Why should you invest in Egypt's real estate market? Al-Ahram Weekly listens to experts, Niveen Wahish reports Egypt may well be known as a tourist destination but it is rarely referred to as a market for real estate investment. There rarely are any articles written in international papers about possible property investments in Egypt. Yet experts say this may be about to change. Already a recent survey showed that Egypt came at the top of the list after Jeddah and Morocco in terms of investors' intentions in the next 12 months. Investors expressed their wish to build, buy and hold onto property rather than sell it. The survey, of 200 regional investors, was carried out by Jones Lang LaSalle (JLL), the financial and professional services firm specialising in real estate, in cooperation with Cityscape Connect, the business information and professional networking website dedicated exclusively to the global real estate community. And that attraction, experts assure, is due to the strongest fundamentals in Egypt's property market. JLL's survey highlighted the fact that Egypt benefits from a large population base and therefore does not have to rely on external demand to boost its real estate market. It is that very demand which, Ayman Sami, head of JLL Egypt told Al-Ahram Weekly, was core to Egypt overcoming the effect of the financial crisis quicker than other countries. He said in other markets like Dubai people were buying property as an investment, in Egypt they were buying it to live in or rent as well as invest. He pointed out that the market had only slowed down after the crisis because people were anxious to see what will happen. "There is a sense of stability here [Egypt] in a world that hasn't had a lot of stability in the last three years." Blair Hagkull, Chairman of JLL told the Weekly adding, "before everybody wanted to make up to 30 per cent profit, if they didn't they felt bad. In the last five years if they didn't lose any they felt good." That stability emanates, according to Ayman Ismail, Partner and chairman of Dar Al-Mimar Group, from the fact that with 600,000 marriages a year there is real and growing demand for residential units. He highlighted that currently in terms of residential units; there is only an oversupply in the high-end market which represents only two per cent of the market. Speaking at a business meeting organised by Cityscape Connect, he pointed out that at $600 per square metre, property in Egypt is as cheap as it gets. "There is a huge area for appreciation," he said, adding that in comparison Jordan's price is double that amount and Dubai was eight times that amount before the crisis. "$16 trillion worth of real estate investments globally, none of which are in Egypt," he said lamenting the lack of marketing. Hisham Shoukri, CEO of Rooya holding, also stressed the importance of marketing. He said that while funds are happy with four and five per cent returns on their investments in Eastern Europe, they are missing on investment in Egypt which could yield around 12 to 13 per cent. "We need to promote the country as a whole, not as individual projects. We need to move with the government and be part of global exhibitions." But Egypt's potential is not only in residential units, according to Khaled Sedky, chief portfolio officer of Palm Hills Developments Company who was also speaking during the Cityscape Connect event. Sedky believes that areas such as retail, commercial, health and tourism are currently underserviced and not up to global standards. In fact Hagkull of JLL says the office space in Egypt is negligible. "It is not quantifiable because many offices are currently located in residential buildings." He said the current stock is estimated at 600,000 square metres. With this in mind Sedky pointed out that the time is now opportune to attract international investments. He said that $1 trillion of the $16 trillion invested in property worldwide has been invested in GCC countries in the past three years. That $1 trillion is now being redistributed over the MENA region and Egypt is competing over it with Morocco and Tunisia. But Ismail warned that the industry needs to focus on regaining and maintaining trust. "Until the Madinaty issue, there wasn't a trust issue. Without regaining trust marketing is useless."
