The eighth edition of the Think Commercial roundtable delved into the diversity of financing instruments in Egypt. The discussion covered the impact of Real Estate Investment Trusts (REITs) on the real estate sector, the future of financing options like bonds and sukuk amidst rising interest rates, and the role of real estate funds in the Egyptian market.
Susan Hamdy, Chairperson of Misr Fund Management, emphasized the need to activate real estate funds. These funds play a crucial role in enhancing the growth and development of the real estate investment market, benefiting both individuals and their wealth.
Contrary to losses associated with other investments, real estate in Egypt tends to yield greater gains. Investors find it a reliable alternative to assets like dollars and gold.
Ahmed Abou El-Saad, Managing Director of Azimut Egypt Asset Management, highlighted the company’s global presence across 18 countries. Their introduction of a gold fund last year aimed to assist Egyptian citizens with investment opportunities.
Amid economic crises, people are shifting away from keeping money in banks. Instead, they seek more efficient investment options. Companies play a vital role by offering various asset types, with real estate being particularly significant for Egyptians due to its wealth-preserving nature.
Hashem El-Sayed, CEO of ODIN Investments, manages Egypt’s first real estate fund. Interestingly, Egypt lacked such funds before 1997, unlike countries like Saudi Arabia and other Arab nations.
Sarah Hassanein, Managing Director of Baraka Capital, identified two investor categories in Egypt:
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- Tourism-Driven Investors: These individuals buy residential units in cities like Marsa Matrouh, El Gouna, and Marsa Alam for personal use or rental.
- Commercial Investors: They face challenges related to pricing uncertainty and lack of information on expected returns. Real estate funds can address these issues by purchasing properties for investors and managing them effectively.
Reforming Egypt’s Real Estate System
Real estate funds offer easy exit options, making them appealing to foreign investors seeking secure investments in Egypt’s real estate sector.
Ahmed Sakr, Founder and Managing Director of SDC Real Estate Fund, emphasized that reform starts with the Ministry of Irrigation. A draft law approved by the Cabinet aims to develop Egypt’s real estate market, although it has not been issued yet.
Mohammed El Kahki, Executive Board Member at Tamweel Mortgage Finance, highlighted concerns about bank facilities. Unlike other countries where facilities can extend up to 30 years, Egyptian banks often limit them to 15 years due to a short-term profit perspective.
Deputy Chairperson and Managing Director of Al Tameer Mortgage Finance, Ayman Abdel Hameed, discussed the issue of property registration, stating that they face complex procedures in this regard, especially involving the Ministries of Irrigation and Water Resources, Justice, and the Governorate where the property is located, among others. Therefore, it is necessary to resolve all these matters through a unified entity. He also emphasized the necessity of having a property ownership registry specifically for foreigners, imposed on real estate developers, aimed at creating a sense of security for foreign investors to invest in the real estate market.
Abdel Hameed stressed that real estate funds reduce risks for investors, and their staff possess the highest level of expertise to assist investors in all matters related to the real estate market.
Partner at Clyde & Co. Mostafa Elsakka emphasized that solving the issues of real estate investors lies in real estate funds, which represent a significant breakthrough in the real estate market by attracting foreign investors and exporting properties.
Elsakka suggested establishing a real estate investment fund with clear policies and listing it on international stock exchanges to attract foreign investors. He added that he believes the legislative environment for real estate funds is not bad, and he is working to persuade his office clients to invest through them.
Meanwhile, the CEO of Qasatli Company Amr Mahfouz stated that one of the main goals of real estate financing is to provide housing units for citizens. He mentioned that sometimes individuals are rejected when they apply for an apartment without being guided to the correct procedures.
Mahfouz added that the company’s role should not be limited to accepting or rejecting citizens’ applications for apartments; there should be guidance and advice provided to these citizens instead of merely assessing their status.
