Sixth October Development and Investment Company (SODIC) aims to increase its land portfolio. The company allocated EGP 3bn for investments in 2017. Moreover, the company targets sales of EGP 5.6bn.
Daily News Egypt interviewed Maged Sherif, CEO of SODIC, to get a better understanding of the company’s current position in the market and its future plans.
Is the company planning to increase its existing portfolio of land?
The current land portfolio requires 12 years of development. We have six million square metres of land already, and we have allocated EGP 600m to buy new plots in 2017.
What is the size of the company’s investments during the current year?
The company plans to invest EGP 3bn in the current year, including EGP 2.1bn for the construction works. We are also set to pay EGP 848m to the New Urban Communities Authority (NUCA) in instalments for land.
What was the size of investments last year?
We invested EGP 2.8bn last year and paid EGP 883m to the NUCA.
The size of lands expected to be bought this year is linked to the size of offerings posed by the Ministry of Housing. We will buy or enter partnerships as long as the prices are reasonable. We urge the ministry to begin offerings after an 18-month hiatus.
Is the company seeking to acquire new lands in Sheikh Zayed?
The company is looking forward to the ministry’s offering of 410 feddans in Sheikh Zayed. These lands were offered before, but they were not awarded to any company. The location of these plots is adjacent to our existing projects, which is why we aim to compete on acquiring them.
How many projects were put forward by the company during the first quarter of this year?
The company has launched three projects in the first quarter of the current year and achieves satisfactory sales. These projects include part of the One 16 project in SODIC West and October Plaza, as well as one phase in the East Town project. We are preparing to offer a new part this year, such as the buildings district in the Villette in New Cairo. This is a separate project that is five minutes from East Town. The area of the project is 301 feddans.
How much did you raise the prices after flotation?
We raised the prices by 20-30% after flotation. This is a natural response to the cost increase following the flotation. The new phases built after flotation have different pricing policies linked to costs. But we stuck with our payment plans.
What is the size of sales achieved by the company’s projects?
We sold 95% of the projects we posed last year. We also obtained EGP 2.2bn of credit facilities; yet, we only used 55% of it.
Have you applied to acquire lands in the New Administrative Capital?
We did submit a proposal with the price we believe fit, in light of the several challenges the project has, such as time constraints, lack of vision about infrastructure, transportation, and public utilities. The state is also competing on implementing units at the project.
The first offering for lands in the new capital included 15 land plots, totalling an area of 1,500 feddans. 13 companies were qualified to buy 9 plots of 1,090 feddans, at a price ranging between EGP 500 and EGP 2,750 per square metre, including SODIC, which wanted 50 feddans. The 6 remaining plots saw no bids.
Will the company submit a proposal in the second phase of the ministry’s offerings?
We plan to compete on the lands in 6th of October City and Sheikh Zayed.
NUCA will put forward 15 plots as part of the second phase of its partnership projects with the private sector companies. The lands will be in New Cairo, Sheikh Zayed, 6th of October City, New Damietta, and New Aswan. The bid is expected to take place before June.
The plots will be awarded to the companies that can grant the NUCA the biggest share in the project, while maintaining the least implementation time. The NUCA has so far signed four partnership projects put forward during the economic summit in Sharm El-Sheikh in March 2015. The total cost of these projects amounted to EGP 131bn for 2,000 feddans.
Did the company complete the New Heliopolis master design plan?
We did complete the plan. The project will be established on 655 feddans between the cities of Badr and Shorouk. It will be completed in partnership with Heliopolis for Housing and Development, the company which owns the land.
What is the size of investments for this project?
Investments for the project amounted to EGP 20bn. This includes the price of the land.
How much is the expected revenue?
The project is expected to return EGP 30bn. It will take place over three phases, with a total of 8,600 units of different categories.
What is the share of Heliopolis for Housing and Development in the project’s revenue?
Heliopolis for Housing and Development’s share is 30%. The company will also obtain 30.2% of revenue from commercial and administrative units, with a minimum of EGP 5.01bn. On the other hand, SODIC obtains 70% of revenues, as it will handle all development, starting with the infrastructure and utilities, to the furnishing of the projects.
When will the first phase be launched?
The company plans to launch the first phase of the project during the third quarter of this year.
We will be committed to delivery dates. We will assign contractors specific works to match with our timetable. We are still in negotiations with the contractors to decide the amount of compensation after the cost hikes as a result of flotation. These negotiations are set to be completed in the second quarter of this year.
How many residential units in the partnerships projects are expected to be delivered this year?
We aim to deliver 1,150 units this year in different projects.
What is the situation of the real estate sector in light of the current economic conditions?
The real estate sector managed to achieve high growth rates over the last period. Many clients put their investments in real estate as they consider it a safe haven.
I expect the market to see more sales in the coming period. An indication of this is the rate of sales achieved in our partnership projects that were offered early this year.
How much was SODIC’s profits in 2016?
SODIC’s consolidated profits rose by 37.3% in 2016, to reach EGP 441.4m. Net profit stood at EGP 321.3m in 2015.
What was the size of profits and revenues in 2016?
Our revenues increased by 42.9% compared to 2015, where the revenues registered EGP 2.1bn in 2016, up from EGP 1.47bn in 2015.
Profit registered EGP 222.5m in 2016, up from EGP 213.2m in 2015, marking an increase of 4.4%.