Real estate exchange a potential game changer for Egyptian property market: Experts

Muhammed Khalid , Monday 30 Oct 2023

The Egyptian Exchange (EGX) is preparing to launch a real estate exchange within four months, which will boost the local market, encouraging small investors in the sector and offering a new financing tool for developers, according to experts and key executives who spoke to Ahram Online.

Depiction of a real Estes exchange.
Depiction of a real Estes exchange. Stock image.


“The real estate exchange will encourage small investors to get involved more in the market as it does not require a large amount of investment,” said Fathallah Fawzy, chairperson of the construction committee of the Egyptian Businessmen Association.

“Also, the real estate exchange will be a secure means of investments as it depends on properties that are already registered,” he added.

Fawzy noted that the new exchange will offer a new source of financing to developers.

A real estate exchange is when individuals or entities swap ownership of properties, typically for portfolio adjustments or location optimization, involving a mutually agreed-upon transfer of titles and often financial considerations.

Units that will be traded in the real estate exchange will be divided into a set of shares each determined based on certain square metres.

"A real estate exchange could enhance transparency in property transactions, boosting confidence and mitigating risks. It provides a central marketplace for trading properties, possibly encouraging greater investor participation,” said Tarek Eid, a member of the board of directors at El Riyad Castle real estate company.

"The exchange offers investors new ways to invest in properties through shares or the secondary market. This allows portfolios to be more diversified and returns more balanced. It may ease investor access to the market by facilitating direct share purchases. This gives investors opportunities to enhance liquidity and trade larger volumes,” he explained.

Eid noted that the exchange's presence could increase activity and competition, potentially reducing costs and risks associated with properties, adding that exchange frameworks allow investors to assess values based on supply and demand.

"However, success depends on attracting developers and investors. Strong regulations are needed to protect investor rights. Fluctuations in stock markets and their impact on prices also require consideration,” he said. 

Egypt is taking steps to organize and boost the local real estate sector. In August, the Egyptian Cabinet approved a draft law for the establishment of a national electronic database for real estate.

The system is expected to assist in government planning and development processes by providing authorities with a simplified system to register old properties; a crucial aid given the country's millions of unregistered old buildings nationwide.

The Egyptian real estate sector is one of the biggest in the region. The number of residential and mixed-use real estate projects in Egypt currently stands at 534 with a value of $329.57 billion.

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