Is NAC the Winning Bet to Attract Gulf Investments?

Is NAC the Winning Bet to Attract Gulf Investments?

With the continued expansion of the Egyptian economy, the government proposes many mega projects, with intentions to promote their projects in various international forums held inside and outside Egypt. Investors are eyeing these opportunities.

Recently, the most prominent foreign investments came from the GCC, including sealing deals in various sectors. GCC companies pumped more investments into several fields, with the non-oil sector having the lion’s share.

According to data released by the Egyptian Cabinet, foreign direct investment (FDI) in Egypt’s non-oil sectors soared 81.3% YoY to $11.6 bn by the end of the FY 2021/2022, the highest rate in 10 years. The volume of real estate purchases from non-residents reached $970 mn, accounting for 9% of net FDIs in the country.

With the launch of the New Administrative Capital 7 years ago, the attention of investors, whether specialized in the real estate sector or other sectors, turned to the mega project. It also succeeded in attracting investments from major Gulf real estate companies. However, experts think that the Egyptian state still has huge opportunities to increase the volume of these investments.

Unambitious Investments

Ashraf Dowidar, a real estate developer, states that NAC succeeded in attracting more Gulf investments to the Egyptian real estate sector, including investments from some Emirati and Saudi companies. He adds that these companies concluded deals and mergers with Egyptian companies to take advantage of the growing opportunities in the Egyptian market in general, not just those in the new capital.

Nevertheless, Dowidar stresses that it is necessary to increase the volume of Gulf investments in NAC, adding that these investments are limited to some major entities that are familiar with the Egyptian market, while the rest of the medium and small-sized companies are awaiting the success of the experiment, which may constitute an incentive to pump more investments into new cities.

Dowidar points out that the Egyptian market is suitable for those companies due to its ability to achieve returns in the long term, noting that the devaluation of the Egyptian pound against the USD increased the appetite of foreign investors to buy real estate in Egypt, which guarantees more returns compared to USD-valued units.

In turn, Hassan Ibrahim, a real estate development expert, confirms that NAC had a major role in increasing Gulf investment in the Egyptian real estate sector. He elaborates that some major entities entered the market and achieved gains, but the size of their investments still needs boosting, given that the real estate market in the GCC has become competitive and is based on international standards.

In a similar vein, Mohammed Al-Bostni, Chairman of Al Bustani Real Estate Development, and Head of the New Cairo and the New Administrative Capital Developers Association, expects the rate of Gulf investment in the Egyptian real estate sector to increase in the coming period, especially with the promotional visits by Egyptian delegates to those countries, including visits by President Abdel Fattah El-Sisi.

Do We Need More Facilities?

Dowidar reveals that there are proposals to offer more facilities to investors by providing citizenship in exchange for real estate ownership with values determined by the state, adding that there are no clear mechanisms for implementation.

He goes on to indicate that Gulf investors do not need to own real estate in Egypt in order to obtain citizenship to facilitate their investments, as they are able to move and invest easily in the Egyptian market. Therefore, Dowidar adds, we need new mechanisms capable of increasing inflows from GCC in the real estate sector.

Furthermore, Dowidar highlights that the Egyptian real estate sector is not isolated from the economy in general, which must be attractive to investors, in order for us to be on the map of investors from all over the world, not just the GCC. He elaborates that this could be done through several methods, including accelerating and resolving economic disputes, reducing bureaucracy, overcoming obstacles, and stabilizing land prices for about 5 years.

Dowidar indicates that NAC has huge investment opportunities in various fields and that there are many lands that have not yet been allocated. He explains that the efforts of the state and President El-Sisi, in particular, the new capital is having all the ingredients to be the starting point in achieving this vision to be a centre and outlet for a global investment of various nationalities. Dowidar calls for need for quick action in that regard to maintain the competitiveness of the Egyptian real estate market among the countries of the region, especially with the huge projects that are taking place in the Kingdom of Saudi Arabia and the financing opportunities provided by it.

On the other hand, Ibrahim stresses the need for the development of infrastructure projects to attract more investments, and the legalization of sales and leasing methods in the capital through accurate descriptions of the buildings offered for sale for the better ordering of the market, to keep pace with developments across the globe.

Ibrahim refers to the need for legislative facilities and the application of the real estate development law to enable companies to retain part of the capital to protect their investors, adding that the real estate brokerage sector needs to be included in the real estate development law to add security to whom are trading real estate.

Ibrahim maintains that there is also a need for representation at exhibitions organized by the state for showcasing available investment opportunities and capabilities offered by NAC, as well as developing investment mechanisms to be more attractive.

Fruits of the Facilities

In another context, Al-Bustani states that the real estate sector does not lack facilities in Egypt, as there are many facilities, such as offering lands to investors in instalments in distinct locations, and the New Urban Communities Authority’s initiative to offer lands for early allocation to foreign investments.

Regarding the recently announced mechanism offering citizenship to property buyers, Al-Bustani notes that the decision contributes to increasing the rates of real estate export, which is considered attractive because it is one of the lowest in the region. The decision, he adds, also supports the real estate sector as one of the most important sources of foreign currency in Egypt, amid the urban boom that the country is currently witnessing.

Al-Bustani remarks that although sales were affected in the previous period due to economic fluctuations, sales are expected to improve in the coming period, as NAC receives more interest with the transfer of part of the government bodies to it.

In conclusion, real estate experts agree on the important role of new capital in attracting more global and Gulf investments in particular. The experts also enumerate mechanisms that may contribute to overcoming the obstacles facing investors in general, in order to maintain the competitiveness of the Egyptian real estate sector.


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