While the government announces plans to develop 20 new fourth generation cities, local homebuyers start to look for residences at these promising spots. As a result, developers compete to adjust their real estate products to cater to their clients’ needs across all phases, from their projects’ designs to the payment plans they offer.
Since youngsters have a significant impact on the property market’s dynamics, even though the purchasing power is highly centralized on the older segment, developers pay special attention to young buyers and seek to satisfy their rapidly changing demands.
In this regard, Invest-Gate interviews some young home buyers and professionals, trying to create a clear image of the powerful impact of this age group on changing the market’s dynamics and trends.
Eased Payment Plans Luring Yet Tricky
Young buyers’ purchase decision is affected by many factors and their preferences vary, yet they are mainly attracted to developers with the most eased payment plans. A poll conducted by Invest-Gate assessing the most successful techniques that developers adopt to attract young buyers showed that extended payment plans mark the most effective technique, gaining 48% of the overall votes, while other techniques like small-sized units and community integration were less favorable at 27% and 25%, respectively.
Maged Mahmoud Salama, a military officer, and his wife Nervine Abou Bakr, administrative personnel, tell Invest-Gate at the International Property Show (IPS), held in Cairo in January 2019, that an eased payment plan would be an important advantage and would add an extra value to the unit, while Amr Mostafa, a digital marketing executive, explains, “I am not ready to pay the unit’s entire sum all at once,” adding that unit sizes do not represent the main concern for him.
However, Sales Manager at Orientals for Urban Development (OUD) Ahmed Zaalouk sees:
The provision of facilitated payment plans is a complex strategy that new developers consider to lure buyers; such a strategy may negatively affect the company’s cash flow, and thus, trigger a delay in delivery times, while land plots may get withdrawn as a result.
Developers should not only focus on offering flexible payment plans, but they should also provide adequate facilities as well as successfully design integrated communities for they are effective techniques to attract home buyers.
On his part, Vice President at Edge Holding for Urban Development Nader Badr notes:
The current competition among developers enables clients to have a 360° view of the market and that’s why they consider all factors together and look for the best offers in terms of locations, payment, and facilities.
Other Factors Clients Look at
In some cases, several clients consider factors other than payment plans, starting from services and facilities to the units’ sizing and proximity to main roads. Nada Seliman, a public relations executive, points out that the number one priority is the surrounding facilities that range from basic services such as schools, hospitals, and shopping malls, to high-end and luxurious services such as sports clubs, accessible commercial areas, and even on-demand craftsmen for emergency cases.
Salama and his wife add that they are also looking for a unit that offers a good investment opportunity and a potential for price growth in the future, while providing a better life for them and their kids. As for their preferred locations, the couple say that “current givens show that the future will be in the New Administrative Capital (NAC).”
In the same context, Edge Holding’s Badr confirms:
“Clients are now paying more attention to the available surrounding facilities, including the nearest commercial spot and the accessibility to transportation lines.”
Meanwhile, OUD’s Zaalouk reckons:
“Clients are currently aware of everything going in the market and build their reasonable choices after acquiring a wide knowledge of every detail about the unit.”
Significant Shift in Units’ Size
Experts see that the buyers’ demands shift constantly, responding to the radical economic changes and rapid market moves. Young buyers now tend to buy smaller and lower-cost units mainly due to the highly growing prices of real estate.
OUD’s sales manager explains:
“Demand turns from A to B categories, with people looking for villas shifting their interest to townhouses, and people searching for townhouses are getting more interested in large apartments and so on,”
This shift can be attributed to the fact that housing prices are on the rise, while the young buyers’ income is not growing at the same pace. “Smart developers are currently developing their projects in line with the consumers’ needs by focusing on smaller-sized units,”
In this regard, Badr comments:
Buyers now ask for less expensive units with smaller sizes, clarifying that demand in the high-end category of all types of units decreasing in a significant way.
“Stand-alone villas that exceed EGP 6 mn are no longer needed, while villas that range between EGP 3 mn and EGP 4 mn achieve the highest sales rates, and the EGP 2 mn apartments are needed the most like never before,”
Generally speaking, it is seen that swinging young buyers’ preferences play a fundamental role in driving the major market trends, and since local demand accounts for a high percentage of the overall real estate market in Egypt, developers try to cater their projects accordingly, aiming to generate more revenues and take the lead in the Egyptian real estate sector.
Read more about this topic on pages no. 38,39 at our February issue.