During a roundtable held by Invest-Gate on Sunday under the title "Real Estate Funds: Unlocking Investment Opportunities," Egyptian real estate experts and executives at leading development companies in the market highlighted the importance of this type of funds for the real estate sector, which contributes 20 percent to Egypt's GDP.
Real estate experts shed light on the role of these funds in collecting financings to decrease the liquidity shortage facing many developers in the Egyptian market.
Recently, there have been several calls for establishing a culture of real estate investment funds in Egypt. For several years there has been only one real estate investment fund traded on the Egyptian Exchange, which is the Egyptian Real Estate Investment Fund.
In December 2022, another fund was launched by Banque Misr in partnership with Banque du Caire, Misr Insurance Holding, and Allianz Insurance, under the name Misr Real Estate Investment Fund.
Real estate investment funds enable big and small investors to invest in different projects and obtain profits according to their level of participation in the investment. Usually, the profitability is reflected in the medium or long term.
Measures in Egypt
"Real estate investment funds attract different entities to the Egyptian market. These types of funds enable citizens to own shares in properties. From 2007 to 2020, legislation was drafted for real estate investment funds, which hadn’t been considered legal entities until 2024," said Sally George, head of the Mutual Funds Department at the Financial Regulatory Authority (FRA).
Meanwhile, Alaa Wally, advisor to Egyptian Exchange chairman, said: "EGX is fully ready to support real estate investment funds and help investors. These funds are a big opportunity for small investors, as they enable them to invest small amounts. Real estate investment funds also allow developers to secure liquidity at a lower cost.”
Boosting Egypt's real estate export
During the event, real estate experts agreed on the role of real estate investment funds in aiding the efforts taken by the Egyptian government to attract more foreign investments in the real estate sector.
"Egypt needs to amend some legislation to facilitate the establishment of real estate investment funds, which has returns ranging from five to 10 percent. These funds will help non-residential investments, including educational, commercial, and medical projects. Real estate investment funds will also support Egypt’s property exports," said Ahmed Shalaby, president and CEO of Tatweer Misr and chairman of the Egyptian Real Estate Council.
In mid-May, the restructured Supreme Council for Investment authorized 22 decisions aimed at promoting foreign direct investments (FDIs) and private investments in Egypt.
The New Urban Communities Authority (NUCA) authorized a range of benefits and incentives for investment projects in new cities, particularly with regard to land utilization.
Prime Minister Mostafa Madbouly has recently announced that foreigners will be permitted to own property in Egypt without restrictions, subject to specific regulations.
The roundtable concluded with a set of recommendations for the Egyptian government to consider to facilitate the establishment of real estate investment funds.
The recommendations included launching indices for real estate transactions to show the performance of the market, founding an authority to oversee and coordinate operations among real estate investment funds, and offering tax exemptions.
"We should use models that have been implemented abroad with regard to different real estate investment funds. There are already investment funds in Egypt, but they aren’t registered and are operating under what are called ‘parallel funds. Facilitating the establishment of real estate investment funds in Egypt will achieve balance in the market," Abdallah Sallam, Madinet Masr's president and CEO, said.
"Real estate investment funds in Egypt need information to achieve their expected results. Establishment procedures take a long time and this needs to change. Obstacles facing real estate investment funds in Egypt should be resolved," Nader Khozam, Ilcazar Developments chairman & CEO, suggested.
Olena Shyrokova, president of the Ukrainian Business Council UAE, stressed the need for legislative reforms and more involvement of the private sector to give a push to the Egyptian real estate sector.
Invest-Gate is a print and online information platform providing a key source of news and information concerning the real estate market in Egypt. The real estate platform organizes a group of events yearly regarding key development in the Egyptian real estate market.