CAIRO: “2009 was a much better year than anticipated, and this was an enormous relief, Ahmed Badrawi, chief business development officer at Sixth October for Development and Investment Company (SODIC), said.
Badrawi spoke on a panel of developers and real estate experts at the Euromoney conference last week, which discussed the challenges and opportunities the sector is facing amid a global financial crisis. Despite the current economic climate, real estate is still considered a solid investment choice in Egypt.
At the end of 2008, Badrawi’s forecasts for 2009 were “cloudy, dark and scary; however, SODIC’s sales beat projections and the company saw a much lower default rate than expected.
“We came out much stronger in market share this year, he said, adding that SODIC lunched two “projects right in the middle of the recession.
But even though it made it survive the crisis, Egypt’s real estate sector still has some obstacles to overcome. Hesham Shoukri, CEO and executive president of Rooya Group, cited “restrictions on lending as one of the challenges.
At the same time, Shoukri said the market has been gathering strength and concerns over the consequences of the crisis have started to fade. “Since last May. the market has been doing better.
Shoukri attributed the downturn seen in the market during the first five months of 2008 to “psychological effects of the crisis.
Walid El-Kafrawy, executive chairman of Ofok Properties, listed the strengths of Egypt’s real estate market, namely the transparency the sector enjoys, the regulatory environment and the stability of building laws. “These are important issues that keep investors coming, he said.
On the same note, Badrawi said, “There is real demand [for real estate] based on people who want accommodations, adding that since the demand is not based on speculation, cancellations have been low.
“We are operating today with virtually no finance from banks, and our consumer are operating with virtually no finance from mortgage companies, he added. “The [mortgage] programs in place have not been effective.
“Mortgage finance companies were excited when they entered the market, but there are still obstacles, there is bureaucracy that made it almost impossible for customers to take out mortgages, he concluded.
Egypt’s real estate sector remains attractive to investors even though it does not get a lot of support from “government, the banking community, and generally even from the mortgage industry, according to Badrawi.
Asked to make a wish for the real estate sector, SODIC executives said ease the restriction on finance while Maged Eldin Ibrahim, chairman and managing director of Taamir Mortgage Company, called for accelerating the legal action taken against customers who stop paying mortgages.
Khaled Rasekh, CEO of ERA MENA & CIS, wished to activate securitization and asked that the government provide tax exemptions for potential investors.
Rooya’s Shoukri made a broader wish: Create a strategic plan to promote real estate investment.