The Covid-19 pandemic had a negative impact on the real-estate sector in Egypt as it did in most countries around the world, with many developers struggling to find buyers for projects.
However, with the launch of several national projects and new cities nationwide, and the emergence of more promising investment opportunities with new and unprecedented financing schemes, Egypt’s real-estate sector has started to witness growing demand once again.
Developers, real-estate experts, banks and customers gathered from 22 to 25 September at the CityScape exhibition in Cairo to witness exhibitors showing off various opportunities for investors and buyers looking for real-estate units nationwide, especially in the new cities and the New Administrative Capital.
“The Egyptian real-estate market is the best in the region and enjoys alluring investment opportunities,” said Ashraf Ezz, managing director of the Al-Futtaim Group, adding that this was especially true after Egypt’s success in overcoming the economic repercussions resulting from the coronavirus pandemic.
The efforts made by the government to revitalise the sector would help it to achieve further growth during the second half of 2021, especially in the light of the construction boom that Egypt is currently witnessing, Ezz said.
Mohamed Saber, sales manager at one of the developers participating in the CityScape exhibition, said that sales were high during the two-day event, with a majority going to projects in the New Administrative Capital.
He added that the government had been speeding up the pace of the completion of construction projects in the New Administrative Capital in order to advance the development of infrastructure. “This has helped encourage local and foreign real-estate development companies to pump more investment into these projects, and attract more buyers as well,” Saber said.
He pointed out that most new commercial property has shifted to the new cities, which are witnessing rises in demand and thus in prices. The availability of financing for the purchase of real estate is an essential contributor to the increased demand, he added.
Banking experts and real-estate finance experts have praised the presidential initiative for mortgage finance that the Central Bank of Egypt (CBE) announced when it entered into force in July. 22 banks are participating in the initiative, allocating a total of LE100 billion and aiming to help finance the purchase of housing units for low and middle-income people at a decreasing interest rate of three per cent over a period of up to 30 years.
Mohamed Samir, a real-estate finance expert, said that strong points of the new mortgage finance initiative lay in its targeting low and middle-income people, the low interest rate, and the long period of the installments.
“I expect a boom to take place in the real-estate sector, enabling more developers and contractors to operate in the new cities,” he said, adding that this would ease the pressure on existing cities and cause more buying and selling.
Samir said that many real-estate companies have reduced the size of units over recent years to offer lower prices per unit, with others extending installment periods. These actions have been to meet the biggest challenge the real-estate market is currently facing, which is the decline in purchasing power of many customers.
The recent crisis of the Chinese developer Evergrande has raised questions about its impact on the Egyptian market. Evergrande is a giant real-estate development company that currently owes about $300 billion to more than 170 banks and financial institutions, the largest debt burden of any real-estate company listed on the international stock exchanges and threatening the Chinese economy.
Investment bank Prime said in a research note last week that the crisis had affected the Egyptian stock market as part of the global turmoil due to the possible default on its debts by Evergrande.
It said that Egypt is isolated from any regional financial consequences that may arise from any default of the company, expecting that the negative impact will be limited to weak trading volumes on the Egyptian Stock Exchange, but global problems could lead to high levels of oscillation.
According to company data, Evergrande stock traded on the Hong Kong Stock Exchange has lost about 85 per cent of its value since the beginning of the year, while the exacerbation of the financial crisis has led to a sharp decline in the shares of all real-estate companies in China.
The crisis is expected not to have an impact on Egyptian real-estate companies, especially since about 95 per cent of them are not listed on the Stock Exchange.