Throughout the Covid-19 crisis, the state has backed the hard-hit tourism sector with initiatives intended to alleviate the repercussions of the pandemic on this vital sector of the country's economy. However, the real-estate sector has not received the same attention from the government, and the Central Bank of Egypt has not delayed the payment of sector debts or reduced interest payments on loans. Palm Hills Developments, a leading upmarket real-estate development company, reported a reduction in sales to LE2 billion in the first six months of 2020, down from LE2.5 billion during the same period of 2019. The company's net profits went down from LE470.4 million to LE282 million during the same periods. Talaat Moustafa Group Holding showed a 16 per cent decrease in profits to LE1.1 billion and a seven per cent reduction in sales to LE4.5 billion in the first half of 2020. Mahmoud Gad, a real-estate analyst at the Arab African brokerage in Cairo, said the performance of real-estate companies on the Egyptian Stock Exchange had recorded a reduction of 34 per cent in the first half of 2020 on the same period a year earlier. He added that the companies' performance had been affected by the coronavirus outbreak due to the late delivery of units and affecting sales figures as revenues are only booked when money is received and not when contracts are signed. Real-estate sales were also affected by people staying at home during the lockdown to combat the spread of the coronavirus and the postponement of real-estate exhibitions like Cityscape, which had hindered companies from promoting new projects, Gad added. Alaa Fekri, a member of the Real Estate Investment Division at the Federation of Egyptian Chambers of Commerce and the owner of a real-estate company, said the virus outbreak had affected the ability of many clients to pay their bills, whether Egyptians working abroad or employees in the tourism sector. The pandemic had affected purchasing power, and his company had recorded fewer sales, he said. Cancellations had exceeded ongoing operations due to layoffs in several sectors and decreases in the salaries of Egyptian expats. The pandemic had led many real-estate companies to market their products online, Fekri said, adding that a large number of cancellations had been due to clients' fears of being unable to commit to paying their instalments. But the cancellations had decreased over the past couple of months as the virus had begun to subdue, he said, adding that this had been particularly the case in the third quarter of the year when many companies had reported a strong comeback. The real-estate sector would likely not bounce back to its 2019 figures due to the slowdown that had taken place in the first few months of 2020, however. Gad said that real-estate companies with abundant liquidity and a strong name in the market had been able to bounce back better than their peers, as was the case for the Nasr City Company for Housing and Development and SODIC. The Nasr City Company had sold land it owned to increase its revenues in its Saray project, he added, and SODIC had increased its sales online. But SODIC recorded a reduction in revenues to LE1.07 billion in the first half of the year, down from LE2.02 billion during the same period a year earlier. The company attributed the lower revenues to a slowdown in the delivery of units, primarily in the New Cairo compounds of East Town Residence and Villette, which contribute 49 per cent and 19 per cent, respectively, of total value, Gad said. He expected the real-estate sector to recover once the Egyptian economy as a whole had regained its strength, forecasting that the sector would perform better throughout the second half of the year if a second wave of the coronavirus was avoided. Gad added that lowering interest rates, especially on deposit certificates paying 15 per cent interest, would increase demand for real estate. Reducing interest rates would decrease the cost real-estate investors shoulder as well, he said. Mohamed Nabil, a real-estate analyst with Naeem Brokerage, said the performance of the real-estate companies was expected to decrease by 25 per cent on 2019 due to the slowdown recorded by the companies in the first half of 2020. This had led some companies to sell some of their land to increase their liquidity and to make up for the weak sales, as was the case with the Talaat Moustafa Group Holding and the Nasr City Company for Housing and Development. In a statement, the Nasr City Company said reservations had increased in the first half of the year due to demand for its Saray project, in addition to its selling land to construct a compound at Taj City. The investors' relations manager at the company said it was trying to increase its profits amid the crisis, expecting that the repercussions of the coronavirus would affect business in the coming period, particularly with expectations of a second wave. The decrease in coronavirus infections had encouraged real-estate companies to make further offers to consumers, Nabil said. Some companies were offering a 50 per cent discount on cash payments to improve sales, he added. Increasing inflation rates and the widening gap between salaries and the prices of units had also led real-estate companies to increase the number of months over which instalments had to be paid, Nabil concluded. *A version of this article appears in print in the 15 October, 2020 edition of Al-Ahram Weekly
