Egypt's population is projected to more than double in 40 years, making it a very attractive market for real estate developers, according to Abdel-Nasser Taha, development director at Emaar Misr.Taha was speaking at a Cityscape Connect event ahead of the Cityscape Next Move real estate exhibition scheduled to be held in Cairo in March, Niveen Wahish attended. In fact, according to Angus Blair, president of the Signet Institute, there is significant annual demand in Egypt, which is reason for optimism for anyone interested in residential development across Egypt, not just Cairo. May Abdel-Hamid, chairman of the Egyptian Mortgage Finance Fund, puts the current housing shortage at 1.5 million units, mostly in the low-income segment. She said that less than 200,000 units are built annually. Some look to real estate as an investment, not merely for housing purposes. This is especially true with a growing foreign exchange risk, according to Omar Elhitamy, managing director of Orascom Housing Communities. The Egyptian pound has lost around five per cent in less than two months. And depleting foreign reserves coupled with continued scarcity of foreign currency revenues could further pressure the pound. “People look for a secure vehicle for their investment, and real estate is offering that,” Taha said. However, for investors to capitalise on this potential, Taha added, they need a secure environment. “Investors will look to risks before profits.” He underlined that what is needed most are regulations to secure local and foreign investment. Since the 2011 revolution, several investors suffered disputes with the government over land purchased under the former regime. According to Ahmed Al-Sayyad, advisor to the chairman of the General Authority for Investment, “it is natural for investors to be cautious.” He assured investors, however, that “the fundamentals of economy have not been shaken.” In fact, he said, this is a very good time for real estate development. However, he warned that the “rules of the game” have changed. “You can no longer finish a project just by knowing the right person. A project has to get all the necessary approvals.” Further, he said, real estate projects have to be mutually beneficial. He said it is no secret that the government has an issue with utilities, therefore he advised investors to look towards integrated development, to put in the infrastructure themselves. Investors have said they face other problems as well. Among these are, Taha mentioned, the affordability of land, difficulty with registration procedures, finance and economic stability. Another missing element, according to Taha, is planning. “There is a gap between population growth and urban growth. The government needs to be ahead and plan, not just for residential and commercial areas, but for hospitals and schools.” Blair agrees that the government has not done a good job with planning. Speaking about Cairo, he said: “We need to create a sustainable city that works, where people are able to get around. Historically, planning has been poor.” An important area that offers plenty of opportunities for investors is housing for lower- and middle-income families. Elhitamy says there is a lot of suppressed demand in these sectors: “We need to think of ways to turn that need into effective demand.” He suggested that the mortgage industry should play a bigger role. “There is a problem of affordability — a mismatch between the loan amount that a low income person can get and the price of the unit.” Elhitamy warned that building low-income housing is not easy work. “Lower-end housing is challenging because you need to create a factory of homes. You need to build quickly, sell a lot, and collect your money,” he said. This is currently not happening in Egypt. Many investors who entered this segment of the market have exited, said Elhitamy.
