(Photo by Omar El-Qorashy )
Since its establishment 30 years ago, Tabarak Holding has become one of the most prominent real estate companies to invest in Egypt. Despite the turmoil experienced in the sector, the company maintained its investments and reassured its commitment. Tabarak Holding chairman Ali El-Shorbani announced the company’s intention to invest some EGP 6bn to 2018.
The company is currently working on four projects, and has announced an IPO with the value of EGP 600m. Daily News Egypt sat down with El-Shorbani to discuss the programme of the company’s projects, its current investments and expected profit. The interview also shed light on a conference being prepared to promote Ras Sedr as a green area and a spot for medical tourism.
Tell us about Tabarak’s real estate projects and land portfolio?
At the beginning of the 25 January Revolution, the market slowed down. For us, we only stopped operations for two months, in January and February. After that, however, things got steady and the value of real estate didn’t drop, but was rather stable. After 2013, and after President Abdel Fattah Al-Sisi was elected, people started to become more confident and things started going back to normal. During that period, we didn’t stop operating and continued with what we have started. We had in our plans the Ninety Avenue project and the Ras Sedr project, Fantasia. We started in 2013 to redo the designs for Ninety Avenue, and got the approvals for the authority [New Urban Communities Authority] and some needed licences. We got those approvals in June and started construction last year, in October.
Tell us about your Fifth Settlement project Ninety Avenue?
The progress has been good so far. The whole project is around 60 buildings and we have worked on some 20 buildings. We started drilling and building foundations and have constructed to the fourth floor in some of these buildings. This happened in light of all the challenges that the sector is facing such as lack of technical training for labour and the issue with financing construction projects from banks. We depend on self-financing. It is not that we don’t want to be financed by banks, but the issue is that banks provide loans with difficulty. The cost so far has reached around EGP 400m.
What is the total value of the project?
In light of the inflation that was experienced, it is expected to reach around EGP 5bn for both the commercial and residential. The number of units in the residential buildings is around 1,300 apartments while the commercial part will be constructed on 48,000sqm. We are expecting that the first stage will be completed by early 2016, and we are hoping that a year from now we would deliver units to the clients. We have the C zone, which we will deliver first so that people who trust in our credibility can live. We have not yet opened the door for sales, but by the end of this month we will start to open the door for selling units.
What are the prices of units that will be open for sales?
The price will be around EGP 8,000 for the square metre paid over five year instalments, not cash. The project is in the centre of the city. The commercial mall is being implemented in a very modern way, and we’ll start constructing it next year. The services offered are exceptional with garages, a centre for studying and meetings, as well as a housekeeping and babysitter service to meet all the needs of the clients.
What about the implementation period?
Within three years.
What about Ras Sedr? You have a project there, so can you tell us more about it?
During the past period, the whole focus was on Sinai and Sharm El-Sheikh. We want to say why can’t Ras Sedr be like Sharm El-Sheikh? We are currently calling for a conference that will be held 1 June under the under the auspices of Prime Minister Ibrahim Mehleb. The message we are trying to convey with this conference is that Ras Sedr should be a green city and a location for medical tourism, which is currently neglected. Why can it be the green city? It is it because you can produce electricity there using solar energy in the morning and wind energy at night. Ras Sedr has the highest wind currents in Egypt. It has amazing nature that can produce farm fresh products such as olives, and help employ locals and develop the area. We have sulphur water and sea. It is also a free pollutions zone, and this is according to the Ministry of Environment.
We are trying to invite the Ministers of Civil Aviation, Housing, Agriculture and Environment to solve the problems in Ras Sedr. It has around 100km of beaches with great weather, sand and water. It has over 100 tourism villages so accompanies with being a green city and having medical tourism, it can attract foreign tourists. Having an airport there will also help. Investors are willing to participate but there problems must be solved. You face eight or nine stages when implementing projects such as approvals of the shore protection [Egyptian public Authority for Shore Protection], approvals from the Ministry of Environment, border guards, the Military Intelligence and Reconnaissance and the Tourism Development [Authority]. All of this can postpone the process of investment. There will be no issue in having one authority that receives all the paper work. Another issue is that investors take the land on usufruct basis for 30 years that can be expended to 50 years. The demand is that it can be 50 years and can reach 99 years.
Were the investors you have talked with Egyptian or foreign?
They were Egyptian investors. They have their experience and the locals know that.
What about the Ras Sedr airport you’ve previously discussed? What’s the progress on that?
The studies were made and it got the presidential approval along with the approval of the Prime Minister. We just need to look into the project and see what can happen. The airport can be constructed over 1m sqm and is ready to be implemented.
When do you hope the airport can begin operation?
With the help of this conference and the presence of all involved parties, we can solve the problem. If it gets the approval, it can begin operation after a year for the first stage.
Going back to the company’s plans, you have previously announced that the company will invest EGP 6bn by 2018. What are the details of this investment plan?
We have the Ninety Avenue project as I have previously told you. We also have a project in Nasr City, with over EGP 600m investments, and the second stage in the Ras Sedr project. The project investments are around EGP 700m-EGP 750m. We also have another project on the Cairo- Alex road, we have received approvals for 12% of it and we’ll reach 20%, with EGP 300m. The [North] coast project will be next year.
Can you give us details on the North Coast project?
It’s around 340,000sqm close to El-Dabaa. Its beach extends some 650m. We have received the initial approvals, and I plan to meet the governor next week to finalise the paperwork. It will not just include water sports but amusement parks for children. Its implementation will start by early 2016.
What about its implementation period?
We have taken a vow that any project will take about three years to implement. The longer time the project takes the more costs it requires. This is something that reflects on clients as well. This is out policy; not to raise price on the client. And currently, the cost has increased due to the price increases in the raw materials and the labour.
What was the percentage of increase in projects prices during the past period?
Between the January uprising till June, the price increase was marginal with around 5% to 10%. Starting this year, the prices increase was about 30% to 35%. This was due to the increase in raw materials and labour.
What are the plans for the company’s Initial Public offering (IPO)?
We have four companies that we’ll have an IPO for in the stock market. All the documents are ready and we will list about 30% to 40% of our volume of investments. This will help with the financing during the coming period and we’re optimistic as we have made profits during the past three years. What delayed us was that we were trying to get approvals from the investment authority (The General Authority for investment and Free Zones). The lPO will hopefully be in June.
What are the cash flows expected from your projects?
We have the Ninety Avenue project and Capital East, which is in Nasr City. They are targeting two niches. When it comes to the finishing of our buildings, we depend on producing high quality. We place four/five options for the clients’ tastes. Ninety Avenue project is pricier than Capital East, because it is targeting above average. The Capital East project is targeting the average citizen so it has a more economic price to meet all citizens. They may include different finishing mixtures but both projects have high quality finishes.
What are the unit prices for the Capital East project?
It will be around EGP 4,000 for the square metre over the period of five years. This is a figure that is almost equivalent to the cost because this is not the project that target big profits. We will begin the implementation this month.
