Some real estate companies working in the Egyptian market have resorted to cash back reward offers to attract and motivate customers to buy units in their projects and stimulate their sales amid the novel coronavirus (COVID-19) crisis.
However, developers and experts disagree on the need for such offers. Some see the measure as an effective boost to sales and that it will relieve financial burdens on the customer, whilst others believe that it will affect the financial solvency of companies.
EG Master Developments warned real estate marketing companies against marketing their projects by giving commission to customers under the name of cash back, which is estimated at 9% of the unit’s value.
The company’s management confirmed that it will not deal with any company using such a system, as well as those companies where it has been proven they have dealt with this system.
Moreover, EG Master Developments said that there is no need to engage in this method, due to the harm it causes to the real estate sector. It also said that the commission amount is an inherent right of the company, and the client is not entitled to participate in it.
On the other hand, AlTameer Arabian CCO Ahmed Osama said that his company presented clients with a cash back offer during July and August.
Osama said that the offer sees customers invest with the company in an asset that the customer eventually owns, whilst benefiting from an annual 20% return on the total paid instalments.
He added that the offer held significant and beneficial returns for customers, and stimulated the company’s sales during the offer period.
“AlTameer Arabian is very keen on building a solid relationship with its clients as it is a relationship of partners, rather than buyer and seller,” Osama said, “Moreover, we reach our loyal clients through committing to scheduled implementation plans and on-site works, in addition to, using technology and social media in contacting with clients.”
He added, “Some customers were late in paying instalments due to the crisis, and as a result, the company postponed collecting dues owed by many customers for a period of three months without interest.”
Meanwhile, Rekaz Developments CEO Tamer Bakeer said that Egypt’s real estate development companies have resorted to this method for selling and making profits. Consequently, if companies offer the cash-back mechanism, then money placement is the only way to provide a return to the customer.
This will not occur in other activities which are not related to the real estate development companies’ businesses.
Rather, real estate companies can provide competitive and fair prices to customers, and payment facilities, Bakeer added.
He further noted that the customer has sufficient awareness of the local real estate market, as well as recognition of serious and non-serious offers. The customer can also identify products and projects that bring him more than just a reward on instalments.
Similarly, Mahmoud Ibrahim, a real estate expert and head of the commercial sector at Capriol Holding, said that the cash back phenomenon poses a threat to the Egyptian real estate market. The mechanism may also represent the “straw that broke the camel’s back,” he said.
Ibrahim added that offering cash back is an amateurish way of pushing aside the competition and attracting clients, without any effort or professionalism in marketing and selling. At the same time, it comes at the expense of the entire real estate market, without considering consequences of this policy on all investors and workers in the sector.