Tarek Shoukry, Head of Real Estate Development Chamber at the Federation of Egyptian Industries (FEI), and Undersecretary of the housing committee at the House of Representatives, stated that relying on mortgage financing to achieve convergence between purchasing power and selling prices of properties, has become necessary, especially during the current period.
Shoukry noted that the global and local economies are witnessing a hike in prices of many commodities, including building materials which led to price spikes in construction costs, which in turn increased selling price to customers. Accordingly, mortgage finance is the best solution to maintain an active market.
He pointed out that real estate prices witnessed an increase of about 15% during the recent period as a result of the upsurge in prices of raw materials, with expectations that prices will continue to hike in exchange for the stability of customers’ purchasing power. Consequently, there is a need for subsidised mortgage financing that is carried out with easy and accessible procedures, and based on a basic philosophy that makes the unit the guarantor of financier funds not the customer’s bank credit ability.
He called for more cooperation from the banking sector with the real estate sector, providing financing in easy ways for property developers with flexible systems that maintain the continuity of development process carried out by developers, which ensures the implementation of projects on time and delivery to clients besides supporting the expansion plan of companies.
A meeting was held under the leadership of Prime Minister Mostafa Madbouly before the end of last month, in order to find out the current situation of real estate market and to discuss demands made by the Real Estate Development Chamber to the Cabinet to support local property market’s ability to work in the current global economic conditions, he said.
He further added, “The list of demands included reviewing the real impact of global increases on cement prices, which is what actually happened at the present time during the meeting with the Prime Minister, and thus real price was reached without an increase. A meeting was also held between Madbouly and steel manufacturers, and the result was a great response among manufacturers by reducing steel price by approximately EGP 1,300 per tonne during the past days.”
The second demand was the postponement of all instalments of real estate developers without interest for a period of three months, subject to renewal, similar to the period granted by the state to Egyptian Federation for Construction and Building Contractors for a period of 4 months, until it absorbs what is currently happening and interacts with new circumstances.
