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Absence of maintenance, chaos of licensing, and old rent are wasting real estate wealth - Daily News Egypt

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Absence of maintenance, chaos of licensing, and old rent are wasting real estate wealth

Real Estate Development Chamber coordinates with parliament’s Housing Committee to impose periodic maintenance on owners and buyers, says Shoukry

With the increasing waste of real estate wealth in Egypt as a result of the neglect for maintaining property and the number of collapsing buildings, workers in the real estate sector have demanded a swift approval of the unified construction law, which includes controls to maintain real estate wealth, or issue a separate law to maintain properties.

Real estate experts have estimated that real estate wealth in Egypt amounts to EGP 2tn, 0.5%-1% of which is wasted annually, equivalent to EGP 10bn. This is the result of negligence for carrying out maintenance on properties or the rate of demolishing property due to years of neglect.

The Real Estate Development Chamber has announced that it will discuss with the parliament’s Housing Committee several laws related to the real estate sector, including the unified construction law, and mechanisms to maintain real estate wealth in new cities and the governorates.

Tarek Shoukry, the head of the chamber, said that Egypt is considered one of the top countries wasting real estate wealth because of the neglect for property maintenance, especially external maintenance, which causes a decline in the value of the property.

“Real estate wealth is continually wasted at large values, which has a negative impact, wastes national wealth and the state’s strategic stock of properties,” he added.

He said that the Real Estate Development Chamber will coordinate with the Housing Committee to find a mechanism that would obligate owners and buyers to conduct periodic maintenance on property, either within residential areas or other types of buildings.

Part of the unified construction law is dedicated to the preservation of real estate wealth. This includes fast mechanisms for carrying out maintenance on property and the reinforcement of the part of the law that demands the establishment of a union of occupants. The union of occupants would require those who hold property to pay their financial obligations and maintain their properties and carry out needed maintenance. The administrative authority would allow for a decision to be carried out that would cut off utilities until the union is created.

The law would also activate the establishment of a fund that would dispense interest-free lending for maintenance and restoration works on residential buildings. The law would also provide alternative housing for those who live in property that is in severe disrepair, and create media campaigns to raise awareness for the need to maintain and preserve property.

Local units will be responsible for registering maintenance companies qualified and registered with the Egyptian Federation of Construction and Building Contractors. The union of occupants will contract with these companies, and in the event that occupants fail to create contracts with companies to carry out maintenance, they would be exempt from the provisions of the union.

In addition to creating a new mechanism for establishing companies qualified for management and maintenance works, and enabling the union of occupants to seek out their services—which would also lead to providing more than half a million new job opportunities in the real estate sector and the establishment of an administrative authority for the union—its mission is to follow up with unions of occupants, and ensure the implementation of periodic and general maintenance of the property business.

Ahmed Anis, a professor of civil engineering at Cairo University, said that the real estate sector in Egypt lacks the periodic maintenance needed for all types of real estate, whether old or new.

Noting that the wasting of real estate wealth is estimated at 0.5-1%, Anis warned that further negligence of maintenance may increase that percentage to 2%, which would fuel the housing crisis due to a likely increase in the number of buildings collapsing.

He noted that the average lifetime of a building in Egypt is 50-70 years, which is considered low, given engineering estimates that a building could last for up to 80 years with periodic maintenance.

Anis said that the state must provide mechanisms for real estate maintenance through the Ministry of Housing and the union of occupants, as well as real estate companies, especially given that the application of these mechanisms through local agencies in governorates has lacked in efficiency and application, and that there has been an increase in the number of illegally constructed and collapsing buildings.

“Citizens should be made more aware about the importance of maintenance, which is a personal benefit for them, not for the owners, because in the event of a building collapsing, they will have to look for alternative housing at a higher cost given the increased prices in the market now,” Anis added.

He also said that old rent laws are creating additional problems, as low rent costs have resulted in owners not paying attention to the need for maintenance.

“If a building collapses, the state’s burdens will increase because it will be obliged to provide alternative housing for the inhabitants, which would increase the gap in the real estate sector and disrupt plans that aim to fill this gap,” Anis went on to explain.

He pointed out that new real estate projects may not face this crisis, especially for the new compounds being constructed, as they are often attached to companies that manage and maintain the buildings within the compound. Anis said this should become a norm in which all housing owners are required to take part.

The regulations for real estate in urban communities contain articles that aim to regulate relations between developers and those who purchase property in new cities, which includes the developers’ commitment to signing contracts with real estate management companies once units are delivered to their new owners. The contracts would be registered with the Ministry of Housing.

Abdel Megeed Gado, a member of the Real Estate Wealth Preservation Society, said that not taking into consideration a building’s design and climate changes leads to additional wastes in real estate wealth.

He explained that maintenance begins with using the proper materials during construction.

Gado said that there are different types of chaos in the Egyptian real estate sector. “If we compare between buildings constructed in the past century and the ones later constructed, we will see the difference in their lifespan,” he added.

According to Gado, the solution for this is activating the law for establishing a union of occupants and putting in place controls that begin with an actual supervision over issuing licences.

He explained that the law must commit owners and residents to carry out periodic maintenance with binding measures. The culture of maintenance does not exist in the sector because residents do not want to carry responsibility and owners sell the units to be safe in legal terms, which creates additional issues in the sector, he explained.

At the recent Arab Housing and Reconstruction Ministers conference, an Egyptian study about the management and maintenance style of joint residential communities was approved.

Nafisa Mahmoud Hashem, an advisor to the minister of housing, said that the study has provided recommendations of a management and maintenance style for joint residential communities, and legislation for regulating all related operations.

The study also recommended establishing companies that work in the field of management and internal and external maintenance of real estate with ways to finance them and train their staff, while providing a database of the recently established projects to facilitate these companies’ work.

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