Real Estate – Daily News Egypt https://dailynewsegypt.com Egypt’s Only Daily Independent Newspaper In English Fri, 23 Jun 2017 13:32:56 +0000 en-US hourly 1 Palm Hills gets approval for development of a residential project area of 12.6 million sqm https://dailynewsegypt.com/2017/06/20/palm-hills-gets-approval-development-residential-project-area-12-6-million-sqm/ https://dailynewsegypt.com/2017/06/20/palm-hills-gets-approval-development-residential-project-area-12-6-million-sqm/#respond Tue, 20 Jun 2017 08:30:10 +0000 https://dailynewsegypt.com/?p=629689 New project primarily puts the company as the largest real estate developer in Egypt in terms of sales value and land size: Mansour

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Palm Hills Development Company said it had obtained approval from the New and Urban Communities Authority (NUCA) for the joint development of an integrated residential project in the 6th of October City. Project approval was obtained on the basis of a shared revenue system,

The project is an integrated residential city, taking place on an area of 12.6 million sqm (3,000 feddans). The city will include apartments as well as independent units, complemented by a range of commercial, educational and entertainment facilities and services, the company said in a statement.

88% of the area will be allocated to the residential components and 12% to the commercial components.
Through this joint venture, the company will undertake all activities including finance and construction, as well as development, marketing, and sales.

NUCA’s contribution will be providing the land and linking the project to external infrastructure and utilities.

The project is expected to include residential spaces ranging from 6 to 8 million sqm. NUCA will receive a cash dividend of 26% of revenues, next to an in-kind share of 371,000 sqm of the residential units and 50,000 of the commercial units.

Announcements for project openings, sales and booking are scheduled for 2018.

Chairman of the company, Yassin Mansour, said that this event marks a turning point in the company’s history, being the largest piece of land the company has ever had in its history. “It is also a quantum leap that turns the company from a strictly a community developer to a small town developer,” he added.

He expressed his pleasure in working with the Egyptian government for a second time, noting that the projects boosts the company’s land portfolio to 41 million sqm, making it the largest real estate developer in Egypt in terms of value of sales and land size.

He pointed out that the project is expected to provide 500,000 job opportunities as well as meet the housing needs of 200,000 units.

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Real Estate Development Chamber, Administrative Control Authority to end problems of real estate developers  https://dailynewsegypt.com/2017/06/19/real-estate-development-chamber-administrative-control-authority-end-problems-real-estate-developers/ https://dailynewsegypt.com/2017/06/19/real-estate-development-chamber-administrative-control-authority-end-problems-real-estate-developers/#respond Mon, 19 Jun 2017 06:30:56 +0000 https://dailynewsegypt.com/?p=629484 MoUs were signed at the economic conference in Sharm El-Sheikh have been converted into contracts, says minister 

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The Real Estate Development Chamber announced that it is cooperating with the Administrative Control Authority to solve the issues of investors with a group of ministries and government agencies. According to the chamber, it has succeeded in solving 20 problems so far.

The newly formed Real Estate Development Chamber at the Federation of Egyptian Industries (FEI) added that it prepares a number of new initiatives aimed at increasing the development rates and at facilitating the business of real estate companies. These initiatives includes cooperation with the Administrative Control Authority, which has entered into force, as well as cooperation protocols with the Administrative Prosecution Authority and the Central Agency for Public Mobilization and Statistics (CAPMAS), according to chairperson of the chamber Tarek Shoukry.

Shoukry said that the cooperation protocol with CAPMAS is in place to provide the information needed by real estate developers in order to guide their investment in its rightful place to serve development, where developers face a great lack of information and statistics.

Shoukry added that the chamber is in contact with the Ministry of Housing, Utilities, and Urban Communities to solve the problem of a high-interest rate on land instalments—applied retrospectively—which is considered a great burden on developers, especially after the recent increase in interest rates by the Central Bank of Egypt (CBE).

He pointed out that the chamber is collaborating with the parliament’s Housing Committee in discussing laws proposals that regulate the real estate sector to achieve a balance in the relationship between developers and customers without harming either party at the expense of the other as well as the relationship between developers with government agencies.

For his part, Minister of Housing Mostafa Madbouly said that the chamber’s initiative to transfer building licences to consulting offices will enter into force in July and will start in a number of cities, which are in great demand for licences.

Madbouly added that the problem of the interest rate on the instalments of land is under study with a number of parties because the exceptional circumstances experienced by the companies do not require additional new burdens.

“Furthermore, the ministry coordinates with the parliament and the chamber to prevent misleading advertising in the real estate investment sector in order to preserve this important sector,” the minister noted.” The ministry has activated the idea of partnership with the private sector in a number of projects. “The memorandums of understanding (MoUs) that we signed at the economic conference in Sharm El-Sheikh in March 2015 have been converted into contracts, and the companies we have contracted with have started implementing investment projects,” the ministry said.

The Minister of Housing said that a new package of partnership projects with the private sector would also be announced soon, stressing that the ministry and the government are keen to push the real estate investment, considered one of the main locomotives of the Egyptian economy.

Madbouly added that the ministry is preparing to offer 50 plots of land for real estate investment to achieve an integrated urban development in the new cities, with areas ranging from 4 to 400 acres.

He pointed out that 28,000 plots of land will be offered to citizens through public lot in different areas and suitable for different tranches and divided into social housing, privileged land, and over-privileged lands.

The parliament’s Housing Committee is studying a number of projects regulating the real estate sector, including the unified Construction Law and the activation of the transfer of granting building licences to consulting offices in order to reduce the role of the municipalities in cooperation with the Egyptian Engineers Syndicate, which will nominate the consulting offices, according to the head of the committee, Alaa Waly.

Waly added that the committee is studying the law of real estate developers to establish a federation similar to the Egyptian Federation for Construction and Building, which grants licences to companies and regulates their work.

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54% of Egyptian households already found housing unaffordable before the recent economic reforms: 10Tooba https://dailynewsegypt.com/2017/06/19/54-egyptian-households-already-found-housing-unaffordable-recent-economic-reforms-10tooba/ https://dailynewsegypt.com/2017/06/19/54-egyptian-households-already-found-housing-unaffordable-recent-economic-reforms-10tooba/#respond Mon, 19 Jun 2017 06:00:25 +0000 https://dailynewsegypt.com/?p=629480 Speculative buying of real estate market estimated at 25% to 30% of transactions according to CI Capital, says the report

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54 percent of Egyptian households already found housing unaffordable even before the bite of the recent economic reforms, according to 10Tooba for Applied Research on the Built Environment’s report.

The report said that with the speed by which nominal wages are being eroded, under the weight of spiking inflation, the only conclusion can be that housing costs are at a catastrophic level.

The report noted that the financial burdens do not end here, as Egyptians are waiting for a new wave of inflation during the coming financial year (FY) 2017/2018.

The economic reform decisions taken by the government in the last quarter (Q4)of 2016 have raised inflation to record levels. Housing costs, including rent, electricity, and maintenance, have been greatly affected by the reform plan. It is unclear whether these affects are directly related to decisions associated with energy and power prices for housing, or indirectly through the current economic crisis affecting real estate prices. This has made financial sacrifices for the sake of housing more arduous for poor and middle-income households.

The economic reforms that took place in Q4 2016 focused on three main actions. The first was the shift from the sales tax to a VAT (value added tax) in October. This raised taxes from 10 percent to 13 percent.

In the same month the currency was devalued, after the Central Bank of Egypt (CBE) decision on November 3rd to liberalise the exchange rate. At the same time, the government announced increases in fuel prices of between 30 percent and 87 percent.

Increases in real estate prices before the EGP devaluation 

Budget deficit and local debts, with a widening gap in foreign investment, had already placed a strain on housing costs long before November, which raised living expenses for Egyptian families.

“With the availability of foreign currency shrinking since 2011, the real estate market predicted high inflation early on, which led persons with enough disposable income to venture into real estate, contributing to a surge in real estate prices of between 35 percent and 50 percent annually, the report said. “With a market share of around 2000 units per year, analysts believe that high end real estate companies have contributed to the rise in prices through constantly offering a small number of housing units at every phase to keep demand higher than supply.”

The report stressed that speculative buying contributed to a large portion of demand, where CI Capital revealed that real estate CEOs estimated that speculative buying was behind 25 percent to 30 percent of transactions.

The report said that the government, by its part, has contributed to price increases of the real estate market and encouraged speculative buying through the deregulation of the real estate market over the last decade and a half.

The report explained that the government is also the largest owner of land earmarked for urban development, mostly new cities. In a study published last February, Arqaam Capital estimated that land prices have risen by almost 50 percent since 2013, all because of the interest in real estate and the government’s need to use its resources to recover from its budget deficit.

Half of urban residents buy their homes and are not renting, as almost 54 percent of families are homeowners. People who needed to buy apartments to live in during the last years have suffered from house price increases caused by speculation, according to the report.

More increases after devaluation

With the devaluation of the Egyptian pound in November, the costs of construction material rose, either because they are imported, or because local production costs increased. All this has led high-end and middle-income real estate companies to raise prices in line with the surge in construction costs.

The report noted that the rapid devaluation of the currency, and the rise in property prices, did not halt the increase or turnout to buy property, giving an example that the Palm Hills company declared on 22 November 2016 that all units offered for sale in a project in New Cairo on the 16th of the same month, were totally sold-out.

Inflation in housing costs estimated at 7.8% annual inflation in January 

The annual inflation in housing costs was not a factor that saw a large change by January in comparison with other expenses on food and health that estimated at 7.8 percent annual inflation.

The report noted that rents will rise by 10 percent annually, the maximum allowed for by the New Rent law, and could exceed this amount when the contract is renewed. Meanwhile, property prices were increasing by 20 percent annually between 2008 and 2016 before the devaluation of the pound and the wave of prices increased.

Expenditure and Consumption Survey (HIECS) by Central Agency for Public Mobilization and Statistics (CAPMAS) said that average rents constitute only 11 percent and 14.6 percent of total monthly expenses in rural and urban areas respectively.

Rural households seem to be at an advantage, where the relatively lower housing costs and the lower proportion of renters, may help them cope better with inflation. However, rural households earn less in cash terms than urban households, (EGP 38,300 annually rural versus EGP 51,100 annually urban). This means that the rural family has fewer chances to re-prioritise areas of expenditure with the increase in prices.

Share of household expenditure 

Therefore, some rural households would have to cut down on expenses when it comes to education, transportation, and communication to fund their housing costs, which means its members would have less opportunities in joining the job market, and with it, less chance of finding a way out of the cycle of poverty.

All these calculations are based on the HIECS estimating housing costs at less than 20 percent of household expenditure, with rent alone making up only 13 percent of expenses, rather than the more real-world figures of 15 percent to 25 percent.

“Further, the government’s is looking to increase its revenue through slapping expensive fines on more than four million families living in illegal housing, as Parliament is about to discuss a law to regularise buildings built without a permit. Parliament has also already begun discussions around abolishing rent control, which a not inconsiderable number of poor and middle-income families currently benefit from,” reads the report, “It is therefore necessary that the government issue legislation to protect those with low incomes from the increase in housing costs.”

Excerpts

Rents rise by 10% annually and could exceed this amount when the contract is renewed, says the report

The government’s is looking to increase its revenue through slapping expensive fines on more than 4 million families living in illegal housing

Arqaam Capital estimated that land prices rose by almost 50% since 2013

Almost 54% of families are home owners

Average rents constitute only 11% and 14.6% of total monthly expenses in rural and urban areas respectively

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Misr Italia, CONSTEC sign contract to construct two administrative buildings at Cairo Business Park https://dailynewsegypt.com/2017/06/12/misr-italia-constec-sign-contract-construct-two-administrative-buildings-cairo-business-park/ https://dailynewsegypt.com/2017/06/12/misr-italia-constec-sign-contract-construct-two-administrative-buildings-cairo-business-park/#respond Mon, 12 Jun 2017 07:30:57 +0000 https://dailynewsegypt.com/?p=628738 The two buildings will cost EGP 55m over 10 months 

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Misr Italia Properties and Construction and Design (CONSTEC) signed a contract to construct two multi-level administrative buildings at Cairo Business Park in New Cairo. The cost of the project comes to a total cost of EGP 55m.

Hany Al-Assal, board member of Misr Italia Holding Company, said that the contract is the first joint venture between the two companies. He said that the Cairo Business Park is the largest administrative complex at 75,615sqm, and consists of 42 administrative buildings with green space making up 70% of the total area. In addition, the park includes a hotel, a conference room, a full service area, restaurants, and parking lots.

Al-Assal explained that Misr Italia has contracted the Engineering Consulting Bureau (ECB) as a consultant to manage the project, as well as take advantage of their office expertise. They expect ECB to give them quality standards and finish the project in a timely manner.

General manager of CONSTEC Ashraf Abdel-Hakam said that the project’s execution period is ten months and the company will handle the first phase of it.

Abdel-Hakam pointed out that the first phase includes general site work, landscaping, concrete, and buildings. The two buildings are to be located on 33,000sqm of land, and each building will include a basement, a ground floor, plus 4 floors. He added that the project will be an addition to the real estate sector.

Abdel-Hakam announced that CONSTEC is currently negotiating details of some new projects with a volume of about EGP 150m.

He stressed that the company is keen to contribute to industrial, national, and developmental projects. The group is particularly interested in the New Administrative Capital project, whose aim is social benefits and impact on the Egyptian economy to alleviate the population congestion in the capital. “The company seeks to overcome all challenges of the contracting sector and the requirements of the labour market through following the latest scientific methods in management and advanced engineering solutions in the management and implementation,” added Abdel-Hakam.

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EGP 90bn revenues of implementing “reconciliation on building violations” law https://dailynewsegypt.com/2017/06/05/egp-90bn-revenues-implementing-reconciliation-building-violations-law/ https://dailynewsegypt.com/2017/06/05/egp-90bn-revenues-implementing-reconciliation-building-violations-law/#respond Mon, 05 Jun 2017 09:30:48 +0000 http://dailynewsegypt.com/?p=627850 The average revenue of implementing the “reconciliation on building violations” law is estimated at EGP 90bn, according to Adel Badawy, a member of the parliament’s Housing, Public Utilities, and Reconstruction Committee. The draft law is in parliament awaiting approval, but there is a lot of dispute between the members of the parliament on the draft …

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The average revenue of implementing the “reconciliation on building violations” law is estimated at EGP 90bn, according to Adel Badawy, a member of the parliament’s Housing, Public Utilities, and Reconstruction Committee.

The draft law is in parliament awaiting approval, but there is a lot of dispute between the members of the parliament on the draft law.

Badawy said that the law of reconciliation on building violations is one of the most important laws that are supposed to be passed by the parliament to end the chaos of construction violations.

He pointed out that the law will address the problems of violations and generate revenues for the state as a result of reconciliation.

He pointed out that the most important conditions of reconciliation in the draft law is ensuring the safety of construction of buildings and that they are not built on agricultural lands.

For his part, Moetaz Mahmoud, another member in the parliament’s Housing, Public Utilities, and Reconstruction Committee, said that the estimates of the return of reconciliation on building violations may reach EGP 120bn, pointing out that there is agreement to direct this amount to develop sewage networks in the villages.

Mahmoud noted that there are 2,900 villages that do not have sanitation.

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Azarita tenants demand decent housing https://dailynewsegypt.com/2017/06/05/azarita-tenants-demand-decent-housing/ https://dailynewsegypt.com/2017/06/05/azarita-tenants-demand-decent-housing/#respond Mon, 05 Jun 2017 09:00:33 +0000 http://dailynewsegypt.com/?p=627848 48 housing units have been provided to those affected by the leaning building, says Governor

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“While we were eating suhoor, we were surprised by the building running towards us from windows and balconies, so terrified that we left our building immediately,” said one of the tenants of the building opposite the leaning building in Alexandria’s Azarita neighbourhood.

In the early hours of Wednesday morning, Alexandria witnessed something unusual, when a 13-floor building in the Azarita neighbourhood started to lean towards a building on the opposite side. The building and all in the vicinity were also evacuated without any loss of human lives.

The nearby buildings estimated at 30. The authorities forced those buildings’ tenants to leave and were relocated until handling the crisis.

The authorities on Saturday were able to start removing the upper floors of the building, and the removing process is still ongoing.

From his part, Governor of Alexandria Mohamed Sultan said that 48 housing units have been provided in the El Amiriya cooperative housing project as a permanent shelter to those affected by the leaning building.

Heba Mohamed, one of the tenants of the leaning building, told Daily News Egypt that the shelters they were moved to are not suitable for living.

Mohamed noted that the authorities divided the tenants of the building, gathering the men in one place and the women in another, not paying any attention to family bonds.

“The new shelters are very far away and as of now we don’t know the mechanism of housing in the new shelters, whether it is ownership or rent,” she added.

Public opinion was divided into two camps, one mocking the incident and joking on social media and the other denouncing the government’s negligence in monitoring the construction of buildings, expressing their sympathy to the families who were displaced without shelter.

Building collapses are common in Alexandria and in Egypt in general and are usually attributed to violations of building specifications, illegal extensions, and a lack of monitoring.

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Real estate prices may increase 80% by year end: Mena for Development Consultancy chairperson https://dailynewsegypt.com/2017/06/05/real-estate-prices-may-increase-80-year-end-mena-development-consultancy-chairperson/ https://dailynewsegypt.com/2017/06/05/real-estate-prices-may-increase-80-year-end-mena-development-consultancy-chairperson/#respond Mon, 05 Jun 2017 08:30:42 +0000 http://dailynewsegypt.com/?p=627845 After issuing the law that grants temporary residence for foreigners in return for buying property, it is anticipated that there will be a 20% to 30% export of real estate, says Fawzy

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In an interview with Daily News Egypt, Fathallah Fawzy, the chairperson of Mena for Development Consultancy, said that the real estate sector has seen growth reaching 50%, and it may show the same increase in the coming years.

What is the maximum increase in real estate units’ prices by the end of 2017?

The cost approximately increased by 30% or 40%. Furthermore, I expect an increase in petroleum materials that will see another wave of rise in prices. Thus, an increase in cost will reach a 60-80% increase, which in turn will lead to the same rise in buying prices.

Does the stabilisation of the Egyptian pound’s exchange rate participate in stablising prices?

This will be made clear in November, since a year would have passed since the flotation. Also, after a year of flotation, the state’s plan in cutting subsidies on petroleum products or other commodities related to the sector that the government considers within the economic reform strategy will also be clear.

In your opinion, why did land prices increase in the current period? In addition, is there a way to handle or offset that increase?

The government is responsible for offering lands; however, the supply is lower than the demand. Therefore, lands are offered at high prices. Furthermore, the government joins partnerships with the private sector to develop lands for building, but the government’s share is about 40% to 45%. This is a high share and, thus, puts burdens on construction costs. In my opinion, I see that the government’s share should not exceed 15%. There are some examples for these partnerships, such as Palm Hills, Mountain View, and Arabia Group.

Which areas will change the real estate “map”?

I think that the eastern Cairo region, which extends from the New Administrative Capital until Ain Sokhna, will cause a boom to the sector, especially in first homes; and it may happen in the coming 20 to 25 years.

When will Ain Sokhna become a market for first homes?

It will take a long time to turn Ain Sokhna to a first home market. I believe it might take approximately 40 years until the development and construction reaches such an area. Only then may it become a market for first homes.

What is your opinion regarding the mechanism of offering lands in the New Administrative Capital?

It is considered a successful offering, as the media is pushing for marketing the New Administrative Capital. Besides, the government pays great attention to the New Administrative Capital, proof of which could be found by the quick development in the new city and the rapid connection established between lands and facilities. Besides, the government’s announcement to move the government’s agencies to the capital gives the area attraction.

What is your expectation of growth in Egypt’s real estate market?

The sector is witnessing a boom, and I think the growth will continue because of the high demand for lands, utilities, and housing units. In recent years, the sector has seen growth reaching 50%. I think growth in the coming years will witness the same increase.

Do you expect an imminent bubble in the real estate market?

There is no bubble in the real estate market, because all real estate projects are sold off-plan. For example, say the developer builds a phase that has 10,000 units. They first offer the units and then build them, so that if the units were not sold, they would not be built—and this is why there is no bubble. This bubble means there is adequate supply and no demand. Furthermore, if the developer offered class A units without the demand to meet it, they would modify the master plan of the project to meet the demand.

Do you think the price increase in units that reached about 40% may change clients’ purchasing preferences?

This is what has already happened in the market, which pushed developers to minimise unit sizes, as the largest space offered currently does not exceed 160-165sqm. Furthermore, some companies and developers gave more options to ease payments, such as extending the payment period and decreasing the down payment.

The Egyptian pound flotation caused some troubles to some construction companies. In your opinion, how did these companies operate in that case?

Affected construction companies can handle the issue with the private developer, but the issue is really with the contractors who work with the government in its social and middle-class housing.

What is your evaluation of the government’s social and middle-class housing projects?

In the current year, the government had great accomplishments in social housing projects. I have a point of view that the government does not have the abilities to develop 90sqm units; I see it can develop social housing with 60sqm or 70sqm.

What are the opportunities that make the real estate sector remain strong?

The demand and the increase in population is the core factor that maintains the sector’s strength. The demand is close to 1m units annually. The demand on the private sector products is estimated at 100,000 units y-o-y.

By the end of 2017, what percent of properties do you think is sold to foreigners or Egyptian expats?

The Egyptian cabinet approves temporary residence for foreigners in return for buying property. Once it becomes a law, it is anticipated that there will be a 20% to 30% export of real estate.

What is your evaluation of the government’s role in the real estate sector?

The government in the current period sells lands and develops projects with prices that are lower than the developers’ projects; in other words, the government is competing with developers that had sold lands to it. I think the government has to define its role in this regard.

Shall we expect new investments in the real estate sector in the coming period?

If the government developed the partnership with the private sector to apply the general developer system, we will see more investments pumped in the sector from Arab and GCC investors, especially Saudi Arabia, as investors are specialists in developing lands and infrastructure.

Why don’t we see foreign investments, such as American or European, in the real estate sector?

Because the mechanisms of the real estate market in these states are very different from Egypt, as the mortgage system there is very effective and more flexible than in Egypt; besides, the interest rate on the mortgage system in these countries is low on grace period—approaching 20 years—while in Egypt, the interest rate is very high, approaching 25%.

What is your opinion regarding the real estate regulation?

It is good, and the most important thing is that it mentioned a specific period of project implementations according to each project’s master plan in order to avoid trading in lands and then selling them later on at a higher price. Any delay will lead the developer to pay fines.

What is the business of Mena for Development Consultancy and its clients?

The company was established a year ago, and we provide real estate consultancy to new developers and companies in order to avoid problems with low cost and achieve the projects with the same planned cost and minimal losses. Our customers are Polaris, Beta Egypt, Mabany Real Estate, Delta Capital, and Abraj Misr.

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2 June deadline to serve units allocated for Egyptian expats https://dailynewsegypt.com/2017/05/29/2-june-deadline-serve-units-allocated-egyptian-expats/ https://dailynewsegypt.com/2017/05/29/2-june-deadline-serve-units-allocated-egyptian-expats/#respond Mon, 29 May 2017 09:30:52 +0000 http://www.dailynewsegypt.com/?p=627132 1,150 units are offered to Egyptian expatriates in Madinaty, Al Rehab, and Dar Misr

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Assistant minister of housing, utilities, and urban communities Khaled Abbas revealed that 2 June 2017 is the deadline for reserving units and lands offered for Egyptian expatriates.

Abbas added that the total remittances made by Egyptians abroad to reserve land and apartments offered by the Ministry​ of Housing to them exceeded $240m, since the opening of the reserving phase until now.

Abbas noted that the lands and residential units are witnessing a great demand of reservations, especially in the cities of New Cairo, Al Rehab, and Madinaty.

He pointed out that there are cities where whole lands have been reserved, including in Obour City and New Cairo.

“For the offered residential units, all the supply has so far witnessed a great demand for the initial reservation,” said Abbas. Reservation is made through the New Urban Communities Authority’s (NUCA) website, after the transfer of the required amounts of money, he added.

In early May, the Ministry of Housing announced the opening of the reservation phase on NUCA’s website for lands in Bayt Al Watan project, Madinaty, Al Rehab, and Dar Masr for Egyptians living abroad.

For his part, Minister of Housing Mostafa Madbouly said that the new land offering includes 3,738 plots of land within Bayt Al Watan project in nine new cities: New Cairo (2,191 plots) in Districts 3, 4, and 5; in Bayt Al Watan area and 6th of October City, the ministry offers 323 units in the northern expansion; the new city of Damietta has 128 plots, and 359 plots of land along Bayt Al Watan area in the north of the coastal road. Moreover, it offered 230 plots of land in Badr City, 195 plots in New Assiut within a distinguished housing area in the south east expansions, 48 plots in New Qena, and 58 plots in New Aswan, 66 plots of land in Obour City and 140 in Sadat City.

Regarding the offered units, the minister pointed out that the new offering includes 1,150 units in Madinaty and 1,161 units in Al Rehab. There were also 3,909 units in Dar Misr divided in eight new cities, as follows: 995 units in the first and second phase of the project south of the Oasis Road in 6th of October City; 500 units in the second phase on 115 acres in 15th of May City; 642 units in the first phase in 10th of Ramadan City; 541 units in the first and second phase in residential area No. 17 in Sadat City; and 531 units in the second phase of the new city of Burj Al Arab. Additionally, there are 500 units in the first and second phases in Badr City, 172 units in the first and second phases in Obour City, and 26 units in the first phase in New Damietta City.

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HHD, Al Oula sign EGP 500m finance lease to develop New Heliopolis City utilities https://dailynewsegypt.com/2017/05/29/hhd-al-oula-sign-egp-500m-finance-lease-develop-new-heliopolis-city-utilities/ https://dailynewsegypt.com/2017/05/29/hhd-al-oula-sign-egp-500m-finance-lease-develop-new-heliopolis-city-utilities/#respond Mon, 29 May 2017 09:00:18 +0000 http://www.dailynewsegypt.com/?p=627121 Heliopolis Company for Housing and Development (HHD) signed a finance lease on Thursday worth EGP 500m with Taamir Mortgage Company (Al Oula) to finance the work on utilities in the New Heliopolis City project. During the signing ceremony on Thursday, Hassan Hussein, the chairperson of Al Oula, said that the financing will be made available …

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Heliopolis Company for Housing and Development (HHD) signed a finance lease on Thursday worth EGP 500m with Taamir Mortgage Company (Al Oula) to finance the work on utilities in the New Heliopolis City project.

During the signing ceremony on Thursday, Hassan Hussein, the chairperson of Al Oula, said that the financing will be made available under the finance leasing system in coordination with Banque Misr.

Hussein added that Banque Misr would save about 90% of the financing, while Al Oula would provide its remaining share.

Hussein noted that the financing period is seven years, with a one-year grace period at a variable interest rate.

He pointed out that his company will play the role of grantee agent and will provide the financing through a finance lease system for the implementation of water and electricity stations in New Heliopolis City.

In early May, the HHD leased a plot of land to Al Oula so that the former would establish a sports club worth EGP 500m.

The HHD clarified that it has selected Al Oula out of three offers by companies that specialise in leasing, because Al Oula has the lowest cost in terms of administrative benefits and expenses.

The HHD said that the value of leasing land with an area of ​​52 acres will be allocated to finance the construction of power stations and water carrier line in New Heliopolis City.

In an interview with Hany Al-Deeb, CEO of the HHD, told Daily News Egypt that the cost of developing 665 feddans (690.2 acres) in New Heliopolis City increased by 20% because of the pound flotation, noting that the cost was estimated at EGP 30bn—including the price of the land—before the flotation, which now surged to EGP 35bn.

Moreover, in February, the HHD signed a contract with Arab Contractors for the restoration and development project of Grenada City’s historical building, located in Heliopolis, with the attendance of the Minister of Public Sector Affairs, Ashraf El Sharqawy, and Cairo Governor Atef Abdel Hamid.

The renovation project of the building is expected to cost around EGP 37.2m and to be finished within one year. “The renovation of Grenada building, as well as Merryland Park, is an important part of the plan to restore Cairo governorate’s unique architectural style,” said Abdel Hamid during the press conference.

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Propertyfinder receives demand requests for property worth EGP 4.6bn in Q1 https://dailynewsegypt.com/2017/05/29/propertyfinder-receives-demand-requests-property-worth-egp-4-6bn-q1/ https://dailynewsegypt.com/2017/05/29/propertyfinder-receives-demand-requests-property-worth-egp-4-6bn-q1/#respond Mon, 29 May 2017 08:30:14 +0000 http://www.dailynewsegypt.com/?p=627112 12% growth in hotel industry in Egypt, says Propertyfinder’s executive manager

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In an interview with Daily News Egypt, Mohamed Hammad, the executive manager of Propertyfinder, a real estate website that has been providing the tools to help consumers find the properties that fit their needs, said that the real estate sector will witness an increase in prices by approximately 30% during 2017.

What areas have the highest demand for apartments?

The top six areas are New Cairo, 6th of October City, Sheikh Zayed, Ain Sokhna, Nasr City, and Maadi.

What is the size of demand for residential properties on Propertyfinder?

The demand for residential units and properties constitutes about 70% of all total searches.

When did Propertyfinder start its business in Egypt?

Propertyfinder is a multinational company based in the United Arab Emirates (UAE) that was established more than 10 years ago and started its business in Egypt in 2013. We don’t buy units, but we are a channel to market units. Furthermore, we operate in six countries besides Egypt: Saudi Arabia, Qatar, UAE, Bahrain, Lebanon, and Morocco.

What is the size of demand that Propertyfinder received in 2016?

We received purchase demands estimated at EGP 3.3bn in 2016. We expect more in 2017 after the flotation of Egyptian pound.

What is the percent increase in prices in real estate units during 2017?

I expect an increase of 15% to 30% and it may reach 60% during 2017.

Does the increase in prices redirect the clients in their sale preference?

The clients who target class A don’t change their preferences. However, there are some clients who redirected their sale preferences from class A to B according to their budget.

Furthermore, I expect that demand on rent will increase by at least 50%.

What is the percent of rent demand that Propertyfinder receives?

30% of our clients demand renting units in the top six mentioned areas.

What are the areas that have the highest price per metre?

The highest is Fifth Settlement. However, the price of the metre depends on facility management and services. The average of the metre price in New Cairo is between EGP 11,000 and EGP 14,000.

Do you expect a real estate bubble?

After the Egyptian pound floatation, the local real estate market became attractive to expats, especially those from the Gulf Cooperation Council (GCC) countries, and those arrive during the summer season. Furthermore, Egyptians believe that the real estate is a safe haven in which to invest money. I don’t think that there will be a real estate bubble in Egypt, but prices may stabilise with no increase—besides, offering long-payment periods that could reach 15 to 20 years. The saturation is in class A; thus, developers will focus in the coming period on classes B and C.

How does the appreciation in the dollar value affect the real estate market?

In the residential sector, the dollar value will have both a positive and a negative effect. Positively, it will increase Egyptian expatriates’ sales. Negatively, it will increase the prices of construction materials.

Which areas will change the real estate “map”?

The New Administrative Capital will change the map, although land prices are high; however, the government provided discounts of 25% on lands.

Do you receive demands to buy residential units in the New Administrative Capital?

Yes, people are searching all the time for property in the New Administrative Capital and El Mostakbal City.

What is the demand in percent of Egyptian expatriates on property?

The demand is approximately 5% to 10%.

What is the size of demand requests that the company received in Q1 2017?

It is EGP 4.6bn, which is higher than the whole of 2016 and 2015.

Do you receive requests for property in Upper Egypt?

We receive few requests for property in Upper Egypt.

What area has the highest demand for people to purchase second homes?

In the recent period, Ain Sokhna is the highest, but I think that after Ramadan, the North Coast will witness a great boom, as during the summer, there are more services to be provided in the North Coast than there are in Ain Sokhna.

Which areas are more developed and could become candidates for clients’ first homes?

Ain Sokhna will witness attraction after New Galala City.

What are the challenges that Egypt’s real estate sector faces?

There is no monitoring on the secondary real estate market, besides the successive increases in prices and the developers’ commitment in delivering units period. Furthermore, providing units for class B and C.

What is the size of growth in Egypt’s hotel industry?

The sector is growing by 12%.

What is the total size of units the company marketed?

The total number of sold units is 525,725, for a total of an estimated 34 million sqm during 2016.

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Selling property to foreigners exceeds $10bn annually: Hesham Shoukry https://dailynewsegypt.com/2017/05/24/selling-property-foreigners-exceeds-10bn-annually-hesham-shoukry/ https://dailynewsegypt.com/2017/05/24/selling-property-foreigners-exceeds-10bn-annually-hesham-shoukry/#respond Wed, 24 May 2017 08:30:11 +0000 http://www.dailynewsegypt.com/?p=626650 For $100,000, which is approximately EGP 1.5m, a person could purchase a luxury apartment in the most exclusive areas in Cairo, says  CGP chief projects officer

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Returns from selling property to foreigners may exceed $10bn annually through the implementation of a plan to market Egyptian real estate products externally, according to Hesham Shoukry, head of the Real Estate Export Council.

Shoukry told a state-owned newspaper that the Egyptian market is one of the most promising and distinctive markets around the world.

He pointed out that the real estate sector is capable within three years of being one of the most important sources for bringing hard currency to Egypt through the sale of real estate to non-Egyptians.

Shoukry noted  that there is an added value to the idea of exporting the property to non-Egyptians as one of the sources of foreign income, namely to bring in more foreign currency through increasing the tourist nights to be spent by owners of those properties in Egypt.

”There is a recent study that confirms that every real estate unit that is sold to a non-resident in the country adds 800 to 1,000 tourist nights, besides the return of the sale of the property, in addition to the tourist promotion by the foreign buyer to Egypt with his friends through hosting them at his property inside the country,” Shoukry said.

“Liberalisation of the exchange rate reduced the value of the property if valued in dollars, which means that Egypt has a large export potential compared to the competing countries in the region, such as Turkey, Dubai, and Greece.”

Furthermore, Capital Group Properties’ (CGP) chief projects officer and member of the Real Estate Development Chamber of the Federation of Egyptian Industries (FEI), Amgad Hassanein, told Daily News Egypt that in light of the US dollar appreciation against the pound, the Egyptian real estate market has become a very attractive investment option, adding that for $100,000, which is approximately EGP 1.5m, a person could purchase a luxury apartment in the most exclusive areas in Cairo.

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Lack of maintenance, low facility management skills wastes EGP 20bn https://dailynewsegypt.com/2017/05/24/lack-maintenance-low-facility-management-skills-wastes-egp-20bn/ https://dailynewsegypt.com/2017/05/24/lack-maintenance-low-facility-management-skills-wastes-egp-20bn/#respond Wed, 24 May 2017 08:00:58 +0000 http://www.dailynewsegypt.com/?p=626647 The higher  maintenance deposit value, the higher  value of the property in case of resale, says Diaa

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In light of the high rates of waste of real estate wealth in Egypt due to neglect of maintenance and an increasing number of building collapses, real estate developers started thinking of mechanisms to maintain real estate’s value, such as establishing or hiring facility management companies to manage their projects after delivery. Furthermore, the developers called upon the government to adopt a unified construction law that includes controls to preserve real estate wealth or issue a separate law to preserve and maintain buildings.

Professor of civil engineering at Cairo University and real estate valuation expert Ahmed Anis said that the real estate sector in Egypt lacks periodic maintenance of real estate, whether old or newly developed.

Anis added that the real estate wealth in Egypt is estimated at EGP 2tn, and because of the annual negligence in the maintenance process, the volume of depreciation reaches 0.5% to 1% of its value, equivalent to between EGP 10bn and EGP 20bn.

He noted that neglect of maintenance may lead to higher depreciation rates of about 2% of the total value of real estate wealth, which is exacerbating the housing crisis due to high rates of building collapses and a resulting lack of habitable housing.

He pointed out that the average age of a property in Egypt is between 50 and 70 years, which is low due to negligence, because engineering estimates indicate that the age of a property can be 80 years at least in case of periodic maintenance.

Tarek El-Gammal, chairperson of REDCON Real Estate Development said that the real estate market must be prepared once again to develop a strategic plan for the development of old real estate wealth to revive it and save it from collapse by beginning maintenance projects quickly.

He added that the market cannot continue to launch more projects and develop new urban areas, while there is a deterioration of services and neglect of maintenance. However, maintenance and adding more services would contribute to a build-up of added real estate value in the future.

From his part, Ashraf Diaa, managing director of ERA West Associates, said that the higher the maintenance deposit value, the higher the value of the property in case of resale.

He explained that the low maintenance deposit affects the purchase process, because the asset value decreases due to neglect.

After 2011, the facility management industry in Egypt has been growing year after year due to a boom in the real estate sector. The sector has witnessed a hike in investments and the number of luxury projects in different areas, therefore developers expressed the importance of facility management agencies to preserve their real estate assets while also maintaining clients’ satisfaction with the quality of the property.

Some real estate developers launched initiatives related to establishing new independent facility management companies or provide management companies with facility management training.

There is an urgent need for such an industry as real estate wealth is either wasted or collapsing as residents or tenants―many of whom have no experience in the sector—have become their own facility managers. With time, problems surface, according to Ashraf Dowidar, CEO of ARDIC for Real Estate Development.

In April, ARDIC launched Qeema, a facility management company, that started its work in the same month by managing two ARDIC projects.

Furthermore, he added that the company will provide paid services for other clients and the company started communicating with some companies and developers about managing their compounds and administrative offices.

Dowidar noted that the developers see that there is a problem because there are no competencies in this field, stating that they had agreed with the American University in Cairo to develop a diploma in facility management.

In this regard, ARDIC conducted a course for 30 people, and about 24 individuals have received an experience certificate from the International Facility Management Association (IFMA).

Believing in the importance and role of facilities management, ARDIC sponsors the innovation centre at the Faculty of Engineering at Ain Shams University.

From his part, Ashraf Salman, the chairperson and CEO of AUR Capital and executive president of ARCO, said that there is an urgent need for a real estate management industry in Egypt, and therefore ARCO would separate its facility management department from the company in order to be independent and provide services to other developers.

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Egypt’s spending in built environment increases by 62% https://dailynewsegypt.com/2017/05/24/egypts-spending-built-environment-increases-62/ https://dailynewsegypt.com/2017/05/24/egypts-spending-built-environment-increases-62/#respond Wed, 24 May 2017 07:30:30 +0000 http://www.dailynewsegypt.com/?p=626636 The real per capita spending in new cities dropped to EGP 16,916 per person, compared to the nominal EGP 19,855 per person, according to the report 

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Total planned spending in built environment increased by 62% from last year, from EGP 98.9bn to EGP 159.8bn in real terms (EGP 187.4bn in nominal prices), according to the Built Environment (BE) Budget 2016/2017.

10 Tooba for Applied Research on the Built Environment recently issued its second Built Environment Deprivation Indicator (BEDI) based on BE Budget 2016/2017.

The BE report said that spending-to-population ratio (SPR) disparities between the different regions of Egypt are high, especially in the Greater Cairo, Suez Canal, and frontier regions, which remain much higher than the parity.

The report added that the equity or the parity is 1.0, while over-spending is more than 1.1 and deprivation is less than 0.9.

In the regions of the Delta and Upper Egypt, the spending-to-deprived population ratio (SPDR) was almost half parity, showing a continuum of deprivation that ignores their needs.

The report noted that Alexandria was the only region where spending was near par with needs (1.1). Spending was higher than parity in Greater Cairo (1.8), and over three times parity in the Suez Canal region (3.2)—evidence of their political importance. However, spending rates relative to needs were extremely high in the frontier region reaching 15.9 times parity.

The report mentioned that BE Budget 2016/2017 continues to shed light on spatial justice in Egypt by analysing public investment in Egypt’s 27 governorates, according to the six sectors that constitute the Egyptian built environment: housing, urban development, drinking water, sanitation, electricity, and transportation.

The report said that SPR spending on local projects in Greater Cairo decreased to 1.3 in 2016/2017, instead of 1.9 in 2015/2016. Furthermore, it decreased to 0.6 in 2016/2017, compared to 0.7 in 2015/2016, while it increased to 2.7 in the Suez Canal region, compared to 1.3 in 2015/2016.

In the Delta region, the SPR spending remained the same at 0.6 in both 2015/2016 and 2016/2017, and it increased in Upper Egypt to 0.7 instead of 0.5 in 2015/2016, all which are under the deprivation level estimated at 0.9.

Whilst, in frontier governorates, SPR spending was the highest, estimated at 7.9 in 2016/2017 compared to 5.6 in 2015/2016.

“The SPR was eight times the population in the frontier region; however, the rates of spending-to-population in the regions of the Delta, Upper Egypt, and Alexandria remain less than the level of parity by about half,” the report read. “When the shares of each of the six regions from public expenditure were compared to their shares of people living in deprived conditions, large disparities between spending and needs were revealed.”

The report pointed out that the ratio of spending on the existing BE, as well as new cities, improved a little over the past year, where the share of spending on local projects in the existing BE grew from 48% to 66%, while for new cities it dropped from 52% to 34%.

However, it remains far from equitable, where only 66% of public spending goes to 98% of the population, while the remaining third goes to 2% of the population that live in the new cities.

Additionally, public expenditure on new cities in five governorates, including the three governorates of Greater Cairo (Cairo, Giza, and Qaliubiya), was greater than spending on the existing BE in those governorates. This is evidence of the political drive favouring new cities over the existing cities and villages in these governorates, such as the New Administrative Capital, despite the lack of accessibility to new cities, according to the report.

More than 98% of Egyptians live in the mainstream local municipalities, and around 2% of Egyptians live in so-called new cities, which are under the administration of the New Urban Communities Authority (NUCA), affiliated with the Ministry of Housing.

The report noted that the per capita spending in new cities dropped to EGP 16,916 per person in real terms (From EGP 19,855 per person nominal).

Moreover, the overall per capita spending there still saw an 8.2% increase on fiscal year (FY) 2015/2016. When using Egypt’s total population, average per capita spending in real terms is EGP 360 per person (EGP 422 per person nominal), with the same increase over last year.

The report lighthearted that the per capita spending in all the governorates of Greater Cairo was higher than the average, with spending increasing by a massive 54% from last year in real terms.

The governorate of Beheira recorded the lowest per capita share for the second consecutive year, despite a 55% increase over the previous year (The New Valley was lower, although it does not yet have a functioning new city).

On the other hand, Damietta had the highest drop in per capita spending from last year (-85%), although it still had per capita spending that was higher than the average (EGP 597 per person).

Alexandria saw the second highest decline, by 79% to EGP 100 per person, or about a third of the average.

The Matruh governorate had the highest per capita spending on new cities for the second year running, with an increase of 17% to EGP 5,123 per person.

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SODIC achieves total revenues of EGP 703m in Q1 https://dailynewsegypt.com/2017/05/16/sodic-achieves-total-revenues-egp-703m-q1/ https://dailynewsegypt.com/2017/05/16/sodic-achieves-total-revenues-egp-703m-q1/#respond Tue, 16 May 2017 15:27:31 +0000 http://www.dailynewsegypt.com/?p=625723 SODIC records triple digit growth in profit, estimated at EGP 211m

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Sixth of October Development and Investment Company (SODIC) achieved EGP 703m revenues, up 275% year-on-year (y-o-y), according to its consolidated financial results for the first quarter (Q1) 2017 on Tuesday.

SODIC has achieved a net profit estimated at EGP 211m, up 312% y-o-y, with a net profit margin of 30%.

The report added that the company’s cash balance reached EGP 2.8bn.

Maged Sherif, managing director of SODIC, said that the company has delivered 399 units during Q1 2017 and that these deliveries represent an increase of 295% y-o-y, with Eastown Residences and Westown Residences accounting for more than 90% of the units delivered.

Sherif noted that the triple digit growth in revenues reflects the ramp up in delivered units. Revenues were bolstered by deliveries in Eastown Residences and Westown Residences that accounted for more than 80% of the delivered value.

He pointed out that the gross profit increased 240% y-o-y to reach EGP 259m, reflecting a gross profit margin of 37%.

He attributed the decline in margins during Q1 to the effect of the delivery of the early phases of Eastown that began in May of 2016.

“Operating profit for Q1 rose to EGP 215m, up 330% from the same period last year. Operating margins improved by 3% to 31% as revenue growth outpaced growth in operating expenses. Solid profitability was delivered with a net income of EGP 211m, up 314% y-o-y. The net profit margin of 30% recorded an improvement of 3% from the same period last year,” Sherif added.

Sherif said that SODIC’s bank debt to equity ratio remained low at 0.3x at the end of Q1, with bank debt outstanding at EGP 1.2bn. A medium-term facility package in the range of EGP 1.3bn was signed with the Arab African International Bank (AAIB) in March with a maturity of six years.

He continued saying that cash and cash equivalents balance stood at EGP 2.8bn during Q1. The company purchased over EGP 1bn of treasury bills during Q1, securing higher returns on these balances.

SODIC closed the first quarter with a recorded EGP 1.2bn in net contracted sales, showing a strong start for the current year, according to the financial report.

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Egyptians invest their dollars into real estate, pushing prices up 40% since flotation https://dailynewsegypt.com/2017/05/16/egyptians-invest-dollars-real-estate-pushing-prices-40-since-flotation/ https://dailynewsegypt.com/2017/05/16/egyptians-invest-dollars-real-estate-pushing-prices-40-since-flotation/#respond Tue, 16 May 2017 10:00:51 +0000 http://www.dailynewsegypt.com/?p=625561 Demand keeps growing despite unjustified price hikes, says head of Building Materials Division

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Most real estate developers claim that the increase in prices is due to the 100% increase in the price of raw materials after the Egyptian pound flotation.

The Central Bank of Egypt (CBE) had decided in early November to liberalise the exchange rate, when the dollar value reached EGP 19.

Therefore, the developers see that big jump in dollar value affected the cost of raw materials for the construction process. Companies raised the prices between 15% and 40%.

The majority of Egyptians are choosing to buy property as a safe haven against the large changes in the value of the Egyptian pound, which prompted many companies to raise prices to stimulate clients to buy at the moment, in addition to convincing them that the value of real estate increases with the high prices.

A recent study conducted by YouGov revealed that the trend of 48% of respondents wanted to invest in real estate after the pound’s flotation.

Tom Rhodes, exhibition director of Cityscape Egypt, said that real estate developers have raised their prices by rates ranging between 25 and 30%, following the decision to float the Egyptian pound last November.

Emad Al-Masoudi, the chief executive of the online portal Aqarmap, told Daily News Egypt that real estate prices rose during the last three months of 2016 by 16% to 35% during the year, while property prices in the previous year rose by 13%.

Ashraf Dowidar, CEO of ARDIC for Real Estate Development

At the same time, real estate prices during the first three months of the current year saw a monthly increase of 5%, recording a 15% increase during the total three months. This increase is an adverse reaction to high inflation.

Al-Masoudi added that it is certainly a corrective case to adjust market prices to match the dollar.

At the Cityscape Egypt Conference held in March, he said that real estate prices rose by 9% during one month after the floating of the pound and rose again by 5% at the beginning of the current year, and then again by about 35% during the first quarter of the current year. He expected that prices would continue to rise to 50%, but not more than that.

Ashraf Dowidar, CEO of ARDIC for Real Estate Development, told Daily News Egypt that the company raised its prices by 25%, adding that this increase came as a result of the contracts signed with contractors at the time of having the price of the dollar at EGP 7, but that when the company opened the door of booking units, the dollar reached EGP 12, up about 70%; and in the current period after the flotation, the dollar value reached EGP 18 and the contractors are asking for an adjustment in the price.

Therefore, the cost of construction increased by 100%, while the natural increase in prices reached 40% to 50%.

“We are increasing with the extension of payment to facilitate the process to the customer,” said Dowidar.

On the other hand, Ashraf Salman, the chairperson and CEO of AUR Capital and executive president of ARCO said that the company did not increase its unit prices by more than 15% after the flotation decision, while maintaining long-payment periods set by the company before the flotation for up to 12 years.

Ashraf Diaa, the managing director of ERA West Associates, said prices had risen twice, the first time before the flotation and dollar appreciation in March 2016 and the other time after the flotation in November. Before the flotation, some companies and developers stopped their sales because of recent increases in the price of the dollar and its unavailability to reoffer their project with higher prices, according to the dollar value at that time.

ERA Commercial Real Estate Egypt is a full-fledged real estate firm, specialised in providing commercial and residential real estate services in Egypt.

Diaa told Daily News Egypt that after the flotation, price increases ranged between 20% and 38%.

Diaa added that as a result of economic circumstances and the pound depreciation, which fell after the flotation, the buyer was forced to accept the highest prices and forced the developer to set up facilities such as a 10–year payment period. For example, the Lavande project of ARCO gives a payment period of 12 years.

“Some companies resorted to decreasing the down-payment or remove it altogether and all the facilities provided by the companies, because the analytical situation of the market says that the prices of raw materials are increasing and developers cannot provide more increases in unit prices so as not to lose customers. Additionally, companies do not want to postpone their commitment to deliver the units, as agreed on in contracts,” noted Diaa. “Real estate companies extend the payment period while they simultaneously raise prices, so the customer does not feel the large increase in price.”

Diaa advised to buy before Ramadan because this month will see further increases in unit prices.

He pointed out that price increases by real estate companies and developers gave the opportunity for small companies to attract new customers and sell their projects in the same areas as large real estate companies and developers.

Price increases led to the redirection of some 80% of customers as they redirected to other companies with more facilities and lower prices or less specifications and less spaces.

Wadila Developments CEO Maged Helmy

Wadila Developments CEO Maged Helmy said that his company raised its prices by not more than 10% following the appreciation of the dollar and the floatation of the Egyptian pound, as a result of the high prices of all building materials and the cost of implementation of real estate units.

Helmy told Daily News Egypt that the company raised prices less than the real increases in the cost of construction, in order to not harm the customers and to meet the needs of a large tranche of those people.

He pointed out that the percentage of the increase reflects the strength of the financial position of the company and its commitment to customers.

Furthermore, Beta Egypt for Urban Development’s chairperson, Alaa Fekry, told Daily News Egypt the average price increase in the real estate sector following the liberalisation of the exchange rate ranges from 20% to 30%, and Beta Egypt maintains prices of some units of its projects and raises the prices of other units by only about 10%.

He added that there are high rises in the prices of building materials, which resulted from the rise of the dollar value. For example, the price of concrete increased by 70% and aluminum by 80%, and the average rise in the cost of construction of the metre is estimated at 65%.

On his side, the Saudi-Egyptian Construction Company (SECON) CEO Darwish Hassanin said the cost of carrying out the company’s projects increased by 20-25% following the rise in the prices of construction inputs. The company has raised the prices of units of new projects to cover the burden of these increases in costs.

He noted that the Egyptian economy faces a challenge, namely the exchange rate and the challenges of recovering the value of the pound, pointing out that if the flotation of the Egyptian pound is purely a bank decision, it requires some economic measures to ensure the return of the pound’s value, including increasing resources of foreign currency, through increasing exports, providing foreign currency through the reduction of imports, and establishing alternative industries and crops in Egypt.

cost of construction process increased by 100%, thus the natural increase in prices reached 40% to 50%

While the head of the Building Materials Division at the Federation of Egyptian Chambers of Commerce (FEDCOC), Ahmed Al-Zainy, told Daily News Egypt that the increase of prices of local building materials, such as sand and cement, ranged from 2% to 20%; imported materials increased by 30% after flotation, although they reached 50% to 60% in the second half of 2016; and construction brick prices increased by only 20%.

Al-Zainy added that the large price increases carried out by real estate companies are unjustified and large compared to the increase in prices of building materials.

However, Daker Abdellah, member of the board of directors of the Egyptian Federation for Construction and Building Contractors (EFCBC), said that the crisis of building material surges extended to road projects, which were affected significantly by the rise of raw materials, the most important of which is bitumen (used for road surfacing and roofing), which represents more than 75% of the value of the budget of road construction. The price of a tonne of bitumen increased by 133.5% after the pound flotation, where its new price now stands at about EGP 6,070 per tonne instead of EGP 2600 before the flotation. This represents a new burden on construction companies. Furthermore, the increases reduced working capital of small and medium enterprises because they cannot afford those increases that began since March 2016 and the liberalisation of the exchange rate in November 2016.

“The road works represent about 20% of the cost of carrying out residential projects, so the increase in this cost will enforce developers to raise the prices of housing units and to load the burden on the citizen in the end,” said Abdellah.

He warned of the tumbling of some real estate companies in the coming period, especially small ones, following the recent changes that are represented in dollar appreciation and its impact on the prices of building materials and the cost of carrying out housing units, in addition to high wages and the application of VAT and other challenges that contributed to raising the cost of implementation.

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Displaced Manshiat Nasr residents call on government to provide alternative housing  https://dailynewsegypt.com/2017/05/15/displaced-manshiat-nasr-residents-call-government-provide-alternative-housing/ https://dailynewsegypt.com/2017/05/15/displaced-manshiat-nasr-residents-call-government-provide-alternative-housing/#respond Mon, 15 May 2017 07:00:03 +0000 http://www.dailynewsegypt.com/?p=625397 For the third day in a row, Manshiat Nasr residents are demonstrating the government’s action of displacing them in favor of a big Arab real estate developer,calling on the government to provide them with alternative housing for the ones they have been displaced from. One of the residents said the government didn’t provide all the …

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For the third day in a row, Manshiat Nasr residents are demonstrating the government’s action of displacing them in favor of a big Arab real estate developer,calling on the government to provide them with alternative housing for the ones they have been displaced from.

One of the residents said the government didn’t provide all the residents with decent houses and the houses it provides do not meet the large number of people the government aims to displace.

He noted that the government announced that it will resettle the people in Al Asmarat City, located in the Mokattam District.

A Manshiat Nasr resident said that the number of units available is 17,000 units, which is not enough, as, according to the UN, the total number of residents displaced are about 800,000.

Furthermore, he added that the government is violating the Unified Building Law, which states that people who are displaced by the government are supposed to be compensated with alternative units.

Another resident, who preferred to give his statement anonymously, told Daily News Egypt that the area is not classified as a dangerous area, but as a stable area—in the sense that it only needs development and not removal—following the classification of the United Nations.

He added the government has already had a grant from the German Technical Cooperation Agency (GTZ) and the European Union (EU) to develop Manshiat Nasr, estimated at EGP 1bn, but the area is still undeveloped.

“We refuse to move to Al Asmarat City because of high monthly rent cost and small spaces of the units,” said the resident. “The committee that the government assigned to evaluate the situation of the area is composed of consultants in this real estate company.”

He noted that they will escalate the situation and that they will have an open sit-in and will submit a case in the State Council. In addition, they will form a popular committee to defend their rights and follow up the case with the court.

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10 years tax exemption, transfer of profits abroad revive Egypt’s real estate sector https://dailynewsegypt.com/2017/05/15/10-years-tax-exemption-transfer-profits-abroad-revive-egypts-real-estate-sector/ https://dailynewsegypt.com/2017/05/15/10-years-tax-exemption-transfer-profits-abroad-revive-egypts-real-estate-sector/#respond Mon, 15 May 2017 06:30:31 +0000 http://www.dailynewsegypt.com/?p=625388 It is important that the executive regulation of the Investment Law includes​ items related to luxury housing, says ARDIC CEO

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On Sunday, the Egyptian parliament approved the new Investment Law on a final basis, to be sent to the president of the republic to issue a decree of the law.

Tabarak Holding for Real Estate chairperson Ali El-Shorbany said that the Investment Law includes several advantages and facilities to encourage investors​ to start business in the country.

El-Shorbany told Daily News Egypt that the item of a one-stop shop is very important for any investor and real estate developer to operate. However, all ministries must agree with respect to the land under their authority and form a government institution responsible for the sale, purchase, and leasing of the lands.

El-Shorbany added that tax exemption for 10 years will benefit the sector, because the value of taxes has escalated recently and reached about 45%, which is a major obstacle to developers and investors.

“Further, transfer of profits abroad without restrictions will open the Egyptian market strongly to foreign investors to promote and strengthen the Egyptian economy,” said El-Shorbany. “The new law will promote selling property to foreigners [export real estate].”

He pointed out that the new law will help pump new investments in the real estate sector, as it proved that it is not vulnerable to being affected by any economic fluctuations, whether the dollar value moves positively or negatively, because it is the only industry that can bear and face any crises. Besides, the demand will not end, because the steady increase of the population is one of the most successful investments and the safest in the world.

The total value of the real estate sold to foreigners worldwide is estimated at about $200bn.

For his part, Ashraf Dowidar, CEO of ARDIC for Real Estate Development, said that the law contains many positives, including all the benefits of other investment laws.

Dowidar assured that the importance of the executive regulation of the Investment Law includes​ items related to luxury housing, besides focusing on social and economic housing.

He pointed out that the process of attracting investments is an integrated system, which means creating the general atmosphere, as well asproviding advanced trainings for Egyptian labour, which stimulate investors to take advantage of these trainings rather than employing foreign labour.

Sahl Al Damrawi, a member of the Association of Businesspeople and of the Union of Building and Construction said that the new Investment Law will attract foreign direct investment and fade away and address the distortions of the previous law.

Al Damrawi suggested that an investment map be prepared for investment in lands and clarify all data related to these lands.

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Tenants negotiate to decrease rent cost after flotation: JLL country director https://dailynewsegypt.com/2017/05/15/tenants-negotiate-decrease-rent-cost-flotation-jll-country-director/ https://dailynewsegypt.com/2017/05/15/tenants-negotiate-decrease-rent-cost-flotation-jll-country-director/#respond Mon, 15 May 2017 06:00:02 +0000 http://www.dailynewsegypt.com/?p=625393 Residential supply grows at a high rate of 11%, says Sami

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Daily News Egypt interviewed Ayman Sami, JLL’s Egypt director, to talk about the real estate market and the tenants’ tendencies in light of the current economic conditions.

OLX Properties Egypt recently published its first annual property report, focusing on user behaviour trends. The report has identified that the top 5 locations searched for on OLX are Nasr City, Maadi, Sheikh Zayed, Heliopolis, and Fifth Settlement. Can you explain us the clients’ demand for these areas?

The data indicates that there is migration from central Cairo and Giza to the outskirts, such as the Fifth Settlement and Sheikh Zayed, with residential supply there growing from 113,000 to 126,000 units between 2015 and 2016. There is still demand for areas like Heliopolis, Nasr City, and Maadi, as all those districts continue to host many multinational corporations.

What does the flotation of the pound mean for the office market?

The current market supply of administrative offices stands at 1,028 million square metres of grade A with an additional 70,000 square metres expected to be delivered during the other three quarters of 2017. 60,000 square metres out of those 70,000 square metres are supplied by Cairo Festival City.

Most of the grade A administrative offices are rented with dollars, and after the liberalisation of the exchange rate, the rent has doubled. Therefore, there are negotiations between tenants and owners to decrease the rent or put a limit to rent costs.q

Ayman Sami, JLL’s Egypt director
(Photo handout to DNE)

What is the percentage of price increases for renting?

For example in central Cairo, rents per square metre decreased by 5.7%, but there were no shifts in West Cairo and New Cairo. I think the decrease is due to some attempts to stablise rent prices, such as putting limits to the dollar value, the current value, and other developers or owners decreasing the rent, as well as other ways, such as extending payment periods. However, some developers and tenants are in the stage of negotiations and the vision may be clear in the second quarter report. Due to the high value of the dollar, some tenants redirected their demand from grade A to grade B. Furthermore, some clients tended to buy buildings to equip administrative offices in these buildings.

What is the percentage of occupancy of administrative offices?

The percent of occupancy of grade A administrative offices is 73%, while it is expected to decrease in the coming period. We don’t have a 100% occupancy, which means that there is a sequential request on administrative offices and this happened in downtown and central Cairo.

What is the demand on the residential market?

The demand is still strong on residential units. The supply is 126,000 square metres with an expected 11,000 square metres to be added during 2017.

The secondary market was strong in the last period but it dropped for some time because people tended to trade in foreign currency. After that, primary sales witnessed a strong demand as clients preferred to invest their money.

What is the size of growth in the residential market?

The growth rate in residential is very high. From 2015 to 2016, the supply reached 13,000 units [113,000 square metres] with an 11% growth.

In the light of the dollar appreciation: what is the size of foreign demand on property?

After the EGP flotation, unit prices decreased by 50% if calculated in dollars​, however, local prices​ increased by 30%. This explains the increase in demand by foreigners. Currently, real estate prices decreased by 35% to 45% according to dollar value.

What is the expected increase in unit prices?

It is about 25% to 30% y-o-y.

What is the supply of retail in the Egyptian market?

The retail supply in Q1 2017 is 1.6 million square metres, the occupancy rate is about 83% grade A. The most important event is the inauguration of Mall of Egypt. Last year, there was a problem in availability of foreign currency, but this year there is a problem related to increases in costs: sales decreased and there is great competition between local products and imported products, which may affect the retail market.

After the great demand that the Cityscape exhibition witnessed in late March, do you expect an increase in supply in residential units?

I expect an increase of 10% in supply.

Which sector is benefiting from the stablisation of the pound?

The residential and the hospitality sector are the ones that benefited the most from the stability of the pound. Therefore, hotel occupancy is close to 70% in Greater Cairo. Egypt is one of the cheapest tourism destinations, as the average daily rate is $89.

What is the most attractive area for offices?

New Cairo is still the most attractive areas for administrative offices.

Is there an imminent real estate bubble?

There is no bubble because the developer always reacts to the market and always reads the market needs.

What is your opinion regarding the New Administrative Capital project?

The New Administrative Capital is the natural extension for New Cairo, as there is no availability of lands in the latter. Besides that, launching projects in El Mostakbal City, which is the area closest to the New Administrative Capital, and demand on AinSokhna revives the demand on the New Administrative Capital.

What are the areas most in demand for second homes?

North Coast is more in demand than AinSokhna because Sokhna still needs development and more services, so prices at North Coast are increasing.

In your opinion, what are possible incentives to attract other Arab and foreign investments to the sector?

Dollar value in the country is an incentive besides other factors, such as the facilities provided by the government to start businesses and how easy it is to transfer profits outside of the country. And of course risk assessment.

What is your expectation for the real estate sector?

We will see a revival in the hotel sector in Greater Cairo. Retail will be the last sector to return to its real growth percentage due to the current economic circumstances. The office market will keep stable and will then start growing again.

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EGP flotation raises cement exports to 1 million tonnes in Q1 https://dailynewsegypt.com/2017/05/11/egp-flotation-raises-cement-exports-1-million-tonnes-q1/ https://dailynewsegypt.com/2017/05/11/egp-flotation-raises-cement-exports-1-million-tonnes-q1/#respond Thu, 11 May 2017 13:42:10 +0000 http://www.dailynewsegypt.com/?p=625101 Cement sector did not export since 2009, says head of cement production division at FEI

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Medhat Stefanos, head of the cement production division at the Federation of Egyptian Industries (FEI) said that liberalising the exchange rate increased the exports of cement to one million tonnes in the first quarter (Q1) of 2017.

Stefanos added that cement plants aim to increase their production capacity to 84 million tonnes by 2020.

He expected that production capacity by the end of the year reaches 60 million tonnes.

At a press conference held by the division, Stephanos pointed out that the cement industry can export 10 million tonnes and aims to reach 30 million tonnes annually.

“There were no cement exports since 2009 until 2016 due to the consumption of 95% of production in the domestic market and cement exports during Q1 2017 are only 1 million tonnes, ” Stefanos said. “The exports of Q1 2017 went to Libya and Yemen, and the division seeks to participate in the reconstruction of Syria immediately after the end of political tensions.”

He pointed out that the cost of quarrying fees rose by 16% after the flotation of the pound.

Stefanos noted that the cement industry is innocent of the high prices of housing units and that cement only accounts for 3% of total construction costs.

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Bedouin protection money raises average cost of real estate projects by 15-20%  https://dailynewsegypt.com/2017/05/08/bedouin-protection-money-raises-average-cost-real-estate-projects-15-20/ https://dailynewsegypt.com/2017/05/08/bedouin-protection-money-raises-average-cost-real-estate-projects-15-20/#respond Mon, 08 May 2017 11:00:24 +0000 http://www.dailynewsegypt.com/?p=624617 Bedouins impose protection rackets on projects that are implemented at the New Administrative Capital, says EFCBC member 

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Construction companies face major challenges as a result of the lack of adequate insurance and the control of Bedouin tribes over sites of real estate projects in various cities of urban communities and remote desert areas.

Furthermore, the exposure of companies to threats and theft of equipment and the imposition of protection money contributed to the high cost of project implementation and construction contracts, according to Daker Abdellah, member of the board of directors of the Egyptian Federation for Construction and Building Contractors (EFCBC).

Abdellah said that construction companies working on those projects, whether assigned by the state or by private sector developers, calculate the additional cost of those protection money within the construction process at an average of 15% to 20% of the real cost, which constitutes new financial burdens for the state as well as private companies, in addition to the recent hikes in the price of raw materials, labour, transport, etc..

Abdellah noted that the percentage of protection money varies from region to region, increasing in deserts and remote cities.

He pointed out that the cost of carrying out projects in Sinai increases up to threefold compared to the costs in other cities and governorates as a result of the companies having to pay Bedouins the equivalent of half of the profit they obtain in return for leaving the companies’ equipment untouched.

He added that the same problem applies to projects that are implemented at the New Administrative Capital.

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Egyptian Cabinet approves temporary residence for foreigners in return for buying property https://dailynewsegypt.com/2017/05/08/egyptian-cabinet-approves-temporary-residence-foreigners-return-buying-property/ https://dailynewsegypt.com/2017/05/08/egyptian-cabinet-approves-temporary-residence-foreigners-return-buying-property/#respond Mon, 08 May 2017 10:30:53 +0000 http://www.dailynewsegypt.com/?p=624614 The government will grant foreigners residency in Egypt for one year if they buy housing units worth $100,000 or more

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The Cabinet approved an initiative by the Real Estate Development Chamber to grant temporary residence to foreigners in return for buying a property, according to chairperson of the chamber Tarek Shoukry.

The newly formed Real Estate Development Chamber, affiliated with the Federation of Egyptian Industries (FEI), has presented an initiative granting foreigners temporary residence for buying a property worth at least $100,000 after security investigations from the relevant authorities, provided that this amount is transferred from outside of the country to the Central Bank of Egypt (CBE).

Shoukry said that the application of the initiative will support the Egyptian economy, which is expected to receive billions of dollars annually from the proceeds of the initiative.

On Wednesday, the Cabinet approved an amendment to the rules for granting residency to foreigners for non-touristic purposes, including granting foreigners a residence in Egypt for one year in the case of buying housing units with the mentioned amount of money. The amendment also grants foreigners a five-year residence in the case of buying housing units worth $400,000 or more.

Shoukry added that the initiative was discussed with a number of different government agencies that supported the initiative, especially Minister of Housing Mostafa Madbouly.

Shoukry stressed that the dollar revenues of the initiative will ease pressure on foreign currency reserves, as it contributes to the provision of billions of dollars to banks from outside the country, which strengthens reserves, especially since the amounts are transferred from abroad, which ensures that there is no extra pressure on the local demand of dollars.

“The Chamber has succeeded since its establishment in providing a number of initiatives, and government agencies responded to a number of those after studying them, including the issuance of licenses for real estate projects to consulting offices, which came into effect, in addition to granting real estate companies six months to hand over their projects,” Shoukry noted. “Furthermore, the chamber is studying a number of initiatives with government agencies, all of which aim at contributing to the revitalisation of the real estate sector, supporting the Egyptian economy, and contributing to raising investment and development rates.”

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ARCO launches new signature project in North Coast https://dailynewsegypt.com/2017/05/08/arco-launches-new-signature-project-north-coast/ https://dailynewsegypt.com/2017/05/08/arco-launches-new-signature-project-north-coast/#respond Mon, 08 May 2017 10:00:35 +0000 http://www.dailynewsegypt.com/?p=624611 AUR Capital for Direct Investment will be launched during Ramadan, says chairperson and CEO

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ARCO’s total investments in the Egyptian real estate market over the next five years will reach EGP 32bn in various projects.

The company expects contractual sales of EGP 25bn over that period, reflecting the company’s confidence in the local real estate market, which depends on real demand based on the population growth enjoyed by Egypt, according to Ashraf Salman, the chairperson and CEO of AUR Capital and executive president of ARCO.

Salman added that real estate investment contributes 17% to the GDP.

Daily News Egypt interviewed Salman to talk about the company’s business and the future of the real estate market.

What is the targeted percentage of sales to Arab and foreigners?

In the next three quarters of the current year, we target EGP 3bn in sales, 60% of which will be from sales in Egypt and 40% from sales in foreign and Arab countries.

What are the main other markets the company targets?

We seek the United Arab Emirates’ (UAE) open market; however, during the next five years, we will pay great attention and develop projects in the Egyptian market.

What are the new projects that the company plans to launch?

We will launch a new signature project in the North Coast. The project will have new designs. However, real estate projects in the North Coast are traditional with high prices and a short payment period. ARCO will innovate a new design of 85sqm chalets that are so close to the lagoon that they will give the image of floating on it. Each of those chalets has a garden in front of it. FC Barcelona star Neymar will lend his name to the Neymar signature homes on the lagoon at City Stars Sahel.

What is the size of investment of the project in the North Coast?

The investment does not exceed EGP 1.9bn, and the payment period will be 10 years.

The first phase will be delivered after three years, the second phase after four years, and the third after five.

What is your opinion regarding the new real estate regulation?

The new real estate regulation is good and will participate in reviving the sector once it is issued.

Does ARCO plan to partner with the government in projects?

ARCO is ready to collaborate with any partner, whether the New Urban Communities Authority (NUCA), the New Administrative Capital, and also private sector developers in line with its strategy. Additionally, we are ready to collaborate with the government as long as the partnership will help reach the target where 60% of customers will consider those units their first homes, and 40% will consider them their second.

ARCO signed a memorandum of understanding (MoU) protocol with NUCA to develop South Marina in El Alamein. What is the situation of the project?

We signed a MoU with NUCA in 2015 to develop South Marina in El Alamein with investments of EGP 26bn to develop 2,800 acres, but the MoU was not agreed upon so a contract was not signed. In the coming period, we may negotiate the project again, and we may also negotiate other projects.

What is the increase in the percentage of prices approximately six months after floating the Egyptian pound? Besides, shall we expect other increases?

ARCO increased the prices by 15% on its units, and, in the next period, we will offer other payment methods. The increase depends on the market.

What is your vision for the future of the real estate sector? 

I see that Egypt’s real estate sector will continue growing between 15% and 25% on average annually during the coming five years. This vision is based on three things: first is the attractiveness of prices; second, there is a demand in various housing units A, B, and C; and third, Egypt in the coming period will be an attractive destination for Arab and European countries.

Are Egyptian real estate companies ready to buy real estate projects for foreigners?

Egyptian companies are ready for that because there were outstanding projects established during the last five years. Besides, there are innovative ideas provided by some real estate developers up to international standards. What we need is to market our products to Arab and foreign markets to achieve our target sales.

What is your opinion regarding the new Administrative Capital project?

The New Administrative Capital project is very well planned, because it takes into consideration all problems that faced the new cities, such as plumbing and electricity. It will be a natural and good development for new Cairo, and we have plans to establish projects in the New Administrative Capital.

Why didn’t ARCO participate in the first phase of the New Administrative Capital? And what is your opinion regarding the first phase?

We weren’t ready for the first phase, and, at this time, AUR Capital hadn’t acquired ARCO yet. Land prices were affordable and were not overpriced, and this helped developers develop and sell their projects.

AUR Capital acquired ARCO. Please explain to us the process of acquisition.

AUR Capital is a direct investment company operating in five areas. The first is real estate investment, and the company has established AUR Misr for Real Estate Investment Company, which has acquired ARCO in February.

AUR Misr for Real Estate Investment is working on developing ARCO’s brand equity and its land bank and investment.

The second fund is the non-banking financial fund, which will be established in cooperation with the Egyptian Gulf Bank (EGBank). The third fund to be launched is the Health Fund. AUR Capital for Direct Investment and Egypt Capital for Direct Investment will be launched during Ramadan.

AUR Misr for Real Estate Investment put a new budget for ARCO, for the period between April and the end of the year. We allocated most of the budget to communicating with customers and providing services.

What about facility management?

We have a facility management department, and it will be separated soon so that it would become an independent company that will provide services to other developers.

What is the size of the gap of luxury real estate units?

There is an annual shortage in luxury housing estimated at 100,000 housing units per year, 200,000 housing units in middle-class housing, and 200,000 in economic housing.

Do you think that the Egyptian real estate market is exposed to a real estate bubble?

I think that Egypt’s real estate market is not exposed to a real estate bubble, contrary to what some experts think. The Egyptian real estate market is characterised by a large population. There is an annual demand of 500,000 housing units. This demand is higher than the supply and will continue to be so in the next five years.

Furthermore, real estate prices in Egypt are the lowest in the region. Prices per square metre in the UAE is not less than $3,000, Morocco at $2,500, and at Nigeria $3,000. In Egypt, however, the highest price per square metre does not exceed $1,000.

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Arabian Cement Company implements 3 projects with EGP 130bn investment during 2017 https://dailynewsegypt.com/2017/05/07/arabian-cement-company-implements-3-projects-egp-130bn-investment-2017/ https://dailynewsegypt.com/2017/05/07/arabian-cement-company-implements-3-projects-egp-130bn-investment-2017/#respond Sun, 07 May 2017 06:30:55 +0000 http://www.dailynewsegypt.com/?p=624491 Sergio Alcantarilla, CEO of the Arabian Cement Company, said that the company seeks to implement three new projects with investments worth more than EGP 130m during the current year, which will reduce the cost and increase the efficiency of the production process, allowing them to provide their products at relatively low prices in order to …

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Sergio Alcantarilla, CEO of the Arabian Cement Company, said that the company seeks to implement three new projects with investments worth more than EGP 130m during the current year, which will reduce the cost and increase the efficiency of the production process, allowing them to provide their products at relatively low prices in order to hedge against the inflationary pressures facing the market.

The projects include the construction of a mechanical crane to feed the furnace of the first line instead of the airlift—as it consumes a lot of electrical energy—as well as the establishment of a system to feed the cement mills by dust in small proportions that do not affect the specifications of cement and the establishment of a new coal mill. The total cost will be €7m.

“We know very well how the inflation affects the purchasing power, and we try to control our production costs and provide the product at relatively low prices,” Alcantarilla said.

He said that the current prices of cement in the Egyptian market after the flotation of the pound are still very low; therefore, the Egyptian cement products have a strong competitive advantage in export, but they need to overcome the bureaucracy problem.

He said that the flotation of the pound was the only option after the changes that happened to the economy and the exchange market.

He added that the Egyptian economy is on the right track, despite its impact on inflation and the purchasing power of consumers but that it requires more clarity of vision, the elimination of bureaucracy, and the confidence of foreign investors.

He added that the company’s entry on the stock exchange provided a new financing channel to be used in expansions over the past year.

On the other hand, the company’s net profit fell by 11.6% to EGP 245.02m, compared to EGP 277.2m in 2015. He said that the company lost EGP 81.1m as a result of the flotation of the pound.

The company’s capital is worth roughly EGP 757.5m, divided into EGP 378.7m shares with a market value of EGP 3.79bn.

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Expectations differ about expected real estate fund investments https://dailynewsegypt.com/2017/05/07/expectations-differ-expected-real-estate-fund-investments/ https://dailynewsegypt.com/2017/05/07/expectations-differ-expected-real-estate-fund-investments/#respond Sun, 07 May 2017 06:00:48 +0000 http://www.dailynewsegypt.com/?p=624486 Saudi Arabia launches three real estate funds in six months, while Egypt launches its third fund in Q3

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During the first experiment of launching real estate funds in Egypt, there were different points of view on expected returns from investing in these funds and the distribution ratios.

The Saudi market is new to these types of funds as well, as it saw the launch of three funds in the past six months. The latest fund is Jadwa REIT Al-Haramain Fund, traded last week after the successful coverage of the initial public offering (IPO) of the fund with 1257%.

This raises questions about how Saudi Arabia succeeded in collecting these huge investments and a rush of investors. Will the Egyptian market succeed in covering the IPO of its real estate funds and attracting investors to it as well?

The Egyptian real estate funds faced many obstacles since the issuance of the executive regulation and the launch of the first two real estate funds. The biggest obstacle for real estate funds now is depriving them of tax exemptions, which will reduce their profitability and may deprive them of attracting Arab and foreign investments, especially that the majority of countries exempt this kind of funds from taxes, so the Egyptian funds will be a weak competitor with their counterparts abroad.

Real estate funds experts agreed that all the challenges for these funds in Egypt will not prevent them from attracting investments and they expect that these funds will generate a satisfying return for investors compared to other financial tools.

However, the duration of the Jadwa fund was 99 years from the date of listing. The duration of the two Egyptian funds, Naeem and Al Masreen, was only 3 and 10 years respectively.

Hany Tawfik, director of Acumen BPE, said that the optimal duration of real estate funds in Egypt ranges between 10 and 20 years to attract small investors and that a three-year period cannot be understood or justified, considering the history of real estate funds around the world. The optimal period for the Saudi investor is 99 years, according to studies conducted by the Saudi company Jadwa.

Tawfik said that his company is in the final stages of signing the contract of managing the real estate fund of the HDB, which is expected to be launched during the third quarter of this year. The fund targets investing in leased assets through development processes which ensure that the fund will achieve costs far less than the purchase of units or buildings and ready-made projects.

Alsherif Wahdan, managing director of Naeem, said that the nature of the investment in Egypt is different from the investment in Saudi Arabia. The Egyptian investor prefers short-term investment; therefore, three years is considered an appropriate period for investment in the real estate fund to recycle the money afterwards, whether in a new fund or through another investment.

Hashim Al-Sayyed, vice chairperson and CEO of the Al Masreen real estate fund, said that Saudi investors are keen on investing in real estate funds to save money for their heirs, so their IPOs see a wide turnover, unlike the Egyptian investors who prefer to get a quick return on a short-term. They also hedge against future fluctuations of the economy, which in turn affect all sectors and investments.

Al-Sherif Wahdan said that the holders of the documents obtain 10% annual distributions, which is attractive to investors, especially since this percentage does not include the capital gains resulting from the annual increase in the value of real estate owned by the document holders through their subscription in the fund, which could increase the return on their investments to almost 26%.

Therefore, Wahdan expected that the IPO on the fund’s documents will see a good turnover of individual investors, as it ensures a sustainable and risk-free return, unlike most of the other investment channels that include risk ratios such as the stock exchange.

As for the property, its value is not decreasing, but it is constantly increasing. Therefore, the majority of investors consider investment in real estate to be the best, especially if it generates annual returns besides the value of the assets themselves.

He pointed out that his company succeeded in covering the private offering segment easily, which witnessed investments from various institutions, funds, strategic investors, and companies subscribing to the fund.

He agreed with Tawfik, believing that the suitable average return on investment in real estate funds is 10%, represented in cash dividends generated by capital gains from an increase in the value of real estate.

He added that it guarantees the distribution of cash dividends annually on investors, through the strategy of real estate funds, which focuses on the profits of assets leased in administrative and commercial projects.

Al Sayyed said that the real estate fund managers can achieve returns on investment in these funds that exceed 10%. The majority of real estate investment companies are able to achieve returns exceeding 200%. Similarly, real estate funds, which are treated like real estate investment companies, are able to achieve returns even if those are not annual, which will depend on the efficiency of management.

In a related context, the manager of the Saudi fund targets to distribute cash dividends twice a year, amounting to at least 90% of the annual net profit of the fund, excluding profits from the sale of basic real estate and other investments that may be reinvested in additional assets or maintenance and renewal of existing fund assets.

The distribution mode contributed to the increase in the coverage of the fund of 1257%. The number of subscribers in the IPO was 5,800 with total proceeds in the IPO of SAR 4.5bn.

He explained that the laws in the United States and the European countries exempt real estate funds from taxes if they are distributing more than 80% of profits, and the rest of the countries followed them.

He told Daily News Egypt that the Naeem fund intends to distribute 90% of its annual profits.

While Tawfik believes that the Tax Law on real estate funds stopped the rapid launch of real estate funds after the amendments to the executive regulations of the Capital Market Law and the inclusion of the provision of the establishment of these funds since 2014.

He added that taxes and fees of the fund manager and the management services company as well as other salaries and expenses are deducted from the dividend returns from profits, which reaches 90%, ending with small distribution rates.

In general, he thinks that a comparison of Egyptian real estate funds with their Saudi counterparts will always end in favour of the Saudi funds.

The Saudi law exempts all funds from taxes. He called for amendments to the Egyptian Tax Law to apply the US system and to allow for tax exemptions when distributing 90%, which will achieve a quantum leap in investment in real estate funds.

He pointed out that the distributable revenues after expenses will be compared to investment in the certificates of deposits or in the Egyptian stock exchange, especially since real estate investment generates a high return, sometimes up to 400%, while also considering the preference of Egyptian investors to inject their money in real estate to maintain their assets in light of price hikes and the continuing inflation in Egypt.

 

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Property Finder conference analyses latest trends of Egypt’s real estate sector https://dailynewsegypt.com/2017/04/30/property-finder-conference-analyses-latest-trends-egypts-real-estate-sector/ https://dailynewsegypt.com/2017/04/30/property-finder-conference-analyses-latest-trends-egypts-real-estate-sector/#respond Sun, 30 Apr 2017 11:46:08 +0000 http://www.dailynewsegypt.com/?p=623691 The website received bids to sell property of a value of EGP 3.37bn, says Hamad

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Property Finder, a real estate website, revealed the latest news regarding the real estate sector in Egypt. This came during a conference that was attended by 150 real estate companies working in Egypt. The conference aimed at introducing the website’s wide-scale expertise to its partners working in the market.

Property Finder’s team organised a workshop on the sidelines of the conference to review the latest marketing trends in the world concerning the real estate market. The workshop aimed at facilitating the marketers’ job. It explained e-marketing ways in Egypt and means to help websites to benefit from search engines, as well as presenting ways to write distinctive and attractive content.

During the conference, Property Finder’s executive manager, Mohamed Hamad, said that “Property Finder depends on the latest technologies to enable its partners to achieve the best results possible. This aims at meeting the continuous growth in real estate investment, especially since real estate is considered a safe haven for investors after the recent economic fluctuations.”

In 2016, Property Finder received bids to sell real estate at a value of EGP 3.37bn, Hamad said. He added that the most wanted destinations are cities like Sheikh Zayed, 6th of October City, New Cairo, and Ain Sokhna, as well as the districts of Nasr City and Maadi. He explained that the most wanted property categories are residential apartments, followed by villas. People mainly searched for apartments across the aforementioned cities and districts, followed by villas in New Cairo and Sheikh Zayed.

He added that the most searched-for apartment size was between 100 and 150 square metres, especially in New Cairo, 6th of October City, Sheikh Zayed, and Nasr City.

Furthermore, the manager of the strategic consultation department in Jones Lang Lasalle Egypt JLL, Aya Ghanem, said the hotel sector is the fastest growing sector in the country. Hotel occupancy rates increased by 12% after the drop of hotel room prices, which especially affected foreigners. This was caused by the flotation of the Egyptian pound, Ghanem said. She also pointed towards a drop in store rents at shopping malls, while occupancy rates simultaneously dropped to 83% compared to 86% last year.

Ghanem hinted at a number of factors that will lead to a period of prosperity for the real estate sector, including the positive developments of the economic climate, which will be reflected in steady growth rates. This will additionally impact the supply and demand across all real estate sectors, she said, adding that the economic reforms will also help with increasing demand on property in the upcoming years.

Ahmed Iraqi, the participant executive manager in “Property Finder”, asserted that new technologies had provided more and newer marketing means that are more effective than the traditional ones. This comes due to a spread of internet services nationwide from which more than 50% of the Egyptian population is benefiting.

Iraqi said that the spread of internet in Egypt helped with developing the real estate sector, adding that most real estate marketers are now using the internet. The internet also saves about 84% of costs compared to traditional means, he said.

During the conference, Hamad presided over an open discussion session with the representatives of big real estate companies in Egypt, including Property Finder Group executive manager Ahmed Amin, Diarna executive manager Ahmed El Menshawy, Go Green executive manager Hisham El Masry, and Egypt Best Properties executive manager Mohamed Gawid, to discuss the opportunities and challenges for the sector in Egypt.

They agreed that the real estate market in Egypt is considered one of the best markets in the Middle East and North Africa region. They also said that the sector is one of the safest sectors for investment, especially after the economic crisis, asserting that average revenues from real estate investment in Egypt reach between 20% and 30%.

The participants asserted that the Egyptian market will not witness a real estate bubble, adding that 90% of the market’s buying and selling transactions are based on savings and cash—not on loans. They also pointed out that the hike in the prices of real estate did not equal the rise in the value of foreign currency compared to the Egyptian pound, stressing that the prices of property will rise in the future.

Meanwhile, during the discussion, real estate marketers said that the New Administrative Capital is a great project that will contribute to improving the Egyptian economy. They urged the government to reconsider the pricing of the lands and units put out for sale in order to implement the project as scheduled and according to the proposed plans.

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Badr El Din inaugurates mall in District 16 of Sheikh Zayed https://dailynewsegypt.com/2017/04/24/badr-el-din-inaugurates-mall-district-16-sheikh-zayed/ https://dailynewsegypt.com/2017/04/24/badr-el-din-inaugurates-mall-district-16-sheikh-zayed/#respond Mon, 24 Apr 2017 07:00:49 +0000 http://www.dailynewsegypt.com/?p=622927 The mall is built on an area of 20,000 sqm with investments of EGP 200m

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Badr El Din Real Estate Projects inaugurated Thursday the first phase of its MAZAR Mall project in District 16 of Sheikh Zayed on an area of 20,000 square metres with investments of EGP 200m.

Chairperson of the company Mamdouh Badr El Din said that the mall is the first of its kind in District 16 and the company was keen to choose the site to meet the needs of the population of the region.

Badr El Din noted that the company will complete the construction work for two other floors of the mall. The mall consists of three floors and 30% of the mall’s units have been leased to a number of commercial chains and an administrative space has been leased to Qatar National Bank (QNB) to set up a new branch.

Badr El Din added that the area of shops starts at 40 square metres and goes up to 2,500.

He pointed out that the mall operates with state-of-the-art technology and depends heavily on solar energy, which will account for 25% of lighting and central air conditioning during the morning hours. The mall includes a central air conditioning station, in addition to a fire station with a reserve of 500 cubic metres of water.

For his part, CEO of Spinney’s Egypt Mohannad Adly said that the mall’s branch is built on an area of 2,500 square metres and witnessed 4,000 transactions on its first day.

The opening ceremony was attended by a number of officials from the New Urban Communities Authority (NUCA), Sheikh Zayed Authority, from the Minister of Supply and Internal Trading, and a number of senior investors and businesspeople.

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“Build it at its cost”—an initiative to build housing units at half price https://dailynewsegypt.com/2017/04/24/build-cost-initiative-build-housing-units-half-price/ https://dailynewsegypt.com/2017/04/24/build-cost-initiative-build-housing-units-half-price/#respond Mon, 24 Apr 2017 06:30:53 +0000 http://www.dailynewsegypt.com/?p=622922 Construction companies obtain 100% profits, says founder of the initiative

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Real estate company owner Emad Essa launched an initiative called “Build it at its cost” to face the hike in property prices following the liberalisation of the exchange rate in November.

Essa said that the initiative aims to combat excessive greed by some investors and contractors, who earn up to 100% of the housing units’ construction cost as a profit.

Essa added that some contractors applied an increase of EGP 1,500 in the price per square metre after the flotation, although the actual increase in the price per square metre was EGP 250.

The initiative has been implemented in a number of projects during the past three months in 6th of October City, which proved successful because of its reliance on the principle of citizens’ participation in building their units, in addition to providing 50% of the construction price through his company, according to Essa.

He noted that the initiative will be implemented in Giza governorate and will be extended to other governorates.

Essa called upon the government to provide lands at affordable prices to benefit the largest possible number of people looking for homes.

Essa told Daily News Egypt that the initiative includes four projects.

The first project consists of nine units with an area of ​​200 square metres per unit in the northern expansion area in 6th of October City in front of Porto October at a cost of EGP 440,000 per unit, although similar units are being sold in the same area for EGP 800,000.

The second project consists of seven units and is being implemented in the northern expansion area as well with an area of ​​140 square metres per unit at a cost of EGP 378,000 per unit, while similar units are being sold in the same area for EGP 630,000.

The third project, which is currently being prepared, targets youth in the Hadayek October area in front of the new Zewail University, where the market price for under-construction units is EGP 450,000; however, the initiative provides the unit at a price of EGP 270,000.

The fourth project is also being prepared in front of Mall of Arabia in the area of ​​palaces and villas in 6th of October City. The unit will be sold at a price of EGP 650,000, although its market price is EGP 1.1m.

“If the state intervenes to provide lands at affordable prices, the initiative can provide housing units of 100 square metres for EGP150,000 in batches,” Essa said. “The initiative proved successful in 6th of October City and it is able to reduce real estate unit prices by more than 40%.”

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ARDIC negotiates with SCZone to develop 2,000 acres https://dailynewsegypt.com/2017/04/24/ardic-negotiates-sczone-develop-2000-acres/ https://dailynewsegypt.com/2017/04/24/ardic-negotiates-sczone-develop-2000-acres/#respond Mon, 24 Apr 2017 06:00:44 +0000 http://www.dailynewsegypt.com/?p=622916 EGP 1.7bn is the volume of contracts of ARDIC’s projects, says managing director

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Daily News Egypt interviewed Ashraf Dowidar, the managing director of ARDIC for Real Estate Development, to talk about the company’s projects and expansion plans.

What is the target of Qeema Company that was established by ARDIC?

Qeema is a facility management company that started its work in April with managing two ARDIC projects: Zizinia Gardens in New Cairo and Zizinia Flowers in El Shorouk. Besides, Qeema will manage the mall we are establishing in Haram Street.

Furthermore, we started communicating with some companies and developers about managing their compounds and administrative offices.

We think that the company is important, as we see that the real estate wealth is either wasted or collapsing as residents or tenants (many of whom have no experience in the sector) have become their own facility managers to their units. With time, problems surface.

The developers see that there is a problem because there are no competencies in this field, and we have agreed with the American University in Cairo to develop a diploma in facility management.

We held a press conference and gathered real estate developers and tenants unions, and the attendance was great, which was proof that there is a need for facility management. We conducted a course for 30 people. In less than two months, about 24 individuals have received an experience certificate from the International Facility Management Association (IFMA).

We selected 10 of the members for a course that will train them to teach the diploma, which will be held by the American University in Cairo on behalf of ARDIC.

Thus, we have contracted with a facility management company in Lebanon that is specialised in green area cultivation, security, cleanness and maintenance, pest control, carwash, and Activation organization.

By the end of the year, we are also targeting the management of two commercial buildings and another mall.

What is the number of phases of Zizinia El Mostakbal and the size of its investments?

The project consists of three residential phases and a fourth commercial one with a total investment value of EGP 2.5bn. We started implementing the first phase in El Mostakbal City, close to the New Administrative Capital, and it is supposed to be delivered by mid-2020. The first phase will end in 2018, the second in 2019, and the third in 2020.

The contract for the first phase was worth EGP 1bn, and EGP 400m have already been paid.

What is the total value of the company’s contracts ?

About EGP 1.7bn is the volume of contracts of ARDIC’s projects.

What is the company’s expansion plan?

We are negotiating with the New Urban Communities Authority (NUCA) for 300 acres in New Minya to carry out a project with a full range of projects, which includes residential, commercial, and administrative buildings, as well as a hospital, hotel, and school.

As for housing units, they will be divided into apartments and villas with a special nature to suit the Upper Egyptian citizen.

Will the company carry out a small-scale residential project in Minya?

Small units in a distant place, such as New Minya or New Assiut, do not fit well with the mentality and culture of the Upper Egypt citizen, because those spaces are available in the city, and they do not have to live far away to get an apartment of that size. Besides, rich people will neither prefer small or large units; therefore, the design of our project’s units will be different.

When are you expecting to implement the project?

NUCA is supposed to offer the plot of land in a tender. There was a problem with the height of buildings, so NUCA got a verbal approval from the army on the allowed height of buildings in that area. A written approval is pending. The land will then be offered in the tender at the price that will be determined by NUCA. The initial value of the project is estimated at EGP 7bn.

Are there other places where the company is negotiating for lands?

Yes, we are seeking a plot of land in the Suez Canal axis of about 2,000 acres, and we are currently negotiating with the Suez Canal Economic Authority. We seek to establish an industrial project, where it will include both a residential and commercial industrial complex, as well as a school. Some questions and points will be agreed upon, because obtaining lands in the axis is conducted through an usufruct system and therefore an agreement must be reached with the authority regarding the residential part of the project.

Does the company worry about increasing the investment tax in the economic zone estimated at 22%?

We don’t worry as much as we do about the whole investment opportunity, such as the value of the land and the new usufruct system and its application under the construction of a residential project. We expect them to reach an agreement before the end of the current year.

Are there loans or agreements with banks to finance the company’s projects?

For the implementation of El Mostakbal project, an investment of EGP 2.5bn will be put to place—we contracted with the National Bank of Egypt (NBE) for a loan of only EGP 220m to finance the project, which proves that the financial situation of the company is good.

What is your opinion on the proposed real estate developer law?

We have attended the first dialogue on a draft law to organise the real estate development sector in the parliament’s Housing Committee, but there is a long debate between developers, members of the parliament, and the Ministry of Housing, Utilities, and Urban Communities. One of the points of dispute is regarding determining the developers through determining the size of lands to be developed. Thus, the parliament specified 250 sqm, but a small area like this will allow a lot of people to be part of the law and named as developers, and the operation will be very wide, which maybe needs to be reconsidered and modified to reach a more effective regulation.

It is important to develop a federation of real estate developers like the Egyptian Federation Construction and Building Contractors in order to open a link between developers and the Ministry of Housing to organize the work of the real estate developers.

We will send the proposals to the parliament, the ministry will comment on these proposals and suggestions, and the discussions will be conducted by the parliament.

After the success of the Cityscape Exhibition held in March, what is the expected percent of the sales?

We sold 40% of the project. We plan to reach 60% of the project by the end of this year.

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59.4% of Egyptians pay 25% of income to rent homes https://dailynewsegypt.com/2017/04/10/59-4-egyptians-pay-25-income-rent-homes/ https://dailynewsegypt.com/2017/04/10/59-4-egyptians-pay-25-income-rent-homes/#respond Mon, 10 Apr 2017 09:00:08 +0000 http://www.dailynewsegypt.com/?p=621483 70% of Egyptian households live without secure tenure, says Shawkat

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59.4% of households would have to pay more than 25% of their monthly income to rent a median priced home estimated at EGP 800, according to Yahia Shawkat, co-founder of 10 Tooba Applied Research on the Built Environment.

Shawkat said that almost half of households (49.2%) would not be able to buy the median home, which at EGP 225,000 surpassed the House Price to Income (HPI) ratio of 6.6.

Official statistics reveal that about 3.2% of households live in non-durable housing. This means that around 200 people lose their lives and over 800 families are made homeless as a result of over 390 residential building collapses a year.

Shawkat added that an estimated 70% of Egyptian households live without secure tenure. The rural Delta governorate of Gharbeya had the highest proportion, at 93% without secure tenure. The frontier governorate of South Sinai had the least, at 8% of households.

Regarding safe water and sanitation, Shawkat said that about 17% of Egyptian households are deprived of access to safe water. The highest incidence is in Upper Egypt, where deprivation ranges from 19% to 46%. About 2.3 million households (13.3% of the population) do not have access to a tap inside their dwelling.

20% of Egyptians do not receive the sufficient national average of 152 litres per person per day, and in 5 out of the 27 governorates, over 25% of water samples failed quality tests.

Meanwhile, over 9.2 million households (53.4%) in Egypt are without improved sanitation. Most households use unsealed septic tanks, or informal sewage networks that discharge raw sewage into canals.  Deprivation of improved sanitation is disproportionately high in Egypt’s rural areas of Upper Egypt and the Delta, according to Shawkat.

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34% of Egyptians live in insufficient housing https://dailynewsegypt.com/2017/04/10/34-egyptians-live-insufficient-housing/ https://dailynewsegypt.com/2017/04/10/34-egyptians-live-insufficient-housing/#respond Mon, 10 Apr 2017 08:30:04 +0000 http://www.dailynewsegypt.com/?p=621479 Qena is the most deprived governorate in Egypt, followed by Luxor, according to BEDI

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One-third of Egyptian families (34.1%) live in insufficient housing, according to 10 Tooba for Applied Research on the Built Environment.

The centre recently issued the Built Environment Deprivation Indicator (BEDI), explaining that the households are deprived of one or more of six quantifiable components that have been used to define adequate housing: affordability, durable housing, secure tenure, sufficient living space (crowding), safe water, and improved sanitation.

The study added that Upper Egypt is the most deprived, as the percentage of households living in an insufficient environment ranged between 37.4% in Luxor and 51.3% in Qena, the most deprived governorate in Egypt.

Furthermore, the Delta region had the second highest deprivation, where it ranged between 29.4% in Menoufiya and 43.5% in Gharbeya.

However, Greater Cairo was just under the national average, where between 23.7% and 33.6% of households were deprived.

Households in the Suez Canal region experienced below average deprivation, ranging between 22.2% and 27.9%. Additionally, New Valley, the least deprived governorate, registered 5%, with the Red Sea at 19.5%.

The study noted that 54.3% of Egyptians are considered cost burdened, with rents or house prices surpassing their ability to pay.

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