El Mostakbal for Urban Development and Tatweer Misr signed a partnership agreement on Tuesday to develop 415 feddans in Mostakbal city, with an estimated investment value of EGP 33bn.
The partnership agreement comprises the allocation of an area of 325 feddans for the development of a mixed-use residential development, to be completed within10 years, with a total estimated investment of EGP 28bn, according to Ahmed Shalaby, managing director and board member of Tatweer Misr.
Tatweer Misr also announced the signing of a purchase agreement with El Mostakbal for a plot of 90 feddans for the establishment of a university and international schools in Mostakbal city, with a total investment of EGP 5bn, to be completed within eight years. Tatweer Misr is planning to launch the project before the second quarter of 2018.
This new project is in line with Tatweer Misr’s accomplishments in the real estate market over the last few years. They are most widely recognised for Il Monte Galala project in Ain Sokhna and Fouka Bay Ras El Hekma in the North Coast.
In an interview with Daily News Egypt, Shalaby said that the company intends to add investments of EGP 3bn in 2018.
What are the details of the partnership project?
The project includes three plots of land and will be developed along three phases. In addition, it is being developed in partnership with El Mostakbal for Urban Development, the land owner, with expected revenues of EGP 50bn. The two parties will achieve a net profit of 20% of the revenues, equivalent to EGP 10bn, over the lifetime of the project which will be announced at the next Cityscape Egypt exhibition.
When will the company start the project?
The project will be launched in March.
You said that the project will include a university. Will the university be a foreign or Egyptian one?
We are negotiating currently with other universities to develop programmes from different universities and the university is planned to include branches of international universities. Furthermore, applications for the university will be through these international universities and the certifications will be through them as well. We will serve as the only developer for the university.
The university will be built on 70 feddans and there will be another 20 feddans for schools.
Will the project include an international hospital?
Maybe. I can’t say that there will be an international hospital or a main hospital in the project, but the project itself includes 12% of the land area allocated for services, which constitutes 40 feddans that may include a hospital, clinics, and other services.
What are the projects that the company is developing?
The company is developing Il Monte Galala and Fouka Bay projects and the project in Mostakbal City that we have recently announced its launch.
Il Monte Galala project will be built on an area of 2.2m sqm in Ain Sokhna. The project will be a residential tourism project and will be developed over 10 years.
In February, the company will sign a final contract with the international company Six Senses to manage a hotel inside the project, which includes 100 suites, in addition to 60 hotel units for sale, and will stand at 120 metres above sea level.
What is the value of 2017 investments and the expected investments in 2018?
The company has pumped EGP 2bn in 2017 and intends to pump EGP 3bn in 2018. The new investments will be distributed between Il Monte Galala and Fouka Bay projects. We will allocate EGP 2bn for Il Monte Galala, compared to EGP 1.5bn in the current year. The investments will cover earthworks worth EGP 450m and the establishment of services and utilities with about EGP300m. In addition, the company will implement an artificial lake at a cost of about EGP100m, and ready-made walls at a value of EGP300m, in addition to construction cost. Fouka Bay’s share of the new year plan includes EGP 1bn, compared to EGP 500m in 2017.
What is the value of targeted sales in the next year and achieved sales in 2017?
The company has gained EGP 7bn in sales from the two projects since their launch in 2015, of which EGP 4.5bn were achieved this year, exceeding the target sales with EGP 500m.
Tatweer Misr aims to achieve between EGP 7bn and EGP 8bn in sales next year.
What is the situation of unit delivery?
Fouka Bay project sales reached 1,100 units and the company will deliver the first phase of the project within a year. Il Monte Galala includes 2,100 units and we plan to deliver the first phase of the project in 2019.
Fouka Bay’s first phase is scheduled for delivery in December 2018, with a total of 150 units, including 45 villas and the rest being residential units. The second phase of the project will be delivered in December 2019. The project stretches over 1m sqm in the North Coast and is being developed over five years.
The acceleration of the implementation process is a top priority during the current phase, in order to avoid risks due to the continued high cost of implementation, which prompts the company to increase its investment plan and sign contracting agreements progressively within our projects to avoid the crisis of price differences.
What other projects does the company intend to launch in the coming period?
The company plans to implement a new residential project and we will announce its details soon. Furthermore, the company is competing for the partnership projects recently launched by the New Urban Communities Authority (NUCA). The company is considering competing for two projects of 500 feddans and 1,000 feddans, a move that is still being studied, especially with the company acquiring new land to implement a residential project.
What are your expectations for the prices of the real estate market?
If construction costs continues increasing, I expect an increase in unit prices between 20% and 30% by next year.
Meanwhile, the coastal projects will not witness an increase of the same value, nevertheless, the price hikes in these areas may be ranging from 10-15% because of the large price increases during the summer.
Did you study acquiring lands in the New Administrative Capital?
Indeed, we studied purchasing lands in the capital and in Mostakbal City and, according to our business model, we first preferred to acquire land in Mostakbal. However, we are interested in purchasing land in the New Administrative Capital in the coming period.
What is your opinion regarding the New Administrative Capital prices?
The New Administrative Capital is a great project and a step forward that includes good planning and a good network of utilities and services. The prices in the capital are more expensive than New Cairo and Mostakbal city, an opportunity for the diversification of market prices.
What other areas do you plan to invest in?
Our plan in the coming period is to expand in west Cairo, in Sheikh Zayed, but we will further study launching an integrated urban project in Zayed in the coming year.
What is the company’s capital? Does the company plan to apply for loans from banks?
The company’s paid-up capital increased to EGP 275m during the current month, which comes within the company’s plan to implement its existing projects and launch a new project.
Regarding loans, bank borrowing is part of the company’s financing plan.