Egypt real estate market sees 'unprecedented' growth

Workers open bags of material at a construction site in Cairo. [Waleed Abu al-Khair/Al-Shorfa]

Workers open bags of material at a construction site in Cairo. [Waleed Abu al-Khair/Al-Shorfa]

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The Egyptian real estate market is thriving despite the country's overall economic situation, officials and experts told Al-Shorfa.

They attributed this vitality in part to the growing need for housing as the population expands, adding that some developers also are hurrying to finish projects before the new tax law takes effect.

Construction activity has risen by 60% at the end of 2012 in comparison with the same period in 2011, said Maged Omran of the Ministry of Housing's technical inspection division.

"Construction activity is certainly at an almost unprecedented high level in the present period," he told Al-Shorfa.

Building is concentrated in Cairo's residential areas and near administrative centres in other provinces, Omran said.

Random housing construction activity also is taking place, where contractors first begin construction and later reach legal settlements and obtain the necessary licenses and utilities, such as electricity, water and plumbing, he said.

Growing demand

"There are about 40 million real estate units registered with official government agencies in Egypt, varying between residential, commercial, tourism and industrial units," Omran said. "The actual number, especially of residential units, however, exceeds the official figure by at least 30%."

The majority of buildings currently under construction are residential due to a widening gap between supply and demand, he said.

"Cairo, for example, is designed and planned to accommodate 5 million people, but the latest figures put the population of Cairo at upwards of 22 million, and residential building construction activity is in a semi-constant state of prosperity as a result," he said.

Egypt needs 800,000 new units a year, while annual production is estimated at no more than 200,000 units, thus making real estate development an urgent necessity, he said.

As a result, private sector participation through the build-operate-transfer system -- a form of project financing through which a private company builds and operates a facility, then turns it over to the government – has become crucial, Omran said.

The Housing Ministry's monitoring agencies conduct field inspections of buildings almost daily, and act on reported violations in co-operation with security services, tearing down any construction deemed to pose a potential hazard, he said.

There also is a plan to overhaul these monitoring agencies in favour of technology centres, particularly in newer cities, in order to track infringements and violations in real time, he added.

Real estate developer Farouq Abdul Latif attributed the "current boom in the real estate sector" to several factors, including the fact that many developers are hurrying to complete their projects before the new tax law is issued.

Housing prices depend on location, access to basic services, and proximity to public roads and metro stations, he added.

"The price of a basic medium-sized apartment in an acceptable area, for example, does not exceed 200,000 Egyptian pounds ($30,800)," he said, adding that developers seek to entice buyers with long-term instalment payment plans.

Small-scale investors thriving

Economist Mohammed Ezzat, a legal advisor for several real estate development companies, said large companies typically do not enter the market at a time like this, preferring to wait until economic and political conditions settle down, particularly since their projects are large, costly and require official plans and licenses.

Medium- and small-scale investors, however, use the real estate market "as a safe haven during crises to preserve [their] capital", he said. "This is why construction activity picked up during and after the revolution and is still going strong despite the fact other sectors are in a recession."

The smaller-scale investor "believes he will not lose his money, even if it has to sit idle for a short period until the markets begin moving again", he said.

The real estate market injects money into the Egyptian economy and is a market mainstay, Ezzat said. It is linked to more than 100 other sectors, creates thousands of jobs and stimulates market activity through the trade of building materials such as iron, cement, paint, tiles and ceramics, in addition to furniture and electrical appliances.

"The best evidence of the real estate market's recovery is its performance on the Egyptian stock exchange, where it recorded the third highest gain among all sectors at 78%, and ranked third in terms of trading volume with 5.4 billion shares traded at a total value of 20.2 billion pounds ($3.1 billion)," he said.

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    غسان المصرى

    2013-1-18

    I prepared this study about the real estate prices in Egypt to see whether they are cheap or high. I tried to identify the role of the real estate companies, price of the land, real estate, homes for sale, homes for rent, shops for sale, and shops for rent in this respect. Is there any demand on palaces? What is the role of the real estate development fund in the real estate market? Are the prices of lands and housing units normal? Because these prices can be classified into the higher level when compared to other states according to three factors, which are the total area of the state, the number of population and the individual’s income level, rather than the national income. The number of population is large when compared to the total area, and the income of a large segment of the population does not allow them to own property in cash or through financing. I tried to identify the average price of apartments, furnished apartments, and apartments for sale or rent according to the old and the new law in Cairo and Alexandria. The same thing applies to downtown apartments in the 6th of October city, Obour, Al-Muhandisin, Al-Rihab, Al-Shorouk, Hurghada, Heliopolis, Fifth Settlement city and Maadi. If we examined the prices of apartments, we will find that Egypt offers the cheapest prices among the Arab States.

  • عمار المنفلوطى

    2013-1-17

    The Egyptian market is starting to witness a fierce competition between the investment companies to win huge tenders and contracts for the implementation of a range of real estate projects. This will create a healthy environment that will have a positive impact on the Egyptian economy.

  • محمد عزت

    2013-1-16

    The Egyptian real estate market will certainly increase these days, because the dollar is different from the Egyptian pound. This is due to the decreased value of the Egyptian pound. This in turn, of course, will make the imported construction materials more expensive. So, God willing, we will find that the price of an apartment that was a hundred thousand will automatically increase to two hundred. As for the taxes, Mursi, with God's help, will make them almost like a butcher’s knife, and anyone who doesn’t like it will see what will happen to him.

  • سيف الدين على

    2013-1-16

    The real estate market is witnessing a boom, but from my point of view, this boom increased from the year two thousand and five until the revolution, and after that, I considered that it was no longer as it was before. Frankly, everything stopped at the outbreak of the revolution, and it is possible to say that the prices may have been fixed from that moment till now. The Egyptian revolution has damaged the Egyptian economy. Among the damage done, we find the marketing of the real estate field in Egypt. All of us have felt a situation of semi-paralysis in the process of the construction, the marketing process and the process of purchasing. So, even when someone buys something, he pays for it in installments or exchanges it for another thing and pays the difference. The number of people has caused the crisis in the world of the real estate. Unfortunately, the majority of the population cannot afford a house or a flat due the lack of sufficient liquidity to buy such housing units. So, the problem is financial or economic and not in the field of real estate or marketing or the wealth of the real estate. We hope that the Egyptian economy recovers so that the real estate marketing returns to its former glory and there will be investment in the real estate in Egypt in the coming period, especially after the Egyptian revolution, and we hope there is a new life without corruption or injustice. Also, the law on taxes that did not include contractors at the moment will cover it in the next period. So, inevitably there is no escape from anything.

  • مريم رؤوف

    2013-1-16

    I wish that the real estate market in Egypt would witness a greater recovery, because there is an increase in the population and there must be a solution to the crisis of housing with the increase in the population. Of course, the rate of unemployment has increased. So, there will be no balance. Therefore, the Egyptian government should think about the matter, and it’s high time for the Egyptians to stop living in humiliation and oppression. They are unable to satisfy their ordinary needs. Therefore, every responsible person should have a solution to the problem of housing that could help the real estate market. So, when their numbers increase, that will contribute to solving the problem of unemployment and increasing the employment opportunities. The government should encourage it and provide the Egyptian people with the appropriate housing that fits their income. Also, it needs to create a common-sized housing unit, which is medium-sized. That is to say that every family will have an apartment in these buildings. In addition, I think that the slums do not present a civilized image, and Egyptian President Mohammed Moursi should take the necessary measures to rebuild the slums in a new, organized way, so that they are good for living in. Also, he needs to provide them with all the necessary facilities, because the people have lived for many years in the inhuman slums. The Egyptian government should do everything for the benefit of the people. We are grateful for the contractors, because they were aware of this crisis and have thought about how to resolve it. I trust that the solutions will be implemented soon.

  • سمير المرسى

    2013-1-16

    The real estate market in Egypt is witnessing an unprecedented boom, greater than ever before, despite the critical period experienced by the Egyptian people of all classes. Despite the numerous crises in the housing, the health, the education, the taxes and the high prices, the Egyptians are trying to get through the economic crisis smoothly, but in vain, because many of them are in the upper class and the others are in the poor class in Egypt, especially the slums. This way, they have come to the real estate markets. With the imminent implementation of the new tax law and the increasing population, there must be a restoration of the real estate market in Egypt.

  • نازلى مندور

    2013-1-16

    With the population boom in Egypt, as well as the high rate of unemployment, certainly the people will not find homes that can shelter them, because unfortunately, there is no one in the government who thinks that there is a solution. The solution is not in family planning. The population needs homes, so the solution is creating many projects that will open the doors for work for the Egyptian workers, so that they can support their families. Besides, with the existence of the slums in Egypt, I think that all the officials know it, because they have become something fundamental in Egypt. Also, the coming days will be a landmark for the tourists coming to Egypt, so the Egyptian government must establish new housing projects and new towns to solve the crisis. Then it will not only solve the crisis of housing for the Egyptians, but it will also provide a million job opportunities for the Egyptian people. In the past days, they have implemented the new tax law; that’s why most of the Egyptian people are rushing to the real estate market to reserve adequate housing for themselves, which is a positive step. Also, the contractors wanted to finish the buildings that they started, and to begin the construction of new buildings. This can be a solution and we hope so, for the sake of the Egyptians.

  • تيسير المنفلوطى

    2013-1-16

    The Egyptian government must give land at cheap prices to the investors in order to encourage them to pump money into the country again. Egypt needs medium-sized and small units. It is possible that the land quest is linked to the type of the project. I suggest that the quest for land be done by building properties for the middle class, and this will largely stimulate the market, due to the limitation of medium-sized real estate.

  • مجد المحمودى

    2013-1-16

    What is happening now in Egypt in the real estate sector is the completion of the projects which began to be implemented two years ago, with a noticeable movement in the private construction activity, which is called the “building of the people” in Egypt. The citizens are looking for medium or small housing and great facilities in paying, which is largely unavailable in the market.

  • منار سليمان

    2013-1-16

    The Egyptian real estate market witnessed a slowdown after the revolution, due to the lack of political and legislative vision, such as the land allocation laws and the issue of corruption, of which a large proportion is linked to the allocation of land. However, at the level of the unofficial real estate market, it has seen a very active movement after the revolution. Besides, a number of individuals have taken advantage of the circumstances and have built, and this has raised the prices of iron and cement. Also, it is expected that the real estate market, in the medium term and in the long term, will witness a boom, given the stability of the political situation.

  • على زايد

    2013-1-16

    No one can deny that Egypt has gone through a serious political crisis over the past two years; however, its people are still fighting to survive. Unfortunately, the population in Egypt is still growing continuously; it has even exceeded all expectations of the Population Commission. Obviously, the Egyptian people are in search of housing amid the housing crisis, which has risen to a very high rate. In the face of the rising housing crisis, the prices of the buildings have risen as well. Even the special housing projects carried out by the companies and the associations are not commensurate with the income of the citizens, especially the employees. Moreover, many companies are unfortunately exploiting the housing crisis by offering residential projects that suit the Egyptian people, but eventually the offers turn out to be a scam. So, this way, the crisis will not be solved. However, currently, the real estate market in Egypt is witnessing an unprecedented recovery, due to the high demand for buildings. All this is in light of the increasing population in Egypt; but this growing demand has ulterior motives, and that is due to the intelligence of the Egyptian people, because they know that the law of taxes will be applied in the coming days. This way, they are exploiting time for their benefit. I hope that this crisis will be solved as soon as possible, because the Egyptian people have suffered enough over the years, and they have had enough of the slum scene. Solutions must be offered to construct buildings that fit the Egyptian people.

  • Ashraf Sabry

    2013-1-16

    I do not know the source of this information, but I think that there is horrible increase in the prices of the construction materials and it may reach 70% of the construction and contracting movement suffering from recession. If you do not believe that, go ahead and see the empty apartments in the area of Al-Zaiton, Al-Matariya, and Hadaiq Al-Qubba to verify this.