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ARCO launches new signature project in North Coast - Daily News Egypt

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ARCO launches new signature project in North Coast

AUR Capital for Direct Investment will be launched during Ramadan, says chairperson and CEO

ARCO’s total investments in the Egyptian real estate market over the next five years will reach EGP 32bn in various projects.

The company expects contractual sales of EGP 25bn over that period, reflecting the company’s confidence in the local real estate market, which depends on real demand based on the population growth enjoyed by Egypt, according to Ashraf Salman, the chairperson and CEO of AUR Capital and executive president of ARCO.

Salman added that real estate investment contributes 17% to the GDP.

Daily News Egypt interviewed Salman to talk about the company’s business and the future of the real estate market.

What is the targeted percentage of sales to Arab and foreigners?

In the next three quarters of the current year, we target EGP 3bn in sales, 60% of which will be from sales in Egypt and 40% from sales in foreign and Arab countries.

What are the main other markets the company targets?

We seek the United Arab Emirates’ (UAE) open market; however, during the next five years, we will pay great attention and develop projects in the Egyptian market.

What are the new projects that the company plans to launch?

We will launch a new signature project in the North Coast. The project will have new designs. However, real estate projects in the North Coast are traditional with high prices and a short payment period. ARCO will innovate a new design of 85sqm chalets that are so close to the lagoon that they will give the image of floating on it. Each of those chalets has a garden in front of it. FC Barcelona star Neymar will lend his name to the Neymar signature homes on the lagoon at City Stars Sahel.

What is the size of investment of the project in the North Coast?

The investment does not exceed EGP 1.9bn, and the payment period will be 10 years.

The first phase will be delivered after three years, the second phase after four years, and the third after five.

What is your opinion regarding the new real estate regulation?

The new real estate regulation is good and will participate in reviving the sector once it is issued.

Does ARCO plan to partner with the government in projects?

ARCO is ready to collaborate with any partner, whether the New Urban Communities Authority (NUCA), the New Administrative Capital, and also private sector developers in line with its strategy. Additionally, we are ready to collaborate with the government as long as the partnership will help reach the target where 60% of customers will consider those units their first homes, and 40% will consider them their second.

ARCO signed a memorandum of understanding (MoU) protocol with NUCA to develop South Marina in El Alamein. What is the situation of the project?

We signed a MoU with NUCA in 2015 to develop South Marina in El Alamein with investments of EGP 26bn to develop 2,800 acres, but the MoU was not agreed upon so a contract was not signed. In the coming period, we may negotiate the project again, and we may also negotiate other projects.

What is the increase in the percentage of prices approximately six months after floating the Egyptian pound? Besides, shall we expect other increases?

ARCO increased the prices by 15% on its units, and, in the next period, we will offer other payment methods. The increase depends on the market.

What is your vision for the future of the real estate sector? 

I see that Egypt’s real estate sector will continue growing between 15% and 25% on average annually during the coming five years. This vision is based on three things: first is the attractiveness of prices; second, there is a demand in various housing units A, B, and C; and third, Egypt in the coming period will be an attractive destination for Arab and European countries.

Are Egyptian real estate companies ready to buy real estate projects for foreigners?

Egyptian companies are ready for that because there were outstanding projects established during the last five years. Besides, there are innovative ideas provided by some real estate developers up to international standards. What we need is to market our products to Arab and foreign markets to achieve our target sales.

What is your opinion regarding the new Administrative Capital project?

The New Administrative Capital project is very well planned, because it takes into consideration all problems that faced the new cities, such as plumbing and electricity. It will be a natural and good development for new Cairo, and we have plans to establish projects in the New Administrative Capital.

Why didn’t ARCO participate in the first phase of the New Administrative Capital? And what is your opinion regarding the first phase?

We weren’t ready for the first phase, and, at this time, AUR Capital hadn’t acquired ARCO yet. Land prices were affordable and were not overpriced, and this helped developers develop and sell their projects.

AUR Capital acquired ARCO. Please explain to us the process of acquisition.

AUR Capital is a direct investment company operating in five areas. The first is real estate investment, and the company has established AUR Misr for Real Estate Investment Company, which has acquired ARCO in February.

AUR Misr for Real Estate Investment is working on developing ARCO’s brand equity and its land bank and investment.

The second fund is the non-banking financial fund, which will be established in cooperation with the Egyptian Gulf Bank (EGBank). The third fund to be launched is the Health Fund. AUR Capital for Direct Investment and Egypt Capital for Direct Investment will be launched during Ramadan.

AUR Misr for Real Estate Investment put a new budget for ARCO, for the period between April and the end of the year. We allocated most of the budget to communicating with customers and providing services.

What about facility management?

We have a facility management department, and it will be separated soon so that it would become an independent company that will provide services to other developers.

What is the size of the gap of luxury real estate units?

There is an annual shortage in luxury housing estimated at 100,000 housing units per year, 200,000 housing units in middle-class housing, and 200,000 in economic housing.

Do you think that the Egyptian real estate market is exposed to a real estate bubble?

I think that Egypt’s real estate market is not exposed to a real estate bubble, contrary to what some experts think. The Egyptian real estate market is characterised by a large population. There is an annual demand of 500,000 housing units. This demand is higher than the supply and will continue to be so in the next five years.

Furthermore, real estate prices in Egypt are the lowest in the region. Prices per square metre in the UAE is not less than $3,000, Morocco at $2,500, and at Nigeria $3,000. In Egypt, however, the highest price per square metre does not exceed $1,000.

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