Leading indicators of a slow property market activity have been in place throughout H2 2019. The situation has worsened with the spread of the coronavirus pandemic which has led a complete lockdown of most nations worldwide and prompted unprecedented preventive measures to curb the virus. The repercussions rippled through the industry due to many factors, such as the suspension 2020 Cityscape edition, the biggest gateway to looming sales, and the significant revenue-generating activity for all across Egypt’s real estate industry. Not only that, the government’s urban development plan including the long-awaited launch of several new cities and other national projects were also postponed and rescheduled to 2021.
In Egypt, after weeks of self-isolation and social distancing, especially across its vital revenue-generating industries, namely real estate, new business models have developed and marketing strategies have been modified to combat the virus outbreak, to overcome its aftermath, and “get the wheel running” as they say. In addition, work has resumed, especially where governmental projects are concerned, to meet the scheduled deadlines, while prioritizing the safety of workers involved.
Invest-Gate meets up with a number of Egypt’s currently active players across the private sector to get their insights on the market and how this global crisis affected their businesses, while reflecting on the strategies they have adopted to overcome this unprecedented time.
COVID-19 Effect on Real Estate Business
Homebuyers are in a wait-and-see mode with limited movement and spending cautiousness when it comes to future investments. With Cityscape being postponed as well, “Like all businesses, we are facing challenges, but our priority was to protect our workers and employees. Right before the crisis, we were preparing for Cityscape Egypt Exhibition with huge marketing campaigns and competitive offers; postponing all of this has impacted our sales levels,” The Land Developers CCO Ashraf El Safoury explains.
With Cityscape 2020 being rescheduled for June depending on the pandemic development, sales nowadays have been pretty slow if not non-existent. “The coronavirus has had a negative impact on the real estate sector,” says Rooya Group Deputy CEO- Commercial Nermine Koraitam. Rooya Group, also, witnesses a slowdown in sales, high percentage of default payments of due installments, and slowdown in construction due to the fear of the pandemic spread especially among on-site workers.
“Business is slow,” states Emaar Misr Project Manager Moataz Mady. The coronavirus impact has reached sales all of Emaar Misr projects, namely Mivida, Uptown Cairo, Cairo Gate, and Marassi. “Sales of those projects have been affected,” Mady confirms.
Sharing the same circumstances, Misr Italia Properties CEO Mohamed Hany El Assal adds that construction is another challenge the developer is facing. “As a sector, most are faced up with the difficulty of keeping up with the construction timeline due to the limited number of the workers and the working hours following the curfew decision,” he says. Yet, because of the fact that the current situation the world is facing is unprecedented, there are no set or rules or guidelines, leading all market players to a serious crisis management. “We are closely monitoring how the market is changing and we have started working on different business plans fitting different anticipated scenarios,” El Assal elaborates.
At Akam Developments, too, sales have been down. Akam Developments Sales Director Mohamed Amer shares with Invest-Gate their current situation. He says, “Sales got affected not only at Akam but throughout the industry all over the world… especially now in Egypt following the cash withdrawal limit of EGP 10k as stated by the Central Bank.”
To help save Egypt’s investment climate under the coronavirus outbreak, the Central Bank of Egypt has imposed a number of initiatives back in March like limiting the daily cash withdrawal to EGP 10k and also postponing all due installments of loans across all industries with reduced interest rates. Mountain View Chairman Amr Soliman believes, “The recent decisions issued by the Egyptian government offered the industry a true opportunity to withstand the current hardship.” Therefore, Mountain View, with CBE’s decision to reduce the interest rate, as well as, the company’s policy, is able to reach its target by providing flexible offers and installment plans. “Our team is currently focused on reading the market and remaining flexible to be able to navigate through the current events,” he explains.
Furthermore, hopes of exporting real estate were hit hard at the company. Akam Developments Marketing Manager Omar Shawkat elaborates, “We have no presence abroad, due to the lack of exhibitions, which amounted to 46% of our 2019 sales transactions.”
Marseilia Group has, also, seen some impact on its sales volumes. “Certainly, sales were affected at the end of the first quarter and the beginning of the second quarter of the fiscal year due to the repercussions of the new Coronavirus,” Marseilia Group Chairman Sherif Heliw says. However, the group was able to maintain the average volume throughout January and February. “We achieved unexpected sales with its Golden Yard project in the New Capital,” Heliw confirms.
At Castle Development, there has been an expected impact on sales in response to the outbreak and there has been a decline; however, Castle Development Sales Manager Ahmed Amr comments, “I believe that projects at the New Administrative Capital will be the least affected in the market, since it stands as one of the top destinations for investment even during times of uncertainty.”
To some other developers the job is easier that what it seems; according to Tabarak Developments CEO Ali El-Shorbany, middle- income housing has not witnessed much of an impact. “Interestingly, not all asset classes in real estate are impacted the same way. Middle income housing, of which we possess a number of projects such as Capital East- although somewhat slower- continues to sell,” he states. Tabarak’s A class projects like 90 Avenue are moving from a snail pace to standstill, “which is expected,” he comments. Tabarak Holding confirms the safety of its workers and employees is not to be compromised at all costs, yet the developer confirms that construction plan is ongoing as is. “We consider ourselves relatively lucky since part of our strategy has always been a focus on cash management principles and diversification of risk measures, which allow us to continue operations as normal,” El- Shorbany says.
Committed to their clients and their needs, Iwan Developments CEO Waleed Mokhtar assures, “We are strongly committed to keeping our promises to our clients, as we have been working to ensure the timely delivery of our recently launched project, Majada, as its construction process has been in good pace and in alignment with the previously set schedule.” However, the real estate developer also believes that the time is challenging for real estate and never experienced before. “Despite it causing an economic slowdown, even in the real estate market, with the cancellation of major international and local conferences and events, we are working to mitigate its impact on our business while protecting our employees and workers through taking all necessary precautions.”
The Land Developers are in a crisis management mode, as its CCO Ashraf Safoury says, “We are working on a risk mitigation plan, which will be followed by a business continuity plan, because companies that succeed in managing this crisis proactively will be able to rebound quickly. “We have set-up a team tasked with collecting and analyzing information, and developing scenarios, followed by recommendations to determine the possible courses of action, and all the options and procedures necessary for the coming period,” he explains.
Landmark Sabbour is yet another real estate developing company that has seen some impact on its sales and currently being developed projects. Landmark Sabbour CSO Mohamed Sultan says, “COVID-19 has taken on our sales volumes.” “Yet it is so far manageable and under control,” he confirms, assuring that work on all construction sites is ongoing. “In our case, it is maintaining the health and safety of all employees while ensuring we move forward according to our construction plans and deliver on time,” he states.
“Surviving reflexes for real estate companies consist today in staying alert and mobilized, maintaining customer relationships, and preparing the rebound,” believes TAMEER Managing Director Antoine El Khoury.