CAIRO: The Egyptian property market is on course to outperform all other MENA countries in 2010, according to a recent report. Citing a Credit Suisse report, Dubai-based analyst Ahmed Badr explained that growth in the Egyptian real estate market will be spurred by “strong domestic housing demand recovery that should filter through developers' sales figures this year, especially on the middle income segment,” Bloomberg reported. Khaled Khalil, a real estate analyst at Cairo-based investment bank Beltone Financial, told Daily News Egypt that stocks in the sector had been underperforming, partly due to financial turbulence in Europe. Still, he added, “activity in the sector has been robust in spite of the global economic downturn and sales have even increased in 2010 so far over the previous financial year, which is not the case in Dubai, where prices have dropped sharply by around 60 percent.” “In Dubai, demand was centered on the expatriate community, and when these individuals' financial situations began to become unstable or unviable, they simply left Dubai. As a result, there was an excess of property due to a sharp drop in demand,” he said. Elaborating on the strength of the Egyptian real estate market this year in contrast to the last, Khalil cited an example: “If you take the real estate firm Talaat Moustafa Group's first quarter 2009 sales, for example, they were in the order of LE 440 million, while for the first quarter of 2010 they were able to attain LE 1.2 billion, which is quite a rise.” He continued: “in the first quarter of 2009, there were more cancellations, but since mid-2009 until now, there has been a reversal, with sales exceeding cancellations.” Low steel prices, which came off a high in 2008, have been pivotal in driving growth, he added. “In contrast to 2008/09, steel prices have declined this year — currently floating around LE 3,550 — providing a strong incentive to develop property, which has accelerated building activities thanks to the surplus of cash-on-hand for the real estate sector.” Khalil said, “Real estate developers have not just been focusing on residential projects, but mixed projects, combining residential with retail and commercial zones and facilities.” Egyptian real estate developer SODIC is one example, he explained, adding “we are optimistic about this firm's performance.” By diversifying their project portfolio, “developers…can now capitalize further on their investments through the recurring revenue that is generated by retail and commercial space that is designated within new projects.” Other developers including Palm Hill Developments are also keeping up with the trend. Confirming the Credit Suisse prediction that the sector can anticipate that its current stable, upward trajectory would continue, “provided that the price of steel remains steady, the real estate sector can expect to grow at the same rate over the course of this year,” Khalil concluded.
