CAIRO: Madinet Nasr Housing plans to launch two building projects early next year and said demand for its middle income homes was holding steady despite a broad downturn in Egypt’s property market, the firm’s development director said.
Nasr City Housing, a formerly-state run firm founded by the government in 1959 and now 30 percent owned by Beltone Private Equity, has been awaiting government approval to start work on some of the best land it owns.
Work on Teegan, planned to include mixed-use housing units and commercial buildings, had been stalled for over a decade because of a dispute with Egypt’s aviation authority, but the firm expects a final seal of approval from the government and to launch the project by the first half of next year.
"The project is still waiting on government approval. We hope by the first half of next year to launch Teegan," Ibrahim El Missiri said at the Reuters Middle East Investment Summit on Monday.
Swiss-based Orascom Development Holding, known for building luxury resorts, is managing the 3.5 million square meter development with Madinet Nasr.
Madinet Nasr is also seeking to launch a project on its 5.5 million square meter plot on the outskirts of Cairo known as Kilometer 45 during the first quarter of 2012, Missiri said.
‘They need apartments’
Egypt’s property market, which had been a major driver of foreign investment and growth, has been reeling from a string of legal rows over how the government of ousted president Hosni Mubarak sold state land, depressing activity in the sector.
Land disputes have hit major firms like Talaat Moustafa Group, Palm Hills Development, and Egyptian Resorts, most of which have higher exposure to luxury property. The cases revolve around a 1998 law requiring state land be sold via competitive bidding not direct sales.
Nasr City acquired the bulk of its land bank through presidential decrees, mostly before the 1980s, and it is also positioned to benefit from pent-up demand for middle income and low-income housing in a country with an enormous youth population eager to own homes before marriage.
"This middle-income category is working fine. People in that category are willing to make that purchase. Revolution or not, they need apartments and a place to live," Missiri said.
Madinet Nasr has been selling an average of 8 to 12 apartments in that bracket per week, even after the uprising, trumping a trend of high cancellation rates and little or no sales that are dampening revenues for other developers, he added.
"After the revolution, there was a slight dip in our sales but what we think is important is that we didn’t hit the bottom, like other companies in the sector," Missiri said.
"I can’t say I haven’t been affected, but it has been buffered by middle-income sales," he added.
In 2008, the firm sold just 33 apartments, but a new management team and a sales plan that targeted a wider range of buyers has helped bring up their rates.
Nevertheless, Madinet Nasr posted a 50 percent decline in first-half net profit and like other developers in the sector complains of vague government policies that are not settling disputes over land ownership and general political uncertainty.
"Buying property is one of the hardest decisions a human being takes. People are drawn into financial commitments, they may be spending their life-time’s saving, so if you feel the state is unstable, this decision is not easy," he added. –Additional reporting by Ehab Farouk
