-reported in Arabic by Shaimaa Ibrahim
When COVID-19 hit the demand spectrum, inevitably altering consumer behavior and market trends, the real estate sector stood the test of time. The outbreak, however, has forced and forged the emergence of new innovative tools that helped in shaping the current real estate scene. Digital transformation was at the forefront of that change, for not only has it helped in maintaining demand, but rather accelerating it to unprecedented limits.
Real estate developers talk to Invest-Gate about the sector’s recovery on operational and financial levels during the second half of 2020. They shed light on the driving forces behind the burgeoning rise in real estate demand, on top of which is digitalization. In addition, they delve into what they consider a safety net for investments in these turbulent times.
The return of Cityscape marked the rise in demand for property, which essentially achieves the goals of both real estate developers and customers alike. Speaking of the increase in real estate sales in the second half of 2020, Senior Vice President of Badya Development, Palm Hills Developments, Ahmed Atallah, stresses that it contributed in pushing the economic wheel; Cityscape was the first thrust in that direction. Competition between developers led to a diversification of projects in different regions and payment systems, he says, adding that the Central Bank’s decision to reduce the interest rate in the second half of 2020 helped increase the purchasing power of customers.
Mohamed El-Mikawi, CEO of City Edge Developments, attributes the sector’s high demand during the second half of 2020 to the government’s robust decisions in combating COVID-19, explaining, “Real estate financing initiatives have a big role in the rise in demand, in addition to the customers’ belief in the sector’s efficacy and as of one of the main investment vehicles. Besides, it is the main sector that achieved economic growth [in this period].” Mikawi adds that as the government continued construction works of its various projects during the pandemic, it paved the way for companies to persist in finishing their projects as well and delivering them on time.
Inertia’s CEO Ahmed El Adawy says that the real estate market has been volatile since the emergence of the COVID-19 crisis, but this situation swiftly changed during the second half of 2020. Reducing costs have also encouraged investors to buy, which will support the real estate market in 2021, the CEO affirms. On the other hand, Iwan Developments’ CEO Waleed Mokhtar thinks that this high demand in the sector is due to the accumulation of demand for real estate units during lockdown. As customers’ lifestyle changes, their needs also change, he explains. These new patterns directly affect everything from the residential and administrative units to the designs that customers choose, he further elaborates.
Mokhtar points out, “With the gradual opening and the well-timed pace of work, we witnessed recovery on the financial and operational levels. The re-convening of real estate exhibitions such as Cityscape Egypt 2020 also contributed to raising the demand as a large number of deals were sealed off with attractive offers between developers and buyers.”
On the other hand, Sherif Heliw, Chairman of Marseilia Group, states that the reason behind the high demand in the second half of 2020 is investors’ urge to “protect their financial resources amidst COVID-19,” noting that a blow to the real estate market will automatically affect their investments, which led to the creation of “a forced demand rather than a realized one.”
In the same context, Amr Soliman, Chairman of Mountain View, explains that the indirect factors that led to the increase in demand are the government’s completion of various projects during the pandemic, leading real estate companies to follow suit. This boosted customer confidence in the market and its ability to overcome crises.
As for the direct factor, Soliman elaborates that the gradual returning back to normal in the second half of 2020 played a big role in increasing the real estate demand once more. With customers seeing the ability of the real estate sector to overcome crises, they are pumping investment in the Egyptian market as a safe haven to preserve their money in light of this pandemic.
A Safety Net
As a result of the growing confidence in the real estate market, Mikawi reckons that this assured customers that real estate is indeed a safety net for their investments, which in turn greatly pushes the demand even more. According to Mikawi, as a form of investment, real estate demand is currently second to none since banks decided to lower their interest rates, stimulating developers to increase credit terms for buyers, which pushes demand even further.
In essence, there is a general consensus from all experts that real estate is currently the safest bet in the world of investments. According to Marseilia Group’s Chairman Heliw, after the first wave of this pandemic, investors started to realize that the real estate sector is the safest bet at present, which explains the increase in real estate demand in the second half of 2020. Inertia’s CEO Adawy also thinks that the real estate sector is a safe haven for investment, especially after the interest rates of banks fell dramatically. This led to the injection of more investments in the real estate sector thanks to the amendments of the laws and regulations related to the ownership of real estate.
In this regard, the Senior Vice President Atallah says, “With the exceptional circumstances that the country is going through as a result of COVID-19, the customers’ need to invest in the real estate sector, which is one of the basic assets, has increased. [It is] the safe haven for investment.”
Pushing Forward with Digitalization
As the pandemic accelerated digital transformation, City Edge Development’s Mikawi stressed that the sales process is becoming increasingly reliant on digital solutions. For instance, online meetings, which were placed as part of the precautionary measures, contributed greatly in the sector’s sustainability, exceptional performance, and overcoming the crisis.
Iwan Development’s CEO Mokhtar states that the application of digital solutions in the real estate sector; “enabled developers to identify supply and demand trends and provide data and information on the real estate market in general and products, in particular. In addition, promoting and facilitating the supply of real estate products by interacting with customers and making deals virtually during the lockdown, contributed to a significant recovery in demand in the second half of 2020,” he says.
Meanwhile, Mountain View’s Soliman emphasizes that “technology is one of the important factors contributing to the continuation of the sales movement of real estate companies. Despite the negative impact of the pandemic on the sector in general, it [technology] has accelerated the process of digital transformation, especially with regard to the sale process.”
Adawy actually believes that real estate developers are leveraging the crisis in utilizing technology to market their products on their websites and official social media pages. The most important characteristic of these means is to provide the customer with the opportunity of having a virtual tour within the projects, he indicates.
More importantly, El Adawy says, “E-marketing has given developers the opportunity to analyze data and information related to customers, with the aim of identifying supply and demand trends in terms of the required spaces, purchasing capabilities and the activities concerned.”
With regard to the role of technological means in increasing demand during the half of the year of 2020, Atallah comments that it “contributed positively to all economic sectors and facilitated buying and selling methods. Many developers also launched electronic platforms to display their products via virtual tours to see the advantages of projects and units.” To illustrate, the Senior VP points out that Palm Hills Developments is one of the first companies that took the initiative to use electronic means to activate their sales, adding that “electronic systems have been developed to display our projects with all their features in line with the state’s precautionary measures to confront the pandemic.”
According to Chairman of Marseilia Group Heliw, it is “the change in the marketing mechanism.” This epidemic has led to a change in the approach of marketing mechanisms for real estate units, especially the reliance of most companies on technological means and telemarketing techniques, noting that “e-marketing and selling through electronic platforms is the winning horse during 2020, and the penetration of technological means to the real estate sector during a crisis COVID-19 was a major market catalyst during that period,” he comments.
Heliw emphasizes that the diversity of electronic communication methods with target customers, whether through targeted campaigns or virtual real estate exhibitions, provided the opportunity for target customers and investors to safely invest in real estate to support the economy and revitalize the Egyptian real estate market, which represents one of the most important moving arms of the national economy.
In the end, the real estate market has indeed been afflicted, but the coping mechanism of the leading experts of this sector is setting new trends and paving the way to a world of opportunities and substantial growth.