Real estate investment in Egypt showed high flexibility in reforming, despite the turmoil Egypt faced in the last year, according to Ayman Ismail, partner and Chairman of Mountain View, affiliated to Dar Al-Mimar Group (DMG).
In an interview with Daily News Egypt, Ismail said the real estate sector is still a strong hedging tool against currency and inflation risks. This is in light of the continuing increase in the real estate prices, which eases these fluctuations with the low supply compared to the demand.
How do you view the partnership between the government and real estate development investors?
It is a professional trend, achieving a high level of balance in the market, and an easing in the successive price rises occurs as a result of the bid system used by the government in allocating the lands. Egypt is in an urgent need of maximising the return on one of its most important resources, which is the land, through unusual tools, like the partnership with the private sector in the process of the real estate development. The government participates as a partnership in the projects with a share in the revenues, which significantly increases the return on the country’s resources and creates income for its treasury. That strategy contributes also to reducing the increasing prices of lands offered by the developers, which ultimately leads to provide houses for the citizens in appropriate prices.
You have partnership experience with the Ministry of Housing. Can you outline what happened with this?
Yes, we agreed with the Ministry of Housing to conduct a partnership, where the state would offer the land, which is 470 acres, in exchange for about 40% of the revenues of the New Cairo project to go to the state. This is a good percentage that would maintain the state’s right, and allows the developer to make a profit benefiting the shareholders of the company.
What about the 6th of October City project?
The 6th of October City project is also through a partnership with the Ministry of Housing. The ministry participates through the land, which is about 470 acres, in exchange for 30% out of the expected revenues. The variable shares of the government in the two projects are due to the different prices in the two areas, with New Cairo more expensive than 6th of October City.
When will the company start executing the project?
We already received the land, and contracted with Dar Al-Mimar Architects (DMA), a designing and planning firm, in addition to another firm, to develop the general plan for the land. I expect the construction to start within nine months, after finishing the designs and developing the final general plan.
What about the volume of investments the company allocates for the two projects?
I do not want to reveal the amount, but it is a huge investment that would contribute, along with the other developers’ projects, to reviving the real estate market.
What about the projects the company has already delivered?
The company succeeded in delivering about seven projects between 2014 and the first half of 2015, of which three projects are in Ain Sokhna, three projects are in New Cairo, and two projects are on the North Coast. Most of these projects are not exclusive to luxury housing, but include units serving the middle class as well.
Do they include projects serving the low-income sector?
No, but they vary between luxury and middle-level housing; I reject the term Corporate Social Responsibility, and prefer citizenship.
What do you mean by citizenship?
Citizenship is the idea that each company carries out its duty towards the society, not only through donations, but through changing the culture of its employees to help the needy. We, at Mountain View, have experience in voluntary work. We are a key member in the Ma’an for Developing Slums charity. We voluntarily executed all the drawings and designs the organisation needed for free.
Can this citizenship achieve a renaissance for Egypt?
Egypt is in need of implementing a golden triangle including three sides: the first is the government or the state, through committing to its supervisory and legislative roles, and to prepare the field for everyone. The second side is civil society, through playing a more effective role in communicating with all parties, including the government, in order to enhance the life of the needy. The third side is the private sector, which is the key strong, active, and effective player in the market currently, and that is capable of advancing the country. It is also able to offer efficient development on all levels, if there is a suitable climate for that.
Does Egypt suffer from a lack of land?
Egypt has a lot of land that needs to be equipped with facilities, prepared, and wisely managed, in addition to being priced to suit the market. Egypt’s plan must include distributing the citizens, who currently live on only 6% of Egypt’s land area, to live on about 14% by 2030, and to increase the percentage to 24 by 2050 %. This requires a real effort, and a comprehensive huge development that allows for absorbing that distribution.
What does the real estate market need the most?
I believe that a consumer protection fund should quickly be established, to protect the real estate consumer from non-commercial risks, like the fund serving the stock market. The fund would guarantee the rights of workers in the real estate market against the uncontrollable risks that could face the companies, like bankruptcy or the like. The fund is suggested, and under discussion. I hope to establish it quickly.
How do you view the notion of establishing a union for real estate developers?
It is a very professional idea that should be executed in order to create a common field that allows all real estate developers to be aware of each others’ opinions on the real estate market and its development needs. It would act as a unified entity representing real estate developers and regulating the nature of their work. It would also communicate with all the concerned governmental bodies to develop the industry.
