CAIRO: The housing and mortgage sector in Egypt is still at its initial stages, especially when compared to North America or Europe, said Michael Borish, international housing finance director of the Ottawa-based Canada Mortgage and Housing Corporation (CMHC). He added that even markets in Malaysia and Singapore - that only started gaining momentum in the 80s and 90s respectively - are more advanced. The Moroccan housing market, he added, is ahead of its Egyptian counterpart, "but not by much. Borish has been working in the financial sector since 1980 and founded his own company in 1996. He has worked in the Middle East and North Africa. On the sidelines of the Al-Ahram Conference for Real Estate Investment held in Cairo last week, mortgage experts weighed in on Egypt's housing sector, while suggesting methods by which the sector can develop. On his part, Mungo Dunnett, founder of Mungo Dunnett Limited, in Oxford, highlighted four main points that need to be addressed in the mortgage and housing market in Egypt. He said title registration on properties needs to be secured, regulations on the valuation process should be issued, sound credit risk management in financial institutions, and, more importantly, economic balance between the protection of customers' rights and mortgage institutions' rights. Dunnett believes that it's the "regulator s responsibility to keep this balance. Dunnett is a reputable financial specialist whose company is currently working with 36 lenders in the UK. He cited the housing market in the UK, which was booming in the period between 1995 and 2007. By the end of 2007, Dunnett said, there were 80 mortgage lenders, including American investment banks, with a market size of £363 billion. This, he explained, led to fierce competition and a profit margin of 0.4 percent for lenders. "Mortgage lenders were arguably losing money so the entire sector started to [collapse.] Dunnett lauded Egypt's initiative to unify three regulatory institutions under the new Egyptian Financial Supervisory Authority (EFSA) and said it was a good step towards regulating the market. However, he said that although "this is progress, a lot more is needed. On the other hand, Borish recalled how restructuring the banking sector in Hungary helped develop the mortgage and finance sectors. "In 1996-2000, Hungary privatized all their public banks except for one, which resulted in a very competitive banking system, attracting strategic investors, such as American and European banks, he said. This, Borish explained, encouraged competition, which was in the customers' best interest. Challenges and opportunities Both experts saw a lot of challenges as well as opportunities in the local market. "Only 4 percent of the land is used for housing in Egypt. This is the lowest percentage I know of. In the Netherlands it's 19 percent; it shows there are resource constraints, Borish said. Dunnett said one of the main problems in Egypt is that a large percentage of people are "unbanked . even though banking in Egypt as a concept is very old, but not consumer banking. However, Borish saw in the 80 million Egyptians good potential in developing the mortgage and housing market because "volume is important to make mortgage work as a business. "There are many young professionals in Egypt, so these are the seeds to the growing middle class. In general, most societies tend to operate in a more stable way when they have a big broad middle class, he said. Dunnett echoed Borish's sentiments, adding that "banks seize opportunities and some of them are aggressively chasing the retail banking activities and this will take some time, because culturally not all Egyptians are comfortable with banks.
