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Monday, 24 September 2018

How state luxury housing projects affect Egypt's real estate market

The Ministry of Housing is moving into the luxury housing market, pushing up the prices of public-sector housing units and leaving the private sector in disarray

Safeya Mounir , Thursday 12 Jul 2018
Dar Misr
Dar Misr project
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The Ministry of Housing, Utilities and Urban Development is expanding its projects to include more luxury residential housing units.

Ministry spokesman Hani Younis told Al-Ahram Weekly that the ministry “has modified the specifications of the third phase of the Dar Misr project, expected to be on the market soon, to meet deluxe standards.

The new housing units will offer entertainment options such as swimming pools and club houses in each compound.”

The ministry’s Sakan Misr project will be confined to middle-income units, while the Dar Misr project in 6 October City will be reserved for more luxurious housing, Younis said.

“The modifications will include the overall design of the project. The Dar Misr project will house an artificial lake, for example,” said Walid Abbas, assistant to the housing minister for urban community affairs.

The name of the project may also change, according to Abbas, although a substitute has not been picked. “The regular outer finishing of the units will be maintained, but the interior finishing will be more luxurious to turn the Dar Misr project into a deluxe housing project,” he added.

“The units will still be offered for less than those built by the private sector,” Younis said.

Dar Misr offers units ranging between 100 and 150 square metres. It seeks to emulate housing compounds built by the private sector in terms of amenities.

“The fact that the government is now competing with the private sector in the luxury housing market will negatively affect private-sector companies. The government’s role should be to focus on limited-income residential units,” commented Alaa Fekri, chairman of Beta Egypt for Urban Development.

Dar Misr is being constructed by the Ministry of Housing in cooperation with the Armed Forces Engineering Authority. The project’s first and second phases included 56,000 residential units that have all been sold. Units in the third phase are expected to reach almost 16,000.

“Demand in the market is still high, but purchasing power decreased dramatically after the floatation of the pound in November 2016. The units currently on offer are not affordable for many people,” Fekri said.

The prices of units at Dar Misr in its initial phases were cheaper than those offered by the private sector by 30 to 40 per cent, Younis said in earlier statements.

“The Ministry of Housing is trying to support the middle-income stratum of society that is the pillar of the community,” he stated.

The new prices of the Dar Misr units have been circulating on social media over the past few days.

In New Cairo, a square metre costs LE9,700, in the 6 October Sheikh Zayed development LE10,100, in Obour and Shorouk LE7,400, in Minya LE5,650 and in Damietta LE9,080.

Younis denied these figures. However, a leaflet issued by the Urban Development Authority’s Commercial and Real Estate Sector on 12 June gave the same figures circulated on social media.

“At these prices the units could cost more than LE1 million for the smallest units in some areas,” complained Nahed Salah, a government employee who was hoping her newly graduated son could acquire a unit.

Although payment terms could be better than in the private sector, the higher prices would still mean bigger installments which would make the units inaccessible to many, she said.

Previous phases of the projects had seen units selling for much lower prices.

In late 2014, the ministry offered around 32,000 residential units in the first phase of the Dar Misr project for middle-income housing in eight cities.

Prices published for a square metre were LE3,900 to LE4,250 in New Cairo, LE2,550 in Sadat City, LE2,700 in 10 Ramadan city, LE2,550 in Badr, LE3,700 in New Damietta, LE3,100 in Shorouk, LE3,400 in 6 October City and LE2,900 in Obour.

In 2015, second-phase units were announced in 12 cities — 6 October, Sheikh Zayed, New Cairo, Shorouk, Obour, Badr, 10 Ramadan, New Damietta, Sadat, New Minya, New Borg Al-Arab and 15 May.

A square metre was priced from LE4,100 in New Cairo to LE2,800 in 10 Ramadan city.

*A version of this article appears in print in the 12 July 2018 edition of Al-Ahram Weekly under the headline: Promoting luxury housing 

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