Despite agreeing on the importance of the Central Bank of Egypt’s (CBE) recent initiative to finance middle-income housing with a value of EGP 50bn, real estate developers are demanding a unified, continuous, unlimited financing mechanism in the local real estate market. This is in order to reduce selling prices and support purchasing power of customers, which corresponds to the request of the Ministry of Housing to implement the initiative before demanding its amendment.
Egypt’s Ministry of Housing demanded the provision of logical payment periods for residential units instead of long payment periods.
Deputy Minister of Housing, Utilities, and Urban Communities for National Projects Khaled Abbas said Egypt’s real estate market is promising as the population increases by 2.5-3 million people annually, which requires more development projects.
He revealed that the ministry is currently reconsidering a market-oriented mechanism for land allocation will effectively facilities the process of obtaining lands.
During “More Innovative, Competitive Real Estate Market in 2020” session at the Think Commercial roundtable, Abbas pointed out that all of the ministry’s plans are consulted in cooperation with real estate developers.
He added that the CBE’s initiative to finance middle-income housing is very important in boosting real estate sales and investments, highlighting that the EGP 50bn fund allocated for the initiative is sufficient to finance approximately 50,000 units.
Tarek Shoukry, head of Real Estate Development Chamber at the Federation of Egyptian Industries, said the customers’ purchasing power has decreased despite real estate developers providing long-term payment plans over the past years, and the CBE’s recent initiative to finance middle-income housing.
He elaborated that real estate companies are expected to retreat from granting long payment periods that hinder the expansion of new investment opportunities, noting that CBE’s mortgage finance initiative will be good a solution for the low purchasing power.
He added that the CBE’s mortgage finance initiative requires some adjustments to allow a greater value for the unit to be funded.
Egypt’s real estate market in previous periods witnessed a scarcity in land offering to investors, which eventually changed when it had a good supply of lands in the market, but recently, the supply of land has increased. Shoukry demanded the market to set a clear and specific plan for land offering to ensure maintenance of strong demand.
Moreover, Chairperson and Founder of Mountain View Amr Soliman said the real estate market needs more finance for mortgage loans, and despite the importance of the CBE’s recent initiative, it covers a limited area of the market.
Soliman noted that property export, to which the government has paid great attention recently and issued effective laws to support it, is the most important element in the Law of Entry and Residence of Foreigners.
He added that non-activation of executive regulations of the Residence Grant Law in exchange for buying property created an obstacle to property export, calling for a coordination between concerned entities and amending the Law of Entry and Residence of Foreigners to grant residence in exchange for buying a property, which is limited to state-owned units only.
Holding meetings between developers and the ministry of housing to discuss supply and demand rates in the market is important to maintain the market movement, Soliman concluded.
Amr El Kady deputy CEO of Talaat Moustafa Group, said the CBE’s recent initiative to finance middle-income housing activates sales in the secondary market, which will revive real estate sales in the coming period, and that the initiative reflects interest, interaction, and dialogue between the state and developers for more benefits for Egypt’s real estate market.
El Kady stressed the necessity of having a unified mechanism and a permanent system for a mortgage financing system, not just an initiative that ends at a certain time, which contributes to bringing purchasing power and selling prices closer.
Mohamed Sultan, chairperson of SID Company, said it is necessary to find new real estate financial models to solve mortgage financing crises in the local market in order to allow developers to start new investment expansion opportunities, as demand is available but purchasing power is low.
Sultan called for initiating new mortgage and financing solutions in the Egyptian real estate market to allow developers to innovate in their projects.
Gasser Bahgat, chairperson of Najma Properties & Amaken Development, expressed that the needs of foreign customers while purchasing developments should be determined and supplied with services, that target the essential needs of foreign customers, especially in Red Sea cities that are a sought out destinations for internationals, stressing that these areas are the winning horse for real estate export in the coming period.
Mohamed El-Taher, CEO of the Saudi Egyptian Construction Company (SECON), said that the CBE’s initiative to finance middle income housing should have expanded to include larger price value units, adding that there are distinct state-produced units in Dar Masr and Sakan Misr projects.
Castle Development’s CEO Ahmed Taha Mansour said that resale in Egypt’s real estate market is important in reviving sector’s sales.
Mansour disclosed CBE’s will help in promoting sales and boosting investment in the sector.
He called for new condition and procedure that facilities foreign clients residency in Egypt.