The Real Estate Development Chamber, affiliated to the Federation of Egyptian Industries (FEI), has signed a cooperation protocol with Banque Misr aimed at revitalising Egypt’s mortgage finance sector.
Chamber Chairperson Tarek Shoukry said the protocol falls under the Central Bank of Egypt (CBE) initiative for providing low-interest mortgage finance to the middle-income segment. The CBE initiative provides a declining interest rate of 8%, along with mortgage finance procedures for other housing segments.
Shoukry added that the protocol aims to put in place tools for joint cooperation between the two parties to facilitate mortgage finance procedures for all those dealing with developers in the sector. It looks to create flexible work methods compatible with the nature and requirements of Egypt’s real estate market and the bank’s credit policy.
Shoukry said the protocol benefits the Chamber’s members who do not fall under the CBE initiative, as it would stimulate sales and provide cash liquidity to companies. The protocol would also provide adequate housing for customers under easy payment systems, with a payment plan of up to 20 years.
He noted that the real estate sector faces the major challenge of catering to both consumer demand and limited purchasing power. He stressed that this protocol provides a link between purchasing power and housing unit prices, making it easier for customers to buy.
Accordingly, Shoukry anticipates that this step will contribute to stimulating local market sales in the coming period. This falls in line with the Chamber’s strategy of stimulating Egypt’s real estate market and monitoring its developments, especially given the current challenges presented by the global health crisis. The Chamber has been in communication with various agencies to facilitate developers and create stimulant environment to boost the sector.
Moreover, MP Amin Masoud said the cooperation protocol would encourage customers to buy housing units they need through an affordable payment plan. It would also help in solving the challenges facing the real estate sector due to the coronavirus outbreak.
Masoud added that the protocol would also provide adequate housing for all social segments as part of state efforts that contribute to the development of the real estate market.
Real estate developers agree that although the CBE initiative is important for providing middle income segment mortgage financing, there is a need for tools that include other segments and unit types. This would include off plan housing units as well as raising the amount of finance available in the mortgage fund.
Ahmed Shalaby, Chairperson and CEO of Tatweer Misr, said the current CBE initiative is good but current circumstances require new mortgage financing systems, other types of units, and further flexibility in conditions, especially as there is the possibility of a shift in demand on space and activities available in real estate products.
Ahmed Samir, Commercial Director at El Wadi for Tourism and Real Estate Investment, said the agreement would revitalise the resale market too. It would encourage customers with the financial ability to buy ready-to-move units.
Samir added that many major real estate developers have in-demand ready-to-move units in different areas. However, customers are hesitant to buy as these are more expensive than off-plan units and are subject to short payment plans. Customers would be more motivated to buy their own housing units if there were better mortgage financing options available.
He believes that the CBE initiative needs to include all projects, regardless of the unit category or target segment of society. There also needs to be available funding at all project levels to boost the local real estate market. Samir added that the CBE initiative should include residential, tourist, commercial, medical, and administrative units to be more effective.