Unregulated market, high prices are Egyptian real estate's main challenges: Wadi Degla Chairman

I expect the real estate market to achieve high growth rates in the next period, says Helmy

The unregulated market and high prices of land and construction materials are the biggest challenges facing Egypt's real estate developers, according to Engineer Maged Helmy, Chairman of Wadi Degla Developments.
In an interview with Daily News Egypt, Helmy anticipates that Egypt's real estate market will achieve good growth rates in the next period due to the high demand in this sector.
According to Helmy, Wadi Degla Developments is participating at the Cityscape exhibition this year with two projects: one on the North Coast, and the other in Ain Sokhna, besides the residential compound of Neopolis.
First of all, can you outline Wadi Degla Developments' activity for us?
Wadi Degla Developments is the executive arm of Wadi Degla Holding. The company meets the needs of the Egyptian market through the services of housing and real estate since it was established in 2005. It has a comprehensive group of integrated residential, commercial, and entertainment real estate projects. The company succeeded in its commitments towards clients and the shareholders, and was able to gain their trust and respect over the years.
How big is the company's activity and business?
The company is always committed to its promise of redefining the outer appearance of life in the Egyptian suburbs, which always exceeds the clients' expectations. The company expanded until the volume of its investments amounted to 30,000 units in 17 residential compounds and tourism resorts in a number of significant areas, like Maadi, New Cairo, 6th of October City, Ain Sokhna, Hurghada, Marsa Alam, and the North Coast.
What is the company's business strategy in the Egyptian market?
A radical change in the life of Egyptian society is the main goal of Wadi Degla, the mother company. The developments the company has achieved over the last ten years resulted in redefining the notion of the real estate. That was achieved through combining the beauty of design with self-sufficiency and affordability. That is in all of the company's residential compounds and tourism resorts. The company also provides first-class services and facilities, besides the beautiful scene, and a group of housing options varying between apartments, duplexes, and villas, with different areas.
Wadi Degla presents integrated projects to its clients, seeking to meet all their desires and needs through developing all its projects and services at the highest level, in addition to making them available to everyone at the right time and in an effective manner. I believe that the specialised team work of the company will guarantee satisfying the clients on all levels. The company seeks also to be a leading company working in a lot of variable fields, in order to serve the clients' needs.
What are the most prominent projects the company established?
Wadi Degla Developments works in a number of the huge projects. The company's projects are divided into two groups: resorts and residential projects. The resorts projects of the company include the project of Marina Wadi Degla, on an area amounting to 628,335 sqm, 132,892 sqm of which are for the buildings. That project that started in 2005, has 1,298 units, and achieved a volume of sales amounting to 100%. The company has also Blumar Sidi Abd El-Rahman project, which is on an area of 273,211 sqm, 119,380 sqm of which are the area of the buildings, with 914 rooms. That project was started in 2008; it achieved a sales ratio of 89%.
These projects include also Blumar El-Dome. This project is on an area of 200,196 sqm, 114,979 sqm of which are for the buildings. The number of its units amount to 811 units. The project started in 2010, and achieved sales ratio of 100% as well. Moreover, in 2011, the company established the Blumar Hurghada resort on 105,890 sqm. The buildings are an area of 89,424 sqm, with 1,242 rooms. The sales ratio in the project amounted to 21%. There is also the project of Blumar El Sokhna that is established on 1.077m sqm, while its buildings are on an area of 392,833 sqm, with 3,023 units. The project started in 2014, and achieved sales ratio of 32.5%.
The projects include also the project of Blumar Hills, which is on an area of 44,926 sqm, and buildings on 17,479 sqm. The number of the project's units is 194 rooms. It was established in 2014, and made a sales ratio of 12%. During the current year, the company started the project of Murano resort on an area of 466,000 sqm. The buildings' area amounts to 244,654 sqm, with 2,000 units. The sales ratio amounted to 27% until now. As for the residential projects the company establishes, they include River Walk, which is on an area of 115,523 sqm. The buildings' area in the project amounts to 74,732 sqm, with 96 units. The company started establishing that project in 2006; its sales ratio amounts to 100%.
There is also the Canal Residence project, which is established on 4,177 sqm, while the buildings are on an area of 2,432 sqm, with 40 units. The project started in 2007, and its sales ratio amounts to 100%. There is the project of Tijan Zahraa El-Maadi, on an area of 78,522 sqm. The buildings are on an area of 296,640 sqm, with 1,728 units. The project was started in 2008; the sales ratio amounts to 98%.
In 2009, the company established the project of Pyramids Walk on an area of 141,139 sqm. The area of the buildings amounts to 86,497 sqm, with 278 units. The sales ratio in that project amounts to 95%. The residential projects of the company include also Victoria Residence, on an area of 12,870 sqm, 4,731 sqm of which are for the buildings, with 27 units. The project started in 2012, and achieved sales ratio of 100%. There is also Tijan Maadi; the project is on an area of 18,172 sqm, while the buildings take 108,866 sqm. The number of units in the project amounts to 650. The project was started in 2014; its sales ratio amounts to 60%.
In 2014, the company also established the residential project Promenade, on an area of 232,901 sqm. The buildings' area in that project amounts to 283,465 sqm, with 1456 units, while its sales ratio amounts to 48%. The Neopolis project is one of the biggest residential projects the company carries on in 2015. The land of that project amounts to 2.2m sqm, with 14,000 units, while the sales ratio amounted to 11% until now.
And what are the other projects the company intends to work on?
There are two projects in Ain Sokhna with total number of units of 1,600 on an area of 500,000 sqm, and a project on the North Coast on an area of 1.2m sqm, in addition to a project under study in 6th of October City.
What are the goals the company targets in 2016, whether in regard to the sales volume or the investments?
We target finalising contracts worth EGP 5bn by the end of 2016, compared to EGP 3bn by the end of the current year, in addition to EGP 1.5bn in investments. The company also targets a growth rate of 60% by the end of this year, supported by the expansions the company conducts in the market during the current period.
How big is the area Wadi Degla Developments developed until now?
We are developing 6.5m sqm, currently, targeting reaching 8m sqm in 2016.
What about the company's expansions in the external market?
We have a big opportunity to work in a number of African countries; Wadi Degla Holding has presence in nine Arab and African countries. We seek to benefit from that presence, especially in Kenya, Ethiopia, and Nigeria. We have already started the process of acquiring lands in Kenya. Egypt's presence in these countries is limited to some businesses, but it does not have any real estate projects there.
And how will the company fund these expansions?
The company has a lot of solutions to fund its expansions, one of which is using the banks. In this regard, there is an agreement with the Commercial International Bank (CIB) over arranging a syndicated loan for the company, in addition to the securitisation operations the company carries out. The company has already carried out a securitisation operation worth EGP 200m through Tharwa Capital.
Is the option of listing the company on the stock market still on the table?
The company is ready to be listed on the stock market, but we have not decided on this issue yet.
What new projects will the company present at the Cityscape exhibition this year, and what is the importance of such exhibitions?
First of all, the company participated in Cityscape this year with two projects: one on the North Coast, and the other in Ain Sokhna, in addition to participating through the residential compound Neopolis, which is located in Mostakbal City in New Cairo. The company has attended Cityscape conference and exhibition since it was held for the first time. It is an important exhibition for any serious real estate developer to present his products. It is a big opportunity also for the consumer to view all the real estate he needs.
What are your expectations for the real estate market in Egypt?
I expect the real market to continue achieving a good growth rate through the next few years, as a result of the increasing demand on the real estate. This means that the market is able to absorb a lot of the new investments and projects in the next period, to meet the market needs.
In your opinion, what are the most important challenges facing real estate developers in Egypt?
The biggest challenge is the unregulated, or unofficial, market, which acquires about 70% of the real estate market in Egypt, compared to only 30% for the official market, in addition to the high prices of land and construction materials.
Finally, what is needed from the government to support real estate development companies?
Firstly, I would like to clarify that the state does not assign projects through direct order as it is said, especially after the incidents experienced in the last period. However, it presents clear projects for participation, and there are committees which discuss with the companies over the participation contracts. All that is needed to ward off any suspicions, is to conduct this process more clearly and transparently. I also believe that the government can negotiate with the developers collectively, and to create partnerships between private companies, especially those working on developing millions of metres of land, and have sufficient experience in that field.