CAIRO: “Real estate investment [in Egypt] will remain an icon among its peers in the Arab world,” said the country’s housing minister at a conference on Monday.
Real estate is “connected to important sources of investments and employment,” he added, assuring investors of the government’s eagerness to cool down the climate in spite of all the “critical events.”
Speaking at the CityScape Real Estate Summit on Monday, Egypt’s Housing Minister Fathy El-Baradei said that progress was underway to reconcile the “few disputes” with some property developers.
He offered pledges of cooperation to local and foreign real estate investors looking to enter the Egypt market.
Cityscape Egypt, in association with Next Move, opened its inaugural exhibition and conference on February 20 in Cairo, where investors and real estate professionals met to discuss the country’s sector and economic outlook.
El-Baradei admitted that there was a slowdown in 2011, but reiterated that the market incurred no major losses with real estate prices still relatively intact.
Regarding the legal disputes that forced some major real estate developers to return land to the state as a form of settlement, El-Baradei said that “the percentage of the firms with such disputes was minimal.”
Settlement talks are underway with at least two primary firms, guaranteeing mutual benefit, he said, adding that the ministry was not going to concede the rights of the state.
In the past two years, a number of real estate firms have come under fire and faced lawsuits for purchasing thousands of acres at undervalued prices directly from the government as opposed to through a public auction.
El-Baradei said that it was quite normal to have some administrative quarrels, but that it should not be treated as an indicator for future investments. He added that transparency was the best guarantee, in addition to proper enforcement of the law as “further reassurance for investors.”
When asked about the previously mentioned PPP (public-private partnership) initiative for an affordable housing project of 1 million units, he said that it was part of the ministry’s plan to promote social justice.
“We are keen on keeping a satisfactory investment atmosphere for all, but also maintaining social justice,” he said. “Previous experience in national projects has shown that when subsidies are involved, responsibility primarily falls on the shoulders of the government.”
The role of the private sector then, he explained, was to implement the units as a contractor, with the ministry inviting all willing investors as long as they bear in mind the main driving force behind the project: affordability.
Meanwhile, he insisted that the role of the ministry was not a realtor’s, but to regulate prices.
Also speaking on the first day of the summit were Neveen El-Shafie and Sherif Oteifa from the General Authority for Investment (GAFI), along with Beltone Financial’s Angus Blair.
El-Shafie provided a briefing on the regulatory framework of Egypt’s real estate sector, improving investment security and insisted that commitments with local and foreign investors shall be honored, in spite of the challenges of 2011, such as GDP shrinking by 1.8 percent and credit downgrades.
She was still confident of the potential for growth despite the increasing building costs and slow investments, because the primary drivers — stable population growth and unmet housing demands — remained.
She also revealed that figures for foreign direct investment declared by the central bank featured $420 million in the first quarter of the 2011-12 financial year, and preliminary indicators showed around $1 billion in the first half, hoping to match the previous year’s performance by June.
On his part, Blair expressed optimism but warned of the obstacles requiring attention: falling foreign reserves, a widening budget deficit and high public debt 85 percent of GDP. He added, however, that the picture was still better than the southern European countries in crisis.
Regarding the rise of the Muslim Brotherhood and its political arm, the Freedom and Justice Party — which currently dominates parliament — and the domino effects of Sharia application and Islamic financing, Blair insisted the situation would not be dire as even in Saudi Arabia, the majority of banking transactions were rather conventional and not Islamic.
Blair noted how retail stores were packed, expressing confidence in that sector and reiterating that the region’s retail capital was Cairo and not Dubai.
“[It’s] still a relatively liquid economy. The positive areas are in retail and commercial real estate, with enormous opportunities,” he noted, and that the one area that needed attention, was finding ways to improve and maximize the footfall of investing, namely mass public transport.
An exhibition was held featuring some of the major real estate players in Egypt.
