Aiming to explore new trends, ideas, and what is on offer in the Egyptian real estate market, Invest-Gate sits with the visionary The Waterway CEO Hossam Hassan, who moved from real estate marketing – for Lake View and Downtown, to name a few – to developing his first “Boutique Compound” as he calls it. The Waterway is a new, uplifting project, featuring an integrated community and residential apartments in New Cairo. It will hit the northern shores of Egypt soon. Hassan shares his gem of a creation and opinions concerning the current selling points of Egypt’s property market today.
How do you view the investment climate in the real estate market today?
The problem in Egypt lies in the absence of firm rules and regulations, or a proper system to be strictly followed. Even when the government sets its laws, it is the exception that usually rules. In Egypt, some investors get away with everything; in the end we see that the bad outshines the good by selling dreams and not reality. You find them selling more facilities on very “unrealistic” long-term payment methods, including zero down-payments, whereas the good sticks to the surrounding environment and tries to make it better, considering the expenses and costs of today given the current state of the Egyptian economy.
What do you mean exactly?
How can you generate business with ten-year instalment plans and a zero present value given the country’s inflation rates and the EGP float that affected prices of daily expenses, let alone construction materials in the property market! So, how can you pursue business, when you come out losing and not gaining!
Today, no one can anticipate next year’s prices. No one can guess the uptick to costs of commodities and services, including electricity, water, food, and transportation, let alone property.
The problem with real estate today is that people seek to invest rather than buy homes, fearing the perpetually decreasing value of the local currency. Most of them even buy properties just because of the easy payment plans on offer. Despite their inability to afford the entire amount of the property, they choose to pay a down-payment today and continue on installments, thinking that after a year or so they will still be able to sell their units at a profit without bearing in mind the consequences should this unaffordable unit remain unsold, leaving them in debt.
Another major problem we face today is the fact that almost 90% of those with purchasing power are legally uneducated. They come in to sign 40-page contracts they do not even read; and if so, they ignore the fine print. This presents a problem with the developing company, where the consumer loses their rights as a homeowner. Unfortunately, most developers today bet on this fact. They sell dreams and misguide people; buyers fall for the bait. Not only that, but given the market drop as well, buyers find developers extending payment plans to attract new buyers and they succeed. So, why would they go for a resale when the developer himself is offering new units with flexible payment plans!
How long will this trend continue for?
I expect this phenomenon to gain traction in the upcoming period since developers now understand and bet on the psychological aspect of purchasing power. I hear that those mythical plans have increased to 12 years, which I find unreasonable.
Since developers today follow such new selling strategies, they fail to meet their deadlines and deliver projects on time, leaving serious buyers grappling – as the value of the property maximizes – between whether to sell their unit (on the secondary market) or wait on the developer. Mind you, most contracts do not give rights to owners if the developer fails to do so. This is another problem that needs to be looked at since there is no law that protects the end buyer.
How do you see this phenomenon or trend coming to an end?
The problem lies mostly on the fact that the government does not restrict developers or contractors. The law clearly states that no developer is to announce the launch of a project or market units without the following:
Firstly, the approval of New Urban Communities Authority (NUCA) on all project designs, including units, infrastructure, and landscape, and the installment of a foundation base for the building project to prove seriousness.
Secondly, the opening of an official bank account of all bought properties.
Still, some find ways to launch projects and sell units without fulfilling these requirements. We see that they fall into trouble after some time. It is unfortunate that the local is the one suffering at the end. Exceptions must end and the law must be enforced in order to combat this trend and save the sector. This takes me back to the first factor causing the problem, which is that Egyptians do not have proper knowledge in regards to real estate investment.
The Waterway is different than any other project across Cairo and was delivered in a very short amount of time. How did you make this happen? What makes it so special?
We were and continue to be serious in the market. We follow the law religiously. We started back in 2011. Of course, after the government’s design approval, we installed the project’s foundation and we did not market it until the base was ready. We only marketed the units afterwards as the law indicates.
Aside from the legality of The Waterway, our main objective is our renovated vision of urban living in Egypt and how we place ourselves in the market. We chose to supply the market with a modern, communal living area on a small, fully-integrated, and equipped piece of land instead of competing with others on mass projects.
We sought a design consultancy firm in the USA and another in Singapore for our landscape to present a picture-perfect compound matching our initial design sketches. We gave those designs to Egyptian consultants, including Engineer Raef Fahmy, Engineer Mahmoud Hussein, and Professor Hatem Gheith to transform our vision and the western designs, fitting Egyptian nature and lifestyle.
To our privilege, we started when the Egyptian uprising took place, when most renowned developers put their projects on hold or fled the country, fearing what the future could bring. This made way for us to be present in the market. My main goal was to present to my clients the exact same picture they saw in the brochure, including the layout, landscape, paint, fountains, gardens, even lightshades. Everything you saw in picture was to be converted to reality, unlike most companies today, who choose to sell off-plan projects. The Waterway awaited realistic implementation of its designs as we aimed to meet the criteria we publicized.
The Waterway is also special in terms of its community. It is a small compound, as I said, and we were very selective with the clientele, to whom we marketed.
What do you mean?
Offers for investment purchases of many units or entire buildings were refused. We do not and will not sell more than two units to a single buyer. We do not want it to go commercial, or for us lose grip on the standard we provide. It is a boutique compound of 600 units in total. Other projects may be cheaper to purchase, but we seek perfection and value for the money you pay. This is how special The Waterway is, in my opinion. We unify the look of the entire compound and set rules for all residences, including the lighting of the terraces, garbage baskets, and doormats, to name a few. This is how we got involved into the details of modern living, ensuring that the compound image remains in line with our vision.
We successfully sold 70% of the project and the remaining 30% are to be sold to an (undisclosed) international entity. They chose us and not other – big name – companies in the market because of our concept, which we stick to and eagerly continue to serve.
What is in the pipeline for The Waterway?
We are currently awaiting official approval for our next project in the North Coast on a -60 feddan- land plot. The designs and vision are ready, but we are awaiting approval to begin with the foundation. The project follows our start here in Cairo. It is also a small beach home compound of maximum 600 fully-finished seaview chalets and villas in proximity to Cairo via the new Dabaa’ Road that is being constructed today. The Waterway North Coast will be finished and delivered within two years.
I am not to extend the project. I want it a small “boutique” as I dream. We will be, again, selective in our clientele and seek to provide all residences with the beach life of Egypt of the past such as Aida in Alexandria and Ras El Bar, for example. We want to revive the beauty of Egypt’s shores as in the past.
How do you see the future of the North Coast? Could it be open year-round and compete with those of Europe?
We have everything. Our hotels are better and our beaches are, by far, the best, but we need a modern strategy and for the law to actually be enforced. We could be better than Nice in France, Monaco, and Ibiza in Spain and compete with other international touristic destinations only if legislation is applied and we stick to development plans no matter how long they take. We need laws, a vision, a strategy, and persistence. I believe that the new generation is capable of making this dream come true.
Stay tuned for more on The Waterway North Coast in our next “North Coast Special” issue…