Egypt's real estate sector is waiting for an end to the challenges it faces in the wake of the political changes that have swept the country.
Experts say the most significant challenges are the proliferation of unregulated construction, high prices of raw materials, and the fallout from the case brought against iron and steel companies that were owned by businessmen affiliated with the former ruling party.
According to economist and legal adviser Mohamed Ezzat, some traders used the prosecution of businessman Ahmed Ezz -- head of the Ezz Industrial Group companies, the largest steel producer in the Arab world, and former secretary of the National Democratic Party -- to manipulate the availability of construction material on the market, which negatively impacted the real estate sector.
"[The Industrial Group] companies entered an atmosphere of uncertainty affecting their shares in the stock exchange, which dropped dramatically, leading iron and steel traders to hide the materials they had in order to reduce supply to the market and raise prices -- something that indeed happened during the past two months."
Ezzat said he does not expect traders to put the stockpiled materials back in the market for at least three months, which will consequently increase the price of residential units by at least 25%, he said.
Ezzat said he also expects the price of steel to increase from its current 4,800 pounds ($802) per ton to 5,200 pounds ($868) in the coming period.
Farouk Abdel-Latif, a contractor and real estate broker, also attributed the recession in the Egyptian real estate market to traders hoarding steel and cement to push up prices, which in turn has led to higher prices for apartments and residential units -- despite the weak demand.
He said steel and cement companies are producing at only half capacity due to weak demand following the withdrawal of large real estate companies from the Egyptian market.
Abdel-Latif said he expects Turkish steel to flood the Egyptian market despite the high cost of imports because it "would be cheaper than domestic steel prices, which rose dramatically".
The Central Agency for Public Mobilisation and Statistics recently recorded a rise in average prices of major construction materials. Brominated steel, for example, rose 2.6% -- from 4,962 pounds ($828) per ton in July to 5,093 pounds ($850) per ton in August.
Abdel-Latif said another factor hurting what he called the "legitimate" real estate market is the proliferation of unregulated building in the absence of official oversight.
"This unregulated market is seeing significant demand from middle-income and poor families. This phenomenon encompasses all Egyptian provinces, where prices start at 40,000 Egyptian pounds ($6,680) and do not exceed 200,000 pounds ($33,400) at a high standard," Abdel-Latif said.
"The prices of unregulated apartments did not see an increase because of their popularity, so they are not influenced by high prices for steel, which constitutes only 10 percent of the cost of buildings."
In contrast, Mustafa Azzouz, a real estate sales manager, told Al-Shorfa that "getting out of the recession in the real estate market is only a matter of time" and that it would end when the political situation stabilised.
He asserted, however, that the concerns of Gulf investors have had a clear impact on the Egyptian real estate market.
"Even Gulf buyers ordinarily wishing to purchase rather than rent [a place] to spend the holidays are refraining from entering the Egyptian market."