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La Viennoise building’s investment cost EGP 55m: Al Ismaelia chairperson - Daily News Egypt

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La Viennoise building’s investment cost EGP 55m: Al Ismaelia chairperson

We are interested in renovating historical buildings, will not be real estate developer, says Shafei

For the past 10 years, Al Ismaelia for Real Estate Investment has been pursuing a revamp of Downtown Cairo, aiming to revive the historic district to the glory of its past.

The company is passionate about creating an authentic contemporary story of a “Downtown for All”.

It has already developed and renovated several buildings in Downtown to make use of them for various purposes, including residential, administrative, and commercial activities.

On Saturday, Al Ismaelia inaugurated La Viennoise building, the first environmentally friendly historical building. The building’s investment cost amounted to EGP 55m, Karim Shafei, chairperson of Al Ismaelia for Real Estate Investment, told Daily News Egypt.

In an interview with Daily News Egypt, Shafei said that the company purchased the building for EGP 30m and invested about EGP 25m in its development and renovation.

What is the main activity of the company?

The company’s activity is based on the acquisition of properties of distinctive architectural style and then work to remove the legal complications associated with the property with several heirs. The company then negotiates with the existing tenants, taking into consideration their social dimension. These negotiations may last about five years. After that, the company starts to renovate the building and its infrastructure while preserving its original character, which represents the architectural significance of the downtown.

In light of the studies conducted by the company, it adjusts the use of many of these properties to suit the contemporary needs of the residential, commercial, and cultural areas, thus increasing the rental value of the building.

Why did you choose to invest in Downtown Cairo?

Downtown Cairo is considered an abandoned area; 30% of the units are empty, 20% are closed, 45% are for administrative and commercial activities, and less than 5% are residential. Furthermore, Property is dilapidated and lacks maintenance and services. Besides, the region includes limited commercial activities of low economic value and that are serving one segment of society.

What is the investment cost of La Viennoise building in downtown?

The investment cost of the building’s development amounted to EGP 55bn.  We purchased the building for EGP 30m and invested about EGP 25m in its development and renovation.

What is the company’s expansion plan?

Our expansion plan includes developing 23 historical buildings, including the French Consulate building and the Cinema Radio building, which was built in the late 1930s and is located on Soliman Pasha Street. It also includes the Kodak building, which was acquired in 1924 by Kodak Company where it hosted its offices until its acquisition by Al Ismaelia in 2008. The building is scheduled to be completed by the end of 2018.

We will invest about EGP 200m in those projects during the coming two or three years. We do not mind developing other buildings in other areas, however, we are more focused on developing the current buildings we have than buying new ones.

How many buildings has the company studied buying?

The total properties offered to the company amounted to about 200 buildings.

Do you plan to develop historical buildings in Alexandria?

Currently, we are focusing on Downtown Cairo, but maybe after three or four years we will look for other areas to develop and renovate.

You develop buildings to make them as though they are new. Do you plan to move into real estate development?

No, we are interested in the renovation of historical buildings.

What is value of the company’s investments?

The company has invested EGP 310m of its paid-up capital.

Does the company plan to list on the Egyptian Exchange?

The listing on the EGX is a proposal and we may go for it at any time.

What is the value of recurrent profits from renting buildings?

For a long time, we did not achieve profits, but our shareholders were aware of that and they had a long-term vision. However, recently we began to achieve profits to cover the projects’ investments.

How many buildings have been developed by Ismaelia?

We have developed about seven or eight buildings with an investment cost of approximately EGP 25m.

What is the demand for renting property in Downtown Cairo?

Nowadays, we have great demand on Downtown for commercial, administrative, and residential activities.

What are the challenges that the company faces when buying buildings in Downtown?

The most significant problem facing the company when buying some real estate is to communicate with the actual owner of the property, and the company negotiates with the extended family in cases where there is a large number of heirs, and there is a property purchased by the company from 60 heirs.

The company refused to buy a property of about 140 heirs due to the difficulty of reaching the owners. In some cases, the time period to negotiate the purchase of the property reaches four years.

When will the company receive the first tranche of the European Bank for Reconstruction and Development (EBRD) loan?

It is planned to receive the first installment of the EBRD loan, of EGP 150m, within two months for use in real estate development projects.

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