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Invest-Gate continues its series of events during 2023 with a new roundtable highlighting the importance of real estate funds as an effective investment mechanism to support the Egyptian real estate market, in order to overcome the current crises. Under the title “Real Estate Funds: Unlocking Investment Opportunities”, the new roundtable is set to be held on Sunday, 11 June 2023.

The roundtable will include discussions over the obstacles hindering the establishment of real estate funds in Egypt, as well as key legislative proposals that would stimulate investment in real estate funds. The event will also shed light on the significance of cooperation among the government, real estate developers, and the banking sector to popularize real estate investment funds in Egypt, as an investment option, to tap into the unprecedented urban growth that Egypt is currently witnessing.

Real estate funds are one of the most prominent investment tools in many countries around the world, with investments amounting to trillions of dollars. Recently, there have been several calls for establishing a culture of real estate investment funds in Egypt, as for several years there has been only one real estate investment fund traded on the Egyptian Stock Exchange, which is the Egyptians Real Estate Investment Fund. In December 2022, Banque Misr, in partnership with Banque du Caire, Misr Insurance Holding, and Allianz Egypt, launched the Real Estate Investment Fund 1.

POINTS OF DISCUSSION

OBSTACLES OF ESTABLISHMENT

Lack of awareness of the importance of this investment tool for Egypt’s real estate sector.
The complication of foundation procedures and high costs thereof.
Tax environment, as the Egyptian market imposes an income tax and a distribution tax on proceeds of real estate funds.

LEGISLATIVE ENVIRONMENT

Developing more incentives for all parties working within the real estate sector.
Supporting investors by providing exemptions on income or distributions tax.
Setting a binding clause for real estate funds to
distribute determined percentages of profits.
Granting tax incentives on distributions of real estate funds.
Reconsidering the bases of tax calculation for real
estate to attract local and foreign investments.
Studying tools of attracting foreign real estate funds.

GOVERNMENT’S ROLE

The government shall adopt facilities to increase the number of real estate funds in order to maximize real estate investment opportunities.
The government is working on drafting the final version of a number of proposed amendments to rules governing real estate funds.
The increasing demand for the Egyptian real estate and the state’s efforts to implement new cities will have a role in stimulating the establishment of real estate investment funds.
There are claims for the government to speed up tax facilitations.
Issuing legislations that stimulate investment in real estate funds.

BANKING SECTOR & LIQUIDITY PROVISION

Investing in real estate funds adds more security to the sector as it relies on diversifying its investments.
Banks should support these funds based on their investment strategies, especially given the abundance of real estate assets.
Investing in real estate funds is an excellent opportunity for
banks to enter the real estate sector, as this might be a viable solution to the financing and liquidity problems facing developers, which will help them expanding their business volume.
Participation of government banks provides a safety
factor, particularly with the state’s intention to amend
legislation related to real estate investment funds.