With a successful sales launch of the first and second phases of its IL BOSCO-New Capital projects, Misr Italia Properties is looking at never seen before profits and a prominent place as a real estate giant in the market. Invest-Gate sits with Misr Italia Properties Co-CEO Mohamed Hany El-Assal to know more about their project in the new capital and his company’s future expansion plans. El-Assal also weighs in on his expectations for 2018 in terms of the economic climate and the performance of the real estate sector, as well as, the Egyptian developers’ needs from the government.
Can you assess 2017 in terms of the investment climate in general and the real estate sector in particular?
Many things took place in the economy in 2017, the main thing being the floatation of the pound, which affected the first quarter of the year, causing a state of stagnation; in both the real estate sector or the import-dependent businesses in general, as a repricing process of the construction material had to take place, which took a long time. But I believe the market readjusted by the summer in the second quarter of the year, but it nevertheless affected the small and medium investors. Unfortunately, only the big investors were able to face this hurdle and work through it. Only the big investors had the financial capability to withstand and adjust to the situation, while the small investors did not have the luxury to wait until the market stabilize, so they sold what they had with losses in order to keep up. This caused many small and medium investors to exit the real estate market. But all in all, I see the end of 2017 as really good and Misr Italia Properties managed to achieve, starting in the fourth quarter of the year, what could be considered the highest profits ever in its history.
How did Misr Italia Properties manage to achieve its highest profits ever in 2017 despite the economic instability?
Well, I have to tell you the story from the beginning. Misr Italia Properties introduced three projects in 2017; Kai Sokhna, in the second quarter, Kai Sahel, in the third quarter, and IL-BOSCO New Capital in the fourth quarter of 2017. We diversified our main company, Mirs Holding Company, and introduced two brands; Misr Italia Properties and Mousa Coast for Development. Misr Italia Properties caters to the upper-middle class and the upper-class clients who seek luxury, grandeur, and vast spaces. Projects under Misr Italia Properties include Kai Sokhna, Kai Sahel, La Nouva Vista, Cairo Business Park, and IL BOSCO-New Capital. While Mousa Coast for Development caters to clients who seek practical spaces, affordable prices, and facilitated payment plans. Developments under this brand include Mousa Coast, Time Square in both 6th of October and El-Shorouk, and the Italian Square. In 2017, we could not strongly reach the middle classes, as they are the hardest-hit class by the economic reforms, but our Misr Italia Properties’ three new projects were completely sold out in both Kai projects while IL BOSCO-New Capital project, achieved an over target as we were aiming for EGP 2 bn, and we managed to accomplish sales worth EGP 3.5 bn, and this is where we achieved a “boom” in the company. We are currently targeting EGP 5 bn worth of sales in 2018.
Why did you choose the New Administrative Capital as a site for your IL BOSCO project?
We had a vision when the idea of the New administrative Capital was first presented. People kept saying it would turn out be like the 5th Settlement or 6th of October, but once we saw President Abdel-Fattah El-Sisi’s keen interest to create the new capital and we learned more details about the project; as what it would offer, we were very interested to have our project there. The best thing about the New Administrative Capital is its location; it’s considered a natural extension to Cairo, while at the same time, it connects Cairo with Ain Sokhna and Ras Sudr. The New Administrative Capital is a smart city, with infrastructure and services that are the latest state-of-the-art that have never been executed in Egypt before. What also encouraged us to invest in the new capital is the fact that it has all the support and backing of the Egyptian government behind it. We were able to acquire 200 acres in the northern part of Mohamed Bin Zayed Street, an optimum location in the new city.
Since you work on the ground in the New Administrative Capital. Can you tell us more about the city’s new developments?
Every month there are new developments in the new capital. The construction rates are rapid; whether the new governorates headquarters, Al Masah Hotel, the Church, the Mosque, and the schools; they are all being built simultaneously and very quickly in a race against time. We’ve been working in the market for 30 years, this is the first time we receive a plot of land with the streets leading to it completely paved, we used to get 4×4 cars in other projects to reach our sites. I believe that in less than two years, with the unprecedented amounts of construction taking place around the clock, the New Administrative Capital, will be the number one city in Egypt.
Can you tell us more about IL BOSCO-New Capital Project and its latest updates?
The 200-acre project consists of standalone villas, townhouses of varying spaces, apartments ranging between 130 to 200 square meters, a clubhouse over 4.5 acres, a commercial mall over 90,000 square meter along with a new concept, never executed in the Middle East or Egypt, which is the vertical forest, 21-floor towers surrounded and engulfed by greenery to ensure the sustainability of the buildings, which will transform Carbon Dioxide into Oxygen and decreases the temperature of the entire building in the summer. This concept, which I believe will be a strong landmark for both IL BOSCO-New Capital and the New Administrative Capital in general, is designed by an Italian design office and it was conceptualized in the United States in CallisonRTKL planning office, while our architectural consultant in Egypt is DMA (Dar Al Mimar Architects) Company. In the project’s first sales launch event, we offered 1500 villas and apartment units, all completely sold out. We will launch the second sales launch event in mid-December, offering 800 apartments and 150 villas. The entire project is around four phases, the third and fourth phases will be launched for sale in 2018. While construction will start in either February or March 2018. The entire construction of the project is scheduled for completion in five years time, but we are working tirelessly to finish the construction in four years.
How can we attract Egyptian expats as well as foreign homebuyers to invest in Egypt?
Egyptian expats’ investments in the real estate market is very good. Around 10% of IL BOSCO-New Capital’s sales are derived from Egyptian expats, they believe that the New Capital has a promising future and they want to invest in real estate and have somewhere they could live in when they return to Egypt.
As to foreign homebuyers, the Egyptian developer cannot currently attract them, as they have to offer them incentives for their investments such as residency to the investor and their family, but developers cannot provide these incentives, and it is the task of the government to provide them. So we’re still behind when it comes to attracting foreign homebuyers.
What do developers currently need from the government?
The most important thing for a developer is the land, so the government should provide the land with suitable prices as well as issuing licenses quickly. There is also a problem that the government has to address, the developers want to develop their country and at the same time turn a profit, but the high prices of land makes it harder for the developer to cater to the lower- and medium-classes. Thus, the developers have started catering to the upper classes more and more, who represent around 5% to 7% of the society, as they have the purchasing power and can buy properties at higher prices. So land prices have to decrease in order for the developers to cater to the lower classes.
What are your company’s plans for 2018?
In the new year, we have more expansion plans in mind. We’ve already started using the ERP (Enterprise Resource Planning) System in all our offices, which connects the client, to the customer care, to the finances and the human resources and streamlines our business. We are also working on our company’s portfolio right now for an Initial Public Holding (IPO) in the Egyptian bourse, we are thinking of offering 20% to 30% of the company’s shares in the bourse with the purpose of increasing capital for land purchase and expansion. We are also assessing a number of lands for new projects, both in Cairo and on the Red Sea and Mediterranean coastlines. Moreover, we will offer more units for sale in Kai Sokhna, Kai Sahel, and IL-BOSCO New Capital.
How do you see the investment climate and real estate sector in 2018?
This is a tough question. But I think the first quarter of 2018 there will be stagnation, because of the upcoming presidential elections, but afterwards, I think there will be a breakthrough not only in the real estate sector but across all sectors. I think the economy in 2017 was in a “brake-mode”, but people are thirsty to buy and invest in the market, including foreign investors who are currently eyeing the market’s prospects.