Real estate companies are targeting the development of their activities by at least 20% by the end of this year. This growth in activity is pushing them to find a source of financing cheaper than bank loans, with real estate developers believing that the stock market allows such financing.
Some real estate companies have recently expressed their desire to be listed on the Egyptian Stock Exchange (EGX) to expand their activities to face expansion in their huge projects. The largest of these companies is Emirati company, Emaar, which has completed many of the registration procedures on the EGX. Emaar aims at offering 15% of its shares.
The Head of Vision Holding Group, Hisham Shokry, said: “Real estate companies prefer to be established and achieve revenues for many years first, and then be listed in the EGX.”
Shoukry sees that listing real estate companies helps them expand the funds process at less cost than what they would have gained from the banking sector.
Former chairman of El-Mostakbel for Urban Development Fathallah Fawzy believes that listing real estate companies in the EGX enables them to increase their capital to face giant foreign companies which are currently intensifying their activities in Egypt.
Fawzy also believes that the real estate sector’s development is the main reason behind listing the companies on the EGX, despite reasons for listing varying from one company to another.
He explained that the advantages of listing companies on the EGX are companies’ corporate governance as well as transparency the budget and data. He added that listing enhances competition between companies.
In the next period, Egypt will be a promising market for real estate investments. In this regard, real estate developers should improve their companies’ financial situation. He added that Emaar encouraged real estate companies to improve their real estate products to increase sales.
Fawzy expects that real estate companies will follow in the footsteps of companies that are willing to be listed in the stock market very soon.
An official in Tabarak Holding Company said that the company has chosen Hazem Hassan’s office to be its IPO advisor and to evaluate its listing share in the EGX as well. He added that the company is studying the possibility of offering 20% to 30% of its shares.
According to the official, the company currently has investments of almost EGP 8bn and wishes to expand into new projects in Egypt or the Gulf countries, especially the UAE and Saudi Arabia.
“The listing will allow access to financing at a lower cost to meet the expansion of the company’s projects with the growth of real estate activity as the state offers more lands and announces huge projects,” according to the Tabarak Holding official.
Abraj Misr Company has announced its desire to put up 15% of its shares on the EGX to expand into new projects they plan to set up on the east and west coasts of the Gulf of Suez.
The company plans to pump investments of EGP 2.5bn to the project, according to an earlier press release by company Chairman Ali Rabie.
Egypt’s real estate market is very promising for pumping new investments, despite the conditions it witnessed over the past four years, according to chairman of an Arab real estate investment group. He added that in spite of these conditions, the market’s growth did not decrease, and remained stable.
Shokry added that the main reason for delaying listing his company in the EGX in the past period was the imposing of the capital gains tax. He then added that the delay will give real estate investment companies another chance to re-examine listing in the stock market.