CAIRO: Despite soaring steel, cement and land prices, Egypt's real estate market is still attracting developers and investors looking for safer havens in the shadow of a global slump, market analysts recently said. According to HC Securities, construction costs in Egypt have surged 27 percent since January pressured by continued hikes in raw material prices, namely steel rebar and cement. Steel currently sells at record highs of more than LE 5,300 per ton, up from LE 3,900 last December. Cement sells at around LE 500 per ton, up from last December's LE 380 per ton. Ongoing upsurges in steel and cement prompted Egyptian property developer Hisham Talaat Moustafa to ring the alarm, outlining in a press statement released yesterday the detrimental effect of such repetitive hikes on the real estate sector. Moustafa, who is also chairman of the General Section of Real Estate Investment (GSREI), said Sunday that the GSREI would not overlook escalating prices in steel and cement that will "eventually affect not only the building and construction industries, but also domestic economy and society in general. Experts put costs of building a square meter of "low-cost housing units today at an average of LE 1,300, compared to LE 1,000 in December. "Nevertheless, construction sector in Egypt - among other sectors - is growing remarkably, fueled with heavy Gulf investments. Dwellings average price per square meter reach levels as high as LE 8,000, stated HC Securities. "Investments [will] continue to pour into the economy, fueling growth across the board, the brokerage and investment firm added. "Egypt has been attracting investments; and with a US slowdown and a possible similar scenario taking place in Europe, Gulf and foreign investors will be more interested in investing in Egypt, especially since growth rates are expected to remain strong in fiscal year 2007/08. Recent data shows that investments in Egypt's real estate market have reached $51.8 billion in some 16 mega projects. "The global investment trend nowadays is in real estate, and Egypt offers the biggest real estate market in the Middle East, said Maged Hassan, CEO of Habiba Real Estate, a regional property consultant firm. "Numbers speak for themselves.. Egypt's real estate market has pulled in billions of investments from Gulf investors alone.and figures will multiply in light of recent interest from European investors. Hassan explained that the nature of real estate development has changed in recent years. Gated communities such as those in New Cairo and Sixth of October City are now on demand, sparking the interest of developers and investors. He added that major investors are no longer interested in developing buildings randomly across cities. Alternatively, they are seeking spacious pieces of land where they can develop mega real estate projects. "Egypt provides this sort of investment opportunity; and that is why a [non-Egyptian] investor comes from the end of the world to buy a piece of land for a real estate project in an Egyptian city, he said. Several Gulf investors have recently eyed Egypt's promising real estate market, developing several mega projects in parallel. Dubai's heavyweight Emaar Properties revealed investments of around $5.8 billion in four projects nationwide. Market rival Damac is pouring in $22.9 billion in four luxury residential projects in Egypt. Similarly, Dubai Holding Company revealed intentions to invest some $4 billion in real estate projects in Egypt. Al-Futtaim Group also plans to bring Dubai Festival City to Cairo with investments totaling $3.4 billion. "Interest in Egypt s real estate sector is [on the rise], especially since the number of tourists visiting the land of Pharaohs is climbing every year; in addition to the fact that Egypt has started to attract high-end tourism and still has huge space for development [projects], commented HC Securities. Additionally, the Abu Dhabi Fund for Investment is looking into investing in several real estate projects to be carried out as a joint venture with the Egyptian government. These projects will include a 15 million square meter development in New Cairo as well as Shaikh Khalifa City, which was financed by the Emirati government. "It is worth noting that the real estate developments are dominated by projects for high-end [segments]. This indicates that real estate has and still remains a source of distress to inflationary pressures in Egypt, with Gulf investors owning investments worth over$70 billion in light of skyrocketing oil prices, HC Securities pointed out. Prices for such projects are expected to be within a price range of LE 4 to LE -27 million with an average area of 7,000 square meters. With the ever-increasing supply and rapidly escalating prices, skeptics argue Egypt's real estate market is a bubble in danger of bursting. However, Hassan begs to differ. "The market will not collapse. It's a global trend. Real estate is [hot] everywhere, in Turkey, Cyprus, Egypt, and the entire world. Everyone's eyes are set on real estate, he said. "Property that could plunge is the one that is [ridiculously] expensive. But the ones that are fairly priced will continue to be in demand.
