CAIRO: Demand for real estate in Egypt is the second highest in the region after Saudi Arabia, Ayman Ismail, chairman and CEO of Dar Al Mimar Group, said Tuesday.
Speaking at the Euromoney Egypt Housing and Real Estate Finance Conference, Ismail added, “There is more demand than supply in the lower and middle income groups.”
Demand is also driven by an increasing need for retail and office space, he said, adding that “a new law will make it illegal for 80 percent of the offices in Cairo to stay in residential buildings.”
Real estate tycoons, experts and officials gathered at the annual Euromoney conference to discuss housing finance and real estate investment in Egypt. The one-day conference was meant to be a catalyst to drive forward the real estate finance market.
“The most important driver for growth in the sector is the rising population,” Ismail said.
“Egypt’s [population] grows 2 percent annually, that’s 1.6 million people, and that’s one UAE population every three years. Real estate demand increases with marriages and in Egypt is driven by 600,000 marriages each year,” he explained.
Meanwhile, Avik Rakhit, MENA director for Jones Lang LaSalle, gave a presentation on the global market’s interest in Egypt, stressing the importance of the country’s growing population and raising demand for real estate.
Rakhit said, “In recent years, Egypt has become one of the most important real estate markets in the region. With the right policies and improvement, [it] has the potential to overtake Dubai as the main real estate investment destination in the Middle East.”
Organized in partnership with the Ministry of Investment and the Mortgage Finance Fund, the conference provided insight into one of Egypt’s most vibrant sectors.
Headed by keynote speaker, Minister of Investment Mahmoud Mohieldin, the event unveiled new projects, new collaborations and new players in the real estate sector while trying to find solutions to the most pertinent issues facing the sector today.
Richard Banks, Middle East director of Euromoney Conferences, stressed the importance of financing real estate. “We are not here to sell each other real estate, but to make the financing of this vital sector more easily available, to end users, to intermediaries and to investors. Financing is the life blood of this sector.”
Mohieldin spoke of the importance of the sector and its exceptional performance over the last few years.
“The GDP in Egypt has been 4.7 percent and we hope that it will reach 5.5 percent by the end of the year. Part of this growth, the construction sector has grown more than double that of other sectors and is the fastest growing sector bar the telecom sector,” said Mohieldin
He also said that the mortgage market was stable and was not affected by the food price shocks in 2008.
“The average rates of the mortgage from banks are stable. Also the increasing prices of food and commodities which were expected to cause instability in the real estate and construction market had no affect,” Mohieldin added.
“The average investment by development and construction companies [in the sector] has increased by 12-13 percent since 2001 and increased to 16 percent this year. The increasing value of real estate prevents it from being affected by any adverse affects, which might cause investment risks.”
The main focus of the minister’s speech was on mortgage finance especially for lower income housing which he said was a priority for the government.
“The benefits of mortgages are clearly seen in the Mubarak housing projects where 70 percent of mortgages are taken out by those with an average income of LE 1,750-2,500. Some amendments over the past year have decreased the maximum down payment for lower income groups to just LE 50,000,” said Mohieldin.
Speaking about the role of the Mortgage Finance Fund (MFF), Mostafa Haywan, chairman of the MFF, and May Abdel Hamid, his deputy, explained how the fund would make buying property easier for the lower income groups.
“We have received a fund of $300 million from the World Bank and we will use this to subsidize 65,000 low income housing units benefiting 250,000 people.”
