The Egyptian real estate sector has been the luckiest in terms of the resumption of the fallout from the coronavirus outbreak since early 2020, and this may be due to a number of economic decisions made by the Egyptian government and the Central Bank of Egypt (CBE) to support this sector, which contributes around 20% of GDP.
Moreover, despite the challenges of the COVID-19 pandemic, the Egyptian real estate sector has grown by 8% since the start of the year.
The government has made key decisions that will change the entire market in the new year, including President Abdel Fattah Al-Sisi’s decision not to commercialize any projects until they reach 30% completion. , as well as its guidelines for initiating mortgage financing. initiative with an interest rate of 3% and payments up to 30 years.
Packaging of marketing projects
President Abdel Fattah Al-Sisi has ordered that no developer can advertise or market real estate projects until 30% of the construction of the project is completed to ensure developer engagement.
Al-Sisi explained that it had been noticed that some developers were selling units even before starting construction and assured that the role of the state is an organizational role to preserve the rights of citizens and provide an investment climate. sure.
Following the president’s decision, Administrative Capital for Urban Development (ACUD) – owner and developer of the New Administrative Capital project – forced all developers to ban offering units for sale until 30% of the project be completed, from September 1, 2021. The decision applies to existing businesses and new contracts.
Accordingly, ACUD has advised potential buyers of real estate to do their research on their projects of interest before signing any contracts.
Clients must verify that the project has ministerial approval, building permits and on-schedule, and also follow the development process.
In addition, many real estate companies and real estate developers in New Alamein and the North Coast have also decided to postpone marketing campaigns for their projects until they have reached the minimum of 30% completion.
The CBE mortgage finance initiative
The CBE has launched a EGP 100 billion mortgage finance initiative targeting low and middle income homebuyers with payment plans of up to 30 years with a low interest rate of no more than 3%. Funding of EGP 100 billion could be increased with strong citizen participation.
This followed on from President Abdel Fattah Al-Sisi’s directives to help low and middle income groups obtain adequate housing at subsidized prices over a long period. The initiative stipulates that beneficiaries must be Egyptians under the age of 75 at the end of the disbursement period.
In addition, the CBE has changed some of the terms of the mortgage finance initiative it issued in December 2019 for middle-income people. The initiative allocated EGP 50 billion for mortgage financing for single people with a monthly income of EGP 40,000 and families with a monthly income of EGP 50,000 with an interest rate of 8%. The changes increased the repayment period to 25 years, instead of 20 years.
The EPC also removed the maximum net area unit requirement and increased the maximum unit price to EGP 2.5 million. In addition, the CBE has enabled banks to accept alternative collateral for financing in the event that the unit cannot be registered.
Modification of the real estate financing rules
The third decision issued by the CBE to support real estate companies came in early February 2021 to support the liquidity of real estate development companies and help them overcome the repercussions of the COVID-19 pandemic.
The CBE made a change to the rules for granting funds to real estate development companies, the most important of which was to allow banks for the first time to finance land down payments owed by their clients to real estate development companies obtaining financial statements. credit facilities, provided that the owner of the land must be a government agency. Banks must then ensure cash flow for the project and that the business has already received down payments from customers and has started construction.
The changes also made it possible to fund partnership projects between real estate development companies and government agencies, requiring companies to submit a detailed schedule for all phases of construction and review them periodically.
The move, coupled with a significant drop in interest rates, has helped real estate developers secure billions of pounds in bank financing to speed up construction plans in existing projects without affecting the growth of their land reserve.
Return of Arab investments in the local market
The past year was marked by a series of acquisitions in the Egyptian real estate market, including the acquisition of SODIC by the UAE consortium of Aldar Properties and ADQ.
In addition, Pioneers Properties for Urban Development acquired Pioneer Holding’s entire 76.45% stake in Cairo Housing and Development Company (ELKA) in a transaction valued at a total of EGP 1.085 billion or 15.77 billion. EGP per share.
In addition, Madinet Nasr Housing and Development (MNHD) is seeking to acquire the real estate company Minka Development for an amount of EGP 200 to 220 million.
The Emirati consortium of Aldar Properties and ADQ has requested the acquisition of a majority stake in SODIC without intending to remove the company from the Egyptian listing, and that its name will remain unchanged.
In December, SODIC announced that the majority of its shareholders had agreed to sell their shares. The company said that after the successful closing of the bought deal offer, the consortium will acquire 304.628 million shares of SODIC at a price of EGP 20 per share, with the company valued at more than 7.1 billion. EGP, the value of the deal reached EGP 6.1 billion.
In addition, the Qatari Diar group resumed its activities in the Egyptian market and obtained the approval of the Ministry of Housing to resume work on the “CityGate” project in New Cairo after a four-year dispute over non-compliance. the construction objective of the project.
Likewise, the entry of Arab companies into the Egyptian real estate market has been one of the most salient features of the real estate sector, whether in the new administrative capital or on the north coast, notably Reportage Properties, SKY AD. Developments and Jumeirah Egypt, all of which are companies that first entered the Egyptian market in 2021.
National identity card for each property
President Al-Sisi also ordered the establishment of a system of inventory and management of real estate assets and the allocation of a national number to each property.
Online applications to connect buyers and sellers
The real estate search engine Aqarmap launched the “Aqarmap Matcher” service to increase the efficiency of the interaction between sellers and buyers and to take advantage of marketing opportunities lost in supply and demand.
The American company Platform Leaders is about to launch on the market its new platform strategy, which is mainly based on the provision of precise and documented information and specialized analysis via a professional research team in favor of facilitating the decisions of investment and to serve real estate players.
Lizas, a prop-tech start-up, has also launched a consumer-focused real estate platform, dubbed ‘Liza’, to empower its consumers to choose properties that match their needs and dictate their rules.
Liza is a web platform that facilitates the process with cutting edge technology for a smooth user experience aimed at different segments of the company to unlock various real estate investment opportunities for its stakeholders. In addition, it aims to connect the buyer and the seller with a chat system. In addition, it allows developer sales teams to maximize the number of direct sales.