On Saturday, the newly formed Real Estate Development Chamber, affiliated to the Federation of Egyptian Industries (FEI), held its first meeting inside the FEI headquarters to announce new procedures taken by the chamber, aiming to address the problems facing Egypt’s real estate sector.
The chamber said that its board approved the procedures that will be implemented in the coming period, which include a series of important mechanisms aimed at creating a sustainable and attractive investment climate.
The chamber will hold the first conference on 12 December with the Ministry of Housing and real estate developers.
Chairperson of the chamber Tarek Shoukry said that immediately after the election of the board of directors, the chamber conducted a detailed study into the challenges in the sector. The chamber also signed a cooperation protocol with the Ministry of Housing.
Forming a committee between the Ministry of Housing and the chamber to address the sector’s problems
Shoukry added that the protocol aims to strengthen coordination between developers and the Ministry of Housing in order to deal with problems related to the sector, and seeks to form a permanent joint committee to tackle problems faced by investors and developers. It will also establish a secretariat to the committee, which consists of specialists in engineering, accounting, and legal affairs.
Shoukry explained that the secretariat will be tasked with examining the problems presented to the committee by investors. They will then be tasked with submitting a report with its findings to the committee, who would discuss it and make a decision.
List consulting firms to speed up issuance of construction permits and ministerial decisions
Shoukry noted that Minister of Housing Mostafa Madbouly has agreed on an initiative launched by the chamber which would transfer the responsibility of reviewing building licences to consulting firms working for the Egyptian Engineering Syndicate. This would be done in order to speed up the issuance of construction permits and streamline ministerial decisions related to construction projects.
He added that the chamber had asked the syndicate to provide the Housing Ministry with a list of consulting offices, explaining that the ministry will be only responsible for adopting the permits according to the law.
The chamber also plans to create a special office for investors to streamline ministerial decisions.
Egypt was ranked 126th overall by the International Finance Corporation’s (IFC) Doing Business report for 2016, and has risen to 122nd for the report’s 2017 forecast. According to Shoukry, development rates will increase and align themselves with the state’s plan to double inhabited space in the country by 2030.
Controlling and regulating real estate advertisements
Shoukry explained that the chamber is coordinating with the Ministry of Housing and the media chamber at the FEI to control and regulate advertisements for real estate units in order to prevent misinformation. The chamber will also be urging media outlets to only publish advertisements for projects that have been given a permit.
Cooperation protocol with ministries of investment and tourism
Deputy head of the chamber and chairperson of Misr Italia Holding, Hany El-Assal, said that they aim to sign cooperation protocols with the ministries of investment, tourism, and others, to support joint cooperation for sustainable development.
Preparing list of legislations to be presented to parliament
El-Assal noted that the chamber is preparing a list of legislations during the coming period to be submitted to the parliament’s Housing Committee.
He added that these legislations would contribute to ending developers’ problems and contribute to future development.
He pointed out that the chamber wants to promote investment opportunities in the Egyptian market through joint campaigns with the Ministry of Housing and enact laws that support this trend, along with the organisation of joint conferences and seminars in order to provide information, data, and details regarding the projects offered by the Ministry of Housing.
Member of the chamber, Amgad Hassanein, said that the chamber’s agenda will include ongoing communication with all stakeholders related to real estate activity through monthly meetings with those stakeholders to discuss the problems they may face and the provision of more facilities to overcome their obstacles.
Addressing the problem of unit or land pricing
Shoukry pointed out that establishing a price for land or building units is complicated because there are several factors and costs that affect the price of land or units. This is particularly true when considering the increased cost of construction materials, imported materials in particular.
Shoukry said that the normal price increases in the real estate market do not exceed 15% annually, but are expected to rise to up to 20-30% over the next year, as a result of the high cost of construction.
Promote launching real estate investment funds
Shoukry claimed that launching real estate funds in the local market would contribute to accelerating the pace of work and investment through the creation of a mechanism to finance developers and spur the resale of units. The profit margin of these funds would be estimated at 15% in the Egyptian market, compared to 5% in European countries.
He pointed out that there are legal obstacles facing the creation of such funds, which explains why they do not exist in the Egyptian market. The chamber wants to coordinate with the Egyptian Financial Supervisory Authority (EFSA) to create such funds in order to attract foreign investments to the market during the coming period.
Solving problem of multiplicity of authorities regarding land allocation
Vice chairperson of the chamber, Bassel Shoirah, highlighted the problem of multiplicity of parties that have the right to act on the land, noting that this multiplicity is one of the problems that complicate the process of issuing permits. This also disrupts investment.
Enforcement of contracts
Egypt currently ranks 162 out of 189 countries in the enforcement of contracts category, according to the Doing Business report. The chamber will work with various agencies in order to facilitate the enforcement of contracts and agreements related to the real estate sector.
Solving problems in mortgage finance system
One of the important issues in the sector is the mortgage finance system. The chamber will attempt to address this issue by amending the Mortgage Finance Law to modify the interest rate and administrative procedures, according to Shoukry. He added that banks have some concerns related to funding junior developers; thus, the chamber will exert efforts to amend the current regulations of the law.
Advancement of SMEs
Hassanein pointed out that the chamber is considering the current situation of small- and medium-sized enterprises (SMEs) that operate in the real estate sector to prevent them from stagnating due to changes that will occur in the market in the coming period.
He explained that supporting SMEs will be done through three procedures. First, the chamber wants to provide SMEs with expertise from international companies, then they want to provide them with investment opportunities commensurate with their financial and technical abilities, and lastly, the chamber wants to work on resolving any problems they may face in the market.