With the fast spread of the coronavirus (COVID-19) across the world, business opportunities in this critical time have become doubtful, especially in Egypt. Governments, businesses and communities are facing up to the reality of COVID-19. The short-term impacts on economic growth, business activity and individual behaviour are undeniable and, while the current consensus is for a rebound in the global economy in H2 2020, the exact trajectory is unknowable. Without a doubt, and as experts across the world state, this pandemic virus will hit world economies hard.  The exact direction of the outbreak and the resulting economic effect is inconceivable.

The World Economic Forum predicts an annual loss of 0.7% of global GDP, “would cause average annual economic losses of 0.7% of global GDP over the coming decades,” says WEF on March 3, 2020. “The #coronavirus outbreak could cost the global economy up to $2 trillion this year,” stated the United Nations and called on governments to take urgent steps to reduce the economic impact, back on March 9, 2020. But is there light at the end of the tunnel? 

At this difficult time, we all seek comfort when moving into the unknown. Invest-Gate displays some hardships and some feasible business opportunities in the time of COVID-19 from the eyes of Egyptian experts.

 

The Egyptian Stock Market Affected

The tunnel might remain dark for the time being when it comes to the Egyptian Stock Market. The impact of COVID-19, as Ahmed Fouad, the financial market expert puts it, “is really bad on this sector.” Egyptian shares have plummeted due to the coronavirus, thus the stock market can’t function properly. “However, the government took some decisions to limit the losses by reducing stamp duty on the transactions, for instance,” he says.

Yet some believe that it might be a good time to buy stocks given the current low prices and that this might help to revitalize the market. On the other hand, “Yes, low prices may encourage purchase transactions, yet still we can’t say these are benefits because overall it means we have losses,” Fouad confirms. So what are Egypt’s alternatives?

 

Local Products and SCZone Might be An Option 

In Egypt, some potential major opportunities may arise. Despite the gloomy picture, some believe during the spread of this pandemic virus, it may be a good time for local products to flourish and create a ‘balance’. Economic expert, and the former Vice-Chairman of the Egyptian Stock Exchange (EGX) Mohsen Adel agrees and says, “The Egyptian market has the upper hand now.” Egyptian products are currently safer than Chinese products. He confirms, “With the US imposing sanctions on Chinese imports, Egyptian products can become exporters to the US, for example. However, it needs a proper promotion campaign for both production and export.”

Egypt’s location is another promising factor which the government can use to its advantage. “The current conditions lead to a restructuring of a map of the global supply chains, which was mainly based on China. Therefore it is possible for Egypt currently to take advantage of its strategic location, especially the Suez Canal Zone, in order to attract many Chinese and international companies looking for a new business hub,” Adel suggests. 

 

Can Egypt’s Real Estate Market Come to the Rescue Again?

In 2016, the real estate market boomed following the government’s harsh economic strategies after the devaluation of the Egyptian pound and it became the haven for all. 

Presently, and during the uncertain times of the Coronavirus in Egypt, some believe this industry is benefitting after its slowdown in 2018/19. Chairman of the Real Estate Development Chamber Tarek Shoukry tells Invest-Gate, “In times of turbulence people certainly resort to a safe haven, which is real estate and gold, as the stock and financial market become more volatile and unstable; thus this will be a good opportunity for this sector, which always surges in times of crisis.”

Landmark Sabbour Managing Director Amr Sultan states, “It is expected that during times of uncertainty buyers tend to adopt a wait-and-see attitude; however, efforts exerted by both developers and the government are projected to achieve a level of equilibrium.”

“The real estate market in Egypt won’t be affected on a large scale as the industry’s biggest share of sales is mainly led by local demand,” Hyde Park Developments CEO Eng. Amin Serag believes. “On an international and regional scale, the local industry in general is still taking its earliest steps toward real estate export. Therefore, expected slow demand will not have long-term impact on developers,” he says. 

Following the government’s recent incentives to save its economies and encourage investors back or keep them in by cutting the interest rate to 3%, Shoukry believes it to be better now for anyone to invest in properties instead of depositing in banks. “It is a wait and see game and nothing is guaranteed or known. As we approach the unknown everyday, we have nothing but to hope for the best and remaining safe,” he says.

Mountain View Chaiman Eng. Amr Soliman expresses, “The central bank’s recent decisions will certainly have long-term positive impact on the economy in general and the real-estate industry in particular. Due to the current state of uncertainty caused by the Coronavirus, reducing interest rates can encourage clients to further invest in real estate rather than saving their assets in the bank, consequently supporting the market through securing financial liquidity.”

This move deemed a sigh-of-relief for the real estate sector. Castle Development CEO Eng. Ahmed Mansour believes, “In order to maintain this momentum, the Central bank of Egypt cut interest rates by 3%, which I believe will have an immensely positive impact on the market’s dynamics. As developers, it provides us with the support we need to deliver on our promises to our customers, it also opens the door even wider for both Egyptian and non-Egyptian investors to turn to real estate as a sanctuary.”

Sharing the same belief, The Land Developers Chairman and Managing Director Ahmed El-Tayebi says, “A risk mitigation strategy should be prepared. Industry leaders must come up with a strategy for the sector’s sustainability in light of any challenges that we might face due to the impact of the pandemic crisis. The central bank’s decision to postpone loans installment payments for six month, and cut down interest rate was an excellent decision as it will lower financial pressure on the real estate industry and allow it to provide better payment plans and facilities, and also encourage people to take real estate loans due to lower interest rates.

SODIC CEO & Managing Director Magued Sherif gives the complete picture of SODIC’s activity during this time. He clarifies, “Given the nature of business and the fact that almost 95% of our production inputs are locally sourced, the risk of supply chain disruption is less of an issue than in other industries. In addition, the length of our delivery cycle of 3 years would allow us to catch up on disruptions in constructions without significant delays to clients.”

ALDAU Development Senior Commercial & Operations Director Mohamed Salem believes, “Rather than focusing on the short-term economic impact of COVID-19, the longer-term societal and real estate impacts should not be overlooked. With no doubt, after overcoming this pandemic it will revolutionize how we live, work & may potentially lead to new operational models.”

On a similar vein, ARDIC for Real Estate Development and Investment CEO Eng. Maged Salah says, “Real estate will always be a safe investment even during tough times and the initiative of the real estate development chamber is a good instance for how we are dealing with the situation.”

He clarifies the initiative saying, “It aims to support and revitalize the market by launching campaigns with attractive offers and flexible payment plans, allowing homebuyers to choose the units without visiting any exhibitions.” Salah stresses, “These actions show that the sector is and will pass this time, not to mention that real estate is the optimal investment alternative to others that are easily affected easily after crises.”

At Landmark Sabbour, according to Sultan, “as developers, we are getting creative as we put together a lineup of marketing plans that aim at reaching our target customers during these challenging times and providing them with better prices.” He elaborates, “The most effective method to face global challenges- such as this one- is made up of flexibility and prompt decision-making, which is why Landmark Sabbour will carry on with a specially-tailored alternative marketing plan to maintain its offers in order to drive sales and inch closer towards our targets.”

Also, Salem confirms, “All sectors across the globe have a social responsibility towards its stakeholders. In the real estate sector, that would be summarized in offering minimal down payments, flexible payment plans & waving interest for any delayed payments.”

Iwan Developments CEO Eng. Waleed Mokhtar confirms, “Currently, real estate developers are working to stimulate buying and selling rates, through offering clients various payment plans on units with the installment period starting from 5-8 years and reaching up to 10-12 years with 10% down-payment, while other companies decided to cancel the reservation fees, provided that there are fixed installments.” Now Iwan is progressing with its sales digitally. “We are working on promoting our new projects online, availing a variety of insights and payment plans options for our customers to choose from, We believe technology is the most adequate method for exhibiting and marketing real estate products regarding the present phase, and is foreseen to support many real estate marketing, promotion, and development in the future,” Mokhtar confirms.

Likewise, Misr Italia Properties CEO Eng. Mohamed Hany Al-Assal believes, “The sector might face minor harm, mostly cancellations of sector-related events or exhibitions as a precautionary measure to guarantee people’s safety.” “Times of crisis tend to increase the demand on real estate as it is considered as a secure investment in the Egyptian market especially in such harsh and uncertain circumstances,” he says.

While Akam Developments believes that the Egyptian real estate market is becoming safer for investment with promising profits, “the pandemic created a ripple effect on all businesses across all industries,” says Akam Developments Founder & COO Edrees Mohamed. 

“We at Castle Development have been working relentlessly to introduce plans that satisfy our target customers. Our marketing plans will continue as planned and we will commit to both the offers we were supposed to announce during the exhibition, as well as establishing a system that ensures optimum performance all around,” confirms Mansour. 

Tabarak Developments shares their method to overcome the current slowdown. “We provide a line of contact available to answer all our clients’ questions and queries, in addition to sending them a sales representative to their doorstep, equipped with mask and gloves as we care of the health of our clients and our employees as well. We are also urging our clients to use e-payment services when receiving installments, as we believe digital communication and payment methods are the best solution in the current scenario and would be the best method to utilize in the future,” explains CEO Tabarak Developments Ali El-Shorbany.

El Attal Holding group of companies are launching their to the end of the Month to allow customers a larger timeframe to purchase their residential, commercial and retail units while enjoying a discount and avoiding large gatherings, El Attal holding is extending their special offers for P ark Lane in the new capital over the next two weeks,” shares Ahmed El Attal, Chairman El Attal Holding as well.

Sherif tells Invest-Gate, “We remain confident in the growth opportunities in our market. The real estate industry in Egypt has a long track record for resilience in the face of global and local challenges on the back of the strong fundamentals that exist in the sector.”

Invest-Gate will continue to watch the market closely and provide you with the latest occurrences in the market and the Egyptian economy in general.