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ARCO to invest EGP 2.2bn in projects in 2018 - Daily News Egypt

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ARCO to invest EGP 2.2bn in projects in 2018

ARCO negotiating with ACUD to acquire 500 feddans

The real estate developer ARCO plans to invest EGP 2.2bn in its projects during the current year, CEO Ayman Ibrahim told Daily News Egypt in an interview.

What is the value of ARCO’s investments in 2018?

ARCO plans to invest EGP 2.2bn in its projects during the current year, of which EGP 500m are to be paid to repay the company’s land installments to the New Urban Communities Authority (NUCA), and the rest of the money is being directed to construction contracts for the implementation of projects.

This amount of investments covers only the existing projects, which can be increased in case the company’s targeted expansion plan is met during the current year.

What are the company’s plans to expand?

The company made offers to obtain four plots of land within the second phase of partnership projects launched by the NUCA at the end of last year. Moreover, the company successfully passed the technical decision phase and is awaiting the financial decision.

The offers were submitted to acquire 194 feddans in New Cairo, 410 feddans in Sheikh Zayed, 500 feddans in Sheikh Zayed’s expansion areas, in addition to another 103 feddans in New Cairo. The company aims to implement residential projects in case it wins. However, in the case of not winning the bid, the company has a plan B.

What is your opinion regarding the governmental partnership system?

Partnership between the state and the private sector is important to achieve the state’s development plan and for the optimal exploitation of its land, in addition to supporting developers indirectly and allowing them to pump investments into the implementation of projects instead of paying installments for land’s price.

Further, I believe that there is a need to expand its application to increase the development rates of the cities in the system.

What is your expectation for price hikes in real estate this year?

The real estate market is expected to witness price increases of about 20% during the current year, which is a natural increase in the market, as I expect that there will not be a price spike as happened during last year following the floatation decision and the high cost of implementation. The price of real estate in the local market is still the lowest compared to other markets in the region, making it the most attractive for buying and investing.

What is your opinion regarding Egypt’s mortgage financing system?

There is a need to support the mortgage finance sector to support clients in obtaining the housing they need. Some portions of the mortgage law need to be modified to cope with other international markets that use this system.

Nevertheless, the Central Bank of Egypt’s initiative for real estate mortgage funding to low- and middle-income individuals is a good step in this regard, but this initiative needs other aspects to include above middle-income and luxury units.

Do you think a real estate bubble is imminent?

The local real estate market is still the most able market to attract investments, especially with the continued housing demand, and not for investment only, which makes this market far from the idea of a real estate bubble despite the high prices. The continued gap between supply and demand needs to combine the efforts of all real estate companies operating in the local market for the implementation of units for different segments of the market.

What is the value of contractual sales targeted in the current year?

The company aims to achieve contractual sales of about EGP 5bn from its projects this year, driven by launching new phases in our existing projects and the market booming, in addition to expanding participation at external exhibitions to market the company’s projects to Egyptian expatriates and non-Egyptians. Egyptian real estate has many advantages in being marketed abroad compared to competing markets.

What exhibitions does the company intend to participate in this year?

The company is participating in Cityscape Egypt and will participate in the International Property Show (IPS) exhibition in Dubai next month.

What is the total area of the company’s land bank?

The company’s total land bank reaches 5m sqm, which is still under development. The company focuses on the specific development of its projects and the provision of deluxe units capable of local and international competition.

Moreover, the company is diversifying its project portfolio between residential and touristic projects, as well as diversifying unit spaces and payment systems to suit all customers.

ARCO was one of the first companies to offer installment periods of up to 10 years during Cityscape 2017, depending on our possession of strong solvency.

What is the status of your unit delivery?

The company aims to increase the construction rates of its projects during the current period, in preparation for the delivery of about 750 units in early 2020, 250 units in La Fontaine project, and 500 units in CityStars Al Sahel project. The company’s project portfolio includes the implementation of a number of major projects on 743 feddans, mainly CityStars Al Sahel on 73 feddans, constituting 88 buildings, and the 33-feddan Lagoon project in Alamein.

What is the value of investments to be allocated in the current year?

ARCO plans to pump EGP 32bn in investments into the real estate market over the next five years, according to the company’s announced investment plan to define its strategy in the Egyptian market.

What are the projects that will be launching this year?

The company is going to launch a new phase of its Lavande project in Sheikh Zayed, which includes 100 housing units, during the first quarter of the current year, with expected sales of approximately EGP 1bn. The company succeeded in marketing the whole first phase of the project. The company is waiting for the ministerial decision in preparation to begin the implementation of the project, which includes a total of 450 units.

What is the status of La Fontaine project’s marketing?

The company has completed marketing the first and second phases of La Fontaine project in New Cairo, where the project is located on a total area of 143,000 sqm and includes 565 units of different sizes in addition to internal services. The project’s installments period is up to 10 years.

What is the value of investments directed to CityStars Al Sahel project?

The value of investments directed to CityStars Al Sahel project has so far reached about EGP 1bn and this amount was directed to the implementation of earthworks and the contract with Crystal Lagoons to implement an artificial lake on an area of 60,000 sqm within the project. The project is located on an area of 743 feddans and will be developed over 10 years.

Does the company plan to acquire land at the New Administrative Capital?

The company is negotiating with the Administrative Capital for Urban Development (ACUD) to acquire 500 feddans to implement an integrated residential project.

Do you have any plans to launch projects in Upper Egypt?

Launching projects in Upper Egypt and the Nile Delta regions is necessary to diversify the investment portfolio of real estate companies during the coming period, especially with the high purchasing power of customers in these areas. Furthermore, the government is interested in launching development and infrastructure projects in new cities such as New Mansoura, West Qena, and West Assiut.

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