Tatweer Misr will launch the first phase of its Bloomfields project at the Cityscape exhibition. The first phase is located on an area of 51 feddans and includes about 3,600 residential units with areas ranging from 80-350 sqm. Bloomfields is Tatweer Misr’s latest project in Mostakbal City, situated only 15 minutes away from the American University in Cairo and 10 minutes from the New Administrative Capital. It is a 325-feddan mixed-use development that includes 10,000 units and an entertainment area. The project also encompasses a 90-feddan school district comprised of international schools on 20 feddans, as well as a 70-feddan international university.
Daily News Egypt sat down with Ahmed Shalaby, CEO and managing director at Tatweer Misr, to learn about the company’s new offering at the Cityscape exhibition.
Tell us about Bloomfields in more detail
Bloomfields is a full-fledged project on an area of 325 feddans, including 10,600 units, a 39-feddan entertainment area, and a 90-feddan entrepreneurial hub, which foresees the establishment of an international university on 70 feddans, and international schools covering an area of 20 feddans in Mostakbal City. Tatweer Misr signed a partnership agreement with El Mostakbal for Urban Development to develop 415 feddans in Mostakbal City last December. Bloomfields will be developed over 10 years, with investments of EGP 28bn in the residential area, and EGP 5bn in the entrepreneurial college.
What makes Bloomfields different?
The project offers a new real estate product capable of competing in the local and global markets.
Establishing a distinct and integrated real estate project, that meets the different needs of our target customers, represents what Tatweer Misr is about.
Tatweer Misr partnered with two renowned design firms; the famous Italian design firm Gianluca Peluffo and Partners and the Egyptian Design firm of Raeef Fahmy, to work on the unique designs of this project.
What does the college town mainly focus on?
The college town focuses mainly on the idea of entrepreneurship, which will serve the administrative and commercial parts of the project in the future. The university project is the result of a two-year journey of preparation, ranging from concept and architectural designs to finding the right international university to partner with, which reflects the size of the challenge imposed on us in order to provide an Egyptian university model with international standards.
What are the sources of funding for the educational project?
We plan to look for new financing mechanisms for the educational part of the project within Mostakbal City, which may include investment funds. The process to finalise the establishment of the university includes obtaining the university permits, reaching an agreement with foreign universities, and finalising studies for required syllabuses, all of which can take about a year or two.
What was the value of investments in 2017, and the expected investments in 2018?
2017 saw Tatweer Misr invest EGP 1.5bn in Il Monte Galala, and we intend to allocate EGP 2bn more in 2018.
Investments in Il Monte Galala will cover land levelling, bearing walls, lagoons, and road works, all standing at a total value of EGP 450m. Meanwhile, a part of the infrastructure work will be tendered with an amount of EGP 300m, while construction of the lagoons will cost EGP 100m.
Fouka Bay’s share of this year’s plan is EGP 1bn, compared to EGP 500m in 2017.
Accelerating the construction processes is a top priority during the current phase in order to avoid risks of the continued cost increase and to deliver on time as promised.
Any updates regarding Il Monte Galala?
Il Monte Galala is being built on an area of 2.2m sqm in Ain Sokhna. The project is a mixed-use development focused on a diverse range of lifestyle options and will be developed over 10 years.
Assigned to Top Tech Contracting Company, the first phase of the project covers 400,000 sqm of land levelling and bearing walls with investments of EGP 600m. Nadinco Construction Co will build 511 units at a cost of EGP 500m, while 556 units were assigned to Inshaa for Contracting Investments and Trading at a total of EGP 500m. Accordingly, Tatweer Misr is currently planning to allocate 600 more units to other contractors at a cost of EGP 700m. It is worth mentioning that General Contracting Company (Fawzy Abdo) will carry out road, facilities, digging, and excavation works throughout the project at a total value of EGP 450m.
So far, we have successfully sold around 2,500 units at Il Monte Galala.
Any construction updates you can provide regarding Fouka Bay, Ras El Hekma?
Fouka Bay is being built on 1m sqm in the North Coast and is being developed over five years. First deliveries in phase one will start in December 2018. The total units sold so far have reached 1,300.
General Contracting Company (Fawzy Abdo) is currently doing digging and excavation work on 3m cubic metres, valued at EGP 200m, 1.5m cubic metres of which is now complete. The first phase of the project includes construction works on 45 villas, with 966 units currently under construction at a total cost of EGP 1.5bn. Work on the lagoons will start this year at a total value of EGP 200m.
What is the value of targeted sales in 2018?
We plan to achieve contractual sales ranging from EGP 7bn to EGP 8bn in all projects this year, driven by the real estate market boom and the launch of Bloomfields’ first phase. We are also counting on the fact that the first phase of any project is usually able to attract a larger segment of the targeted customers, in comparison to later phases.
How do you see the real estate market after the decrease of interest rates?
The lower interest rates, which are expected to continue declining during the coming period, will be in favour of the real estate market, as customers will be inclined to invest in high-yielding property.
Moreover, the boom in the real estate market is a result of different aspects, mainly the increased land offerings, and the different offering methods by the government, and this is clearly reflecting the development currently taking place all over Egypt. In addition, the government, represented by the Ministry of Housing, has an interest in the real estate investment sector and will have to deal with and consider the crisis of land shortage; one of the biggest problems being faced by real estate investors for decades.
Will the company apply for the third partnership projects offering by the Ministry of Housing?
We are waiting for the third tender of the partnership projects, which the Ministry of Housing intends to offer during the current year, in order to determine the possibility of investment opportunities available at this stage and how those fit with our expansion plans.
What are Tatweer Misr’s sources of funding?
The company currently finances its projects through self-financing and sales revenues. It is more difficult to resort to bank financing for funding, due to the high interest rate. The current rate burdens the project with additional financial costs, ultimately affecting the sales prices of units.
What is Tatweer Misr’s vision regarding the export of real estate?
Plans of exporting our real estate projects do not target Egyptian citizens working abroad, but mainly foreign clients. Studies show that British and Russian citizens, along with Arabian Gulf citizens, are the most interested in owning units in Egypt, which makes these countries fertile markets for this objective.
It is important to provide a real estate product that aligns with the requirements of this target group of customers, especially that British and Russian citizens prefer touristic residential units as second homes, prompting the company to market Il Monte Galala according to their criteria. We aim to market 25% of total units in Il Monte Galala project abroad. As for the Gulf area, they prefer first home projects, so we plan to participate in real estate exhibitions in the cities of Abu Dhabi and Dubai this year, to focus on marketing the company’s new project in Mostakbal City.
The Egyptian real estate market is regarded as the most affordable, compared to others in the region, giving us a more competitive advantage to expand. In addition, we have recently partnered with Liverpool FC to stimulate the company’s sales using the club’s name for marketing our projects in the UK; this represents another part of our strategy to export our projects to Europe.
What is your opinion regarding the mortgage finance system in Egypt?
The market is in need of strong real estate mortgage finance system to support customers’ purchasing decisions, where a large segment of the market is still not able to afford units, even with the facilities recently provided by real estate developers.
Moreover, mortgages help real estate companies take over their role as developers instead of financers; being both hinders expansion plans.
What is the company’s expansion plan and what are the targeted areas?
We plan to expand in West Cairo and Upper Egypt. However, investing in Upper Egypt requires a clear and strong vision by the government to provide integrated services to facilitate business in this region.
Is the company planning an initial public offering (IPO) at the Egyptian Exchange?
The IPO is one of the most important expansion plans for the company, which we will not be able to put into effect at this point. There are several requirements, which include three years of profitable financial statements, which we cannot currently meet , since the financial statements of real estate companies start showing profit after delivery and not after sale.
Should we expect a bubble in the Egyptian real estate market?
The real estate market in Egypt is extremely far from reaching a bubble. It is a real market that depends on actual needs and real purchases and prices, not abstract ones. The pricing of a unit is based on realistic costs of construction, not speculation. This, among other things, helps ensure the survival of this market.