Many shareholders in the real estate sector have called for establishing a culture that is conducive to the growth of real estate investment funds in Egypt. For several years, there has been only one real estate investment fund traded on the Egyptian Exchange, which is the Egyptians Real Estate Fund. In December 2022, Banque Misr, in partnership with Banque du Caire, Misr Insurance Holding, and Allianz Egypt, launched a real estate investment fund, named the Misr Real Estate Investment Fund 1.
Invest-Gate launched a roundtable entitled “Real Estate Funds: Unlocking Investment Opportunities”, in which Egypt’s real estate developers discussed the main obstacles facing the establishment of real estate funds in Egypt, including lack of sufficient awareness of this investment tool for the sector, high costs of establishment, and lengthy establishment procedures, in addition to tax environment that needs some amendments.
“The expansion of urban development that Egypt has witnessed is unprecedented. Thus, real estate investment funds are very important to fully benefit from this trend, which is essential amid the economic challenges that Egypt is currently facing. Real estate investment funds are among the key investment vehicles that will contribute to attracting more local and foreign investments,” said Fathallah Fawzy, Vice Chairman of the Egyptian Businessmen’s Association & Chairman of the Real Estate Development and Contracting Committee.
For his part, Alaa Wally, Advisor to the Chairman of Promotion and Business Development, stated: “The Egyptian Stock Exchange (EGX) is fully ready to support real estate investment funds and help investors. These funds are a big opportunity for small investors. One of the main advantages of real estate investment funds is to distribute risks among different instruments and also enable developers to secure liquidity at a lower cost. The main challenge impeding the establishment of real estate investment funds is the evaluation of assets and the high taxes that erode their returns.”
Similarly, Sally George, Head of the Mutual Funds Department (FRA), noted: “Real estate investment funds support financial inclusion. From 2007 until 2020, legislation was drafted for real estate investment funds, and other procedures were facilitated, such as the maximum limit for funds was eased to EGP 5m, after it was the minimum limit. Also, the regulations permit properties to be registered later, and it is not a condition to be already registered.”
“Foreign customers prefer to buy properties through real estate funds. Thus, they will play a key role in property export and bolster sales amid fluctuations in prices. Egypt needs to amend some legislation to facilitate the establishment of real estate investment funds, which has returns ranging from 5% to 10%. These funds will help non-residential investments, including educational, commercial, and medical projects. Real estate investment funds will also support Egypt’s property exports,” said Ahmed Shalaby, President and CEO of Tatweer Misr and Chairperson of Egyptian Real Estate Council, calling for the reduction of taxes on real estate investment funds.
Furthermore, Abdallah Sallam, President and CEO of Madinet Masr, clarified that real estate investment funds are a very important tool for real estate development, stressing that we should use models that have been implemented abroad concerning different real estate investment funds. He highlighted that there are already investment funds in Egypt, but they aren’t registered and are operating under what is called ‘parallel funds,’ clarifying that facilitating the establishment of real estate investment funds in Egypt will achieve balance in the market.
Nader Khozam, IL Cazar Developments Chairperson and CEO, said: “The real estate investment funds in Egypt need information to achieve their expected results. There used to be 50 profitable funds in the 1990s.”
“Real estate investment funds are crucial to support investment. Technology should be applied in the real estate sector to encourage investors. There should also be different facilities and a single source of information for customers and investors,” Ahmed Elbatrawy, Egypt MLS founder, maintained.
“MLS technology is the main driver of all real estate transactions in American, Canadian, and Mexican markets. Therefore, the launch of a subsidiary to the platform in Egypt will boost property export,” Elbatrawy added, revealing that EGP 1bn was invested in MLS Egypt to build a platform that will provide information on real estate funds, portfolios, and returns.
“The value of real estate funds in the world amounts to a total of $1.9trn. All factors indicate that real estate funds have become a major necessity. There are no obstacles hindering the establishment of real estate funds in Egypt. I call, however, for the offering of tax exemptions [for these funds],” said Hashem El Sayed, Executive Chairman & Cofounder of ODIN Investments & Executive Chairman of Egyptians Real Estate Fund.
Bassel El Serafy, Global CEO of Adeer International, and Managing Director of Paladin Properties UK, said that real estate funds are essential, as they are one of the solutions to the current problems of real estate developers.
“It is Egypt’s way to export real estate, attract investors, and provide foreign currency,” he added, pointing out that Saudi Arabia is witnessing great activity in establishing real estate funds at present.
Mohamed Galal, TSM Chairman, said: “There are currently great economic challenges in Egypt, which affect the real estate market,” adding, “Recently, there has been a presence of Gulf investment in Egypt. Meanwhile, countries near Egypt have huge investments that the state must try to attract; accordingly, the problem of return on investment (ROI) must be solved.
Olena Shirokova, President of the Ukrainian Business Council UAE, commented that real estate investment funds are important to the Egyptian economy, stressing the need for more legislative reforms and facilitations, in addition to increasing private sector participation.
Haytham Soliman, CEO of HRE Properties, UK, called on the Egyptian government to address all obstacles that prevent the establishment of real estate investment funds, affirming that the banking sector must participate more and cooperate with the government and developers to overcome all obstacles. Soliman mentioned that data availability in a comprehensive market is important for local and foreign investors.
