Daily News Egypt

Egypt’s real estate sector undergoing transformation: SODIC managing director - Daily News Egypt

Advertising Area




Advertising Area




Egypt’s real estate sector undergoing transformation: SODIC managing director

Higher land prices create more partnerships among developers 


For Magued Sherif, the managing director of local development at SODIC, Egypt’s real estate sector is undergoing transformation following the currency flotation and the new pricing policy for the government in land plots it offers for investors.

“The market is reshaping at the current stage. After the currency flotation, the prices are getting higher, but the demand is on the rise, too, to hedge from higher inflation rates,” Sherif told Daily News Egypt in an interview last month.

Magued, who was earlier the Egypt country head and properties chief executive officer at Majid Al Futtaim Properties from 2008 to 2011, expects more partnerships among developers in the coming period.

How do you see the real estate sector at the current stage?

I think the market is reshaping in the current stage. There is a stiff competition among developers to get new customers with soaring prices due to higher costs after the currency flotation.

We could see more partnerships between developers to overcome the problem of land prices.

How can the land pricing policy be improved so that costs are kept under control?

To completely tackle the issue, the government must also bring more land to the market in each auction. This, along with the new policy, should bring prices to a more reasonable level.

Land prices are becoming a real issue. There is simply more demand than property, and no regulations are in place to stop bidders aiming too high. The new real estate policy is expected to regulate this by classifying developers according to track record and development capacity, allowing them to bid on plots that match their abilities.

What factors are driving demand for the real estate sector?

Demand is driven by strong demographics. Egypt has a population of more than 90 million, half of which are under the age of 25. There are also more than 800,000 graduates and a similar number of marriages every year looking for new units.

Private developers collectively bring 20,000 units to the market annually.

Egyptians are also pouring money into the real estate sector to hedge against rampant inflation.

Are you concerned about a possible bubble in the real estate sector?

I think this concern is overblown. The insurmountable demand makes addressing this segment a very lucrative investment. However, the going rates for land and the size of the plots being offered by the government do not make addressing middle-income housing feasible for private developers, who must deliver profits for their shareholders.

What changes can be made to mortgage regulations to make them accessible to lower segments?

A strong mortgage finance system that makes home ownership more accessible to a wider segment of the population is essential. The current off-plan sales system, where the developer plays the role of financier, is a result of a lack of mortgage financing and adequate options for home buyers. This must be changed, and a more effective system put in place.

The main issues with mortgages are interest rates—naturally high in an inflationary environment—and rigid policies on land registration as a prerequisite for home loans.

The economy needs to continue growth, and inflation must be controlled. This will lead to an environment where affordable mortgage rates appear. Policies need to be revisited to allow for more units to be part of the mortgage market.

Advertising Area



https://wwww.dailynewssegypt.com/2017/09/18/egypts-real-estate-sector-undergoing-transformation-sodic-managing-director/
Breaking News

No current breaking news

Receive our daily newsletter
Subscribe