Costlier coastal real estate

Safeya Mounir , Saturday 1 Jun 2024

The price of real estate on the North Coast is rising in the wake of increasing demand.

Costlier coastal real estate

 

Real-estate developers have been taking a new look at the North Coast since the establishment of New Alamein City and even more so since Prime Minister Mustafa Madbouli announced the Ras Al-Hekma investment project earlier this year.

They have been racing to launch development projects in the area, which has become a winning one for investors. Barely a day goes by without the announcement of a new resort beginning construction on the North Coast. Most of the projects are run by firms encouraged by the high returns from earlier projects launched in the area.  

The stretch of the North Coast from Alamein to Ras Al-Hekma is attracting investors not just domestically but also from the Gulf countries, Alaa Fikri of the Real Estate Investment Division of the General Federation of Chambers of Commerce told Al-Ahram Weekly.

The attraction of the area has grown since UAE-based Emaar Properties, one of the largest real-estate development firms in the Arab region, started to invest there. Others soon followed.

Consumer demand has risen, as have prices. According to Fikri, a main factor that has contributed to rising prices is the limited seaside space in the 100 km area.

“People in general, and the better-off segment of the population in particular, love the North Coast,” he said. “They determine prices. The higher the demand, the more sellers will raise their prices. This has contributed to the soaring property values.”

The price per square metre of housing units in some of the North Coast resorts is now more than LE150,000, he said. When similar units first came on the market in Alamein in 2018, they cost LE30,000 a square metre. However, demand remains high.

The demand for real estate on the North Coast this year is even higher than previously anticipated, according to Ahmed Sabbour, chairman and managing director of Al-Ahly Sabbour Developments, in recent statements to the press.

He explained that while demand is likely to increase overall, it will vary depending on the features and advantages of each project. The Ras Al-Hekma project will draw more investors from the Gulf, which will drive up prices further, he said.

Gasser Fawzi, managing director of the Mina Group which owns one of the North Coast projects, agrees that demand and prices in the area are extraordinarily high. Another reason for this is that most are holiday or short-stay units and therefore more profitable, he said.

“With the new Ras Al-Hekma project, there has been a huge surge of demand domestically and from the Gulf region. We expect a large inflow of tourists,” he added.

The average price per unit in some projects has increased by 100 per cent since the beginning of 2023, Fawzi said, adding that most purchasers are Egyptian expatriates whose income has increased in terms of domestic purchasing power as a result of the liberalisation of the exchange rate that went into effect earlier this year.

“So, even though prices have shot up, units are still relatively inexpensive for them, and demand will not decline,” Fawzy said.

However, he believes that the recent surge in demand and prices has been unusual and the result of exceptional circumstances. He predicts that the price and demand trajectories will level off once the exchange rate stabilises and inflation and interest rates fall.

Fouad Hussein, who heads the marketing department of a major real-estate firm, said that while demand for North Coast units is seasonal, selling them is easy because the returns on investment are high.

He said that a two-room unit that went for LE3.2 million last year is going for LE5 million this year. He expects such dramatic increases in demand and prices to continue when construction starts on the Ras Al-Hekma project.

The real-estate market differentiates between the “old” North Coast, the part extending from Alexandria to Marina Alamein, and the “new” North Coast, which encompasses newer, trendier luxury compounds extending from Marina to Marsa Matrouh.

According to Hussein, property prices in the former area have shot up in recent months, but only about half as much as those in the new development projects being carried out by major real-estate developers along the “new” North Coast.


* A version of this article appears in print in the 30 May, 2024 edition of Al-Ahram Weekly

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