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Lack of legal transparency hinders Egypt’s property export - Daily News Egypt

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Lack of legal transparency hinders Egypt’s property export

Poor performance of traditional real estate agents has unfortunately negatively affected the profession, says RE/MAX Egypt and UAE chairperson

Chairperson and Regional Director for RE/MAX Egypt and UAE, Khaled Nasser, said that there are is legislation or mechanism in place yet concerning real estate exports, so we cannot make such an assessment.

Daily News Egypt interviewed Nasser to know the challenges facing real estate export in Egypt as well as the role of real estate agents in promoting the sector, the transcript for which is below, lightly edited for clarity:

Is there a shortage in real estate units for middle or low-income groups?

The middle and low-income groups are the highest in demand for residential units, and we suffer from a shortage of supply within this criteria. It is, therefore, important that the government provides reasonably priced lands for the private sector investors to fill the gap between supply and demand. The shortage in residential units for middle income groups is in the range of half a million units, which represents a great challenge. This is why the government should engage the private sector to balance the supply of luxury housing–which is witnessing poor demand due to the inflation–by providing increased supply for middle and low-income groups.

What are the challenges facing Egypt in exporting real estate, considering the significant return of investment that can be achieved, especially since Egypt’s market share of the real estate global export market less than 2% or $300bn?

There are no legislations or mechanisms in place yet regarding real estate exports, so we can’t make such an assessment. It is however a great opportunity for Egypt once we have the necessary framework, which will then enable us to make a proper evaluation. 

We also lack legal transparency when it comes to the ownership of properties. It might take months for a non-Egyptian to register a property in Egypt. So, the foreigner finds himself/herself obliged to make a primary contract and then bring the case to court to get authentication on the signature. These steps are definitely unacceptable, incomprehensible, and unattractive to foreigners.

What we are missing in Egypt, is an easy, clear, and fast system for registering properties. This is in addition to standard and transparent contracts, to save foreigners who want to own a property in Egypt from creating a contract, or to turn to a lawyer here or there, who might provide them with false advice. Therefore, no foreigner would buy a property in Egypt, unless we guarantee him/her a fast and transparent system for property registrations, and a standard contract agreement, in which a foreigner can register the property he/she wants to buy in couple of days.

What are the differences between real estate market in Dubai and Egypt?

There is a big difference between the real estate market in Egypt and the UAE. In Egypt, the real estate market is mostly dependent on cash payments, especially in resale operations. Meanwhile in the UAE, the market depends on small-interest mortgages ranging between 3% and 4%, which makes it attractive for many. Additionally, the real estate sector in the UAE relies more on investors and leasing-which is due to the large number of foreigners (up to 85% of the community).

On the other hand, the power of the real estate market in Egypt lies in its high population, which means there is a considerable demand for real estate. In addition to the predominance of the ownership culture compared to leasing. Therefore, the Egyptian market is certainly much bigger, but the problem lies in the weak purchasing power compared to the price of real estate properties, coupled with the lack of real estate mortgage.

The real estate market is much smaller in the UAE compared to Egypt, despite its high sales volume. This is due to many factors including the speed of the sales and purchasing cycle, the high value of the UAE Dirham, and the easy procedures and simple costs of the mortgage system, which encourages investment in both commercial and residential units. This is also due to the high value of real estate in the UAE compared to Egypt, the high investment rates, and the presence of many multinational companies’ headquarters in Dubai, which promotes investment opportunities in the administrative and commercial real estate sectors.

Please elaborate the RE/MAX Model in real estate marketing

RE/MAX is the world’s largest real estate network of franchisee-owned and operated offices. it branches out to more than 115 countries around the world with more than 125,000 agents working in over 8,000 offices. RE/MAX is also considered the fifth strongest franchise brand globally among all sectors. What distinguishes RE/MAX from other real estate marketing companies is that it does not consider a real estate agent as an employee in the company, but as a professional who is cooperating with RE/MAX to build his own office and take advantage of the RE/MAX brand and its benefits. Therefore, the real estate agent is considered the most important person for RE/MAX as he is the one who represents the brand and provides the service to the client. This is why RE/MAX’s daily focus is on developing the agents by providing them with the highest income compared to other companies, in addition to ongoing training, state-of-the-art tools, and access to a global network, which facilitates the purchase of real estate in all countries and contributes to the export of Egyptian properties abroad.

RE/MAX has also been expanding in Egypt very quickly. We currently have more than 35 offices in six governorates with more than 600 real estate agents, and we are looking into expanding to 12 governorates by 2020 with more than 1,000 real estate agents.

What is your opinion about real estate mortgages in Egypt?

Mortgage is the best solution for many of our challenges in Egypt, especially with the current weak purchasing power. There are some challenges, however, that we need to overcome at first, such as the high value of the banks’ interests, the long time it takes for loans to be approved, and the presence of many unregistered properties, which hinders the loans’ approval. Therefore, it is important to facilitate the registration of real estate properties and accelerate judicial procedures for real estate loans.

What are the challenges that face the real estate marketing sector in Egypt?

There are many challenges in the real estate marketing sector. First of all is the absence of laws that protect the rights of both parties. Most countries have unions and associations for real estate brokers responsible for ensuring the quality of the service clients receive, in addition to offering brokers adequate training, and ensuring procedures are in place to secure the client’s rights. Most real estate brokerage companies in Egypt do not work with a professional system or contracts, which allows for room for fraud between both parties. The second challenge is the lack of specialisation. It has become traditional that anyone can work as a broker to increase his income without necessarily applying professional systems or methodologies, which created chaos in the real estate market and a bad service model as a result.

Therefore, we must first work on the solutions: to establish a syndicate for real estate brokers then to license those who wish to practice the profession. Third of all is to launch legislations that protect customers from non-professional brokers and vice versa. Moreover, it is also important to have an association responsible for real estate evaluation that offers professional information and pricing criteria to regulate the current chaos in real estate pricing.

What is the importance of the real estate agent in the market?

The real estate agent plays an important role in the real estate cycle. As a professional consultant, he must have up-to-date market information, as well as knowledge of the property’s legal status and its real value in order to guarantee the best fair price for his client who is buying the property. This also applies in the case of sales transactions where the real estate agent must also possess strong negotiation skills in addition to marketing tools as he promotes and negotiates on behalf of the client to ensure the highest suitable price for the sold property.

The poor performance of traditional real estate agents has unfortunately negatively affected the profession and has led clients to diminish the importance of the real estate agent, while the agent is the most competent person in this filed. Therefore, there is a need to emphasise to clients that the real estate agent is your consultant and plays a very important role in maintaining your rights as a client.

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