzy noted that while developers seek to work and develop more projects, “bureaucracy wears off developers more than the actual development of the project,” recommending an improvement to the legislations to remedy this problem.
Ashraf Dowidar, CEO of ARDIC for Real Estate Development and Investments, stated that more and more developers are directing their investments to the new capital, while other areas across the country need more attention.
“SCZone can lure foreign investments so it should be given a priority. It is a prototype that we can work on to be a model for other developments,” Dowidar elaborated.
While Hassan Hussein, Chairman of Al Oula for mortgage finance highlighted tools of attracting foreign investments to the real estate sector such as providing more administrative and commercial spaces that foreign investors usually prefer and look for, Darwish Hassanein, CEO of Saudi Egyptian Construction Company (SECON), touched on investment opportunities in Upper Egypt, adding that the government should encourage developers to invest south of the country by offering incentives such as reduced land prices and long-term payment plans. “Clients in Upper Egypt are the most committed to their payment plans so investors should have no fear to invest there,” Hassanein urged.
He also encouraged public-private partnerships to develop residential projects, stating “Partnerships between the public and private sectors will help offer lower-priced units.”
Sherif Seleem, CEO of Pinnacle Construction Projects, said the main challenge to new cities is attracting residents. He said, “New Al-Alamein could attract residents by being a hub to international universities, as well as, being an industrial zone.”
Ahmed Shalaby, Managing Director and Board Member of Tatweer Misr added, “Investing in education is always profitable, especially for foreign investment funds,” executing commercial services will also revive new cities and attract investments into a fully integrated real estate project.
However, Tarek El Gamal, Chairman of REDCON Real Estate Development and Investment, argued that Egypt’s legislative body is a major obstacle in establishing international universities, proposing legislative amendments to remedy this obstacle.
While Arkan Chairman Mamdouh Badr Eldin said one of the strategies of attracting residents to new cities is building entertainment and commercial complexes, giving an example of Sheikh Zayed City, which, according to him, saw an increase in population numbers after the opening a number of entertainment venues and big supermarket chains there.
Rooya Group Chairman and CEO Hesham Shoukri said, “Many governments worldwide stopped financing infrastructure projects such as roads and transportation networks.It has become the developers job in many countries over the world.” He proposed that the private developers in Egypt should be given the chance to carry out such kinds of infrastructure projects.
Moving onto the second session of the roundtable, titled “Real Estate Mortgage & Finance”, speakers tackled financial obstacles facing real estate developers and suggested possible solutions to improve the overall performance of the sector.
Head of the Mortgage Finance Fund Mai Abdel Hamid said, “The fund offered around EGP 10.5 bn worth of mortgage finance, with expectations to reach EGP 20bn by the end of this year, targeting low- and middle-income classes.”
Alsherif Wahdan, Director of East Coast said, “Real Estate Investment Trusts (REITs) are very important as there are no mechanisms for financing projects during construction.” He suggested that REITs can fulfill this role.
Suzan Hamdy, Director of Capital Markets Group at Banque Misr, suggested the establishment of asset and property management companies as one step on the path of strategic restructuring of the sector. “We also need a database with all information related to what each area needs in terms of services to be able to develop the country properly,” she added.
Ibrahim El Missiri, CEO of Somabay said, “Registering real estate units, especially in touristic projects, should be given attention in order to drive more growth in the mortgage finance system.”
“We need the state to set a clear plan for land offering for a set number of years, three years for instance,” Amgad Hassanein,Chief Projects Officer of Capital Group Properties, said.
Nader Awad, Deputy CEO of El-Sherouk for Touristic Development, suggested, ” Lands offered by the Tourism Development Authority (TDA) to be offered to Egyptians in EGP instead of USD, or at least half and half due to the high inflation.”
In the third session, titled “Cross-Border Estate Investments & Restructuring,” Misr Italia Properties CEO Hany El-Assal said that a “Power Triangle”- meaning developer, client, and banks- should be present to export real estate, to finance and ensure that the money is securely transferred between the developer and the client.”
Amr El-Kady, City Edge Developments CEO, said “There has to be a strong economic base first so we can export our real estate abroad.” According to El-Kady, Egypt’s main asset is the human capital and should be further supported and developed.
Osama Shalaby, Chairman of Catalyst Developments, said, “We need clearer legislations for Egypt’s developers and mortgage funds to efficiently deal with international clients.”
Basheer Mostafa, CEO of First Group, said that effective planning is essential to attract foreign homebuyers to the country. “The planning of new cities must to be comprehensive, creating industrial, agricultural, residential, and commercial areas in every city in addition to cities having their own airports and being connected to the capital,” Mostafa added.
Waleed Mokhtar, IWAN Developments CEO, added that developers and government should “know what foreign homebuyers want in order to tailor residential communities according to their needs.”
“We need strong domestic brokers, who have strong networks and an international brand to connect with brokers internationally and consequently attract foreign homebuyers to Egypt, ” Mokhtar added.
Mohamed Banany, Vice President of Coldwell Banker and Coldwell Banker New Homes explained that from a macro perspective, both Spain and Dubai are models of countries that succeeded in exporting real estate. He said that Spain offers incentives such as tax exemptions for retirees while Dubai created the Real Estate Regulatory Authority (RERA), which he described as a “one-stop shop” for buyers and developers.
“Creating a professional market as a first step to exporting real estate requires having professional brokers,” Banany said, adding that to ensure brokers’ professionalism in the sector, “brokers in the USA, for example, spend two years training, while in Dubai, they undertake three tests before they hit the market.” He urged for similar measures in Egypt.
Invest-Gate’s roundtable was sponsored by AUR Capital, First Group, Catalyst Developments, Coldwell Banker, Saudi Egyptian Construction Company (SECON), and Iwan Developments.