EGP 11bn in total sales of Azha project in Ain Sokhna: Madaar CEO

Madaar to receive over EGP 650m to fund construction in Azha project before the end of the year, says Gasser Bahgat

Daily News Egypt sat down with the CEO of Madaar Development, Gasser Bahgat, to talk about the developments in the Azha project located in Ain Sokhna.
What are the developments of the Azha project?
The project consists of two big phases, and each phase includes 11 or 12 villages. Each village is integrated with full services and includes a clubhouse and all other necessary services to perform as a separate project. The villages are not connected to each other but are connected to the main road inside the project.
We have four villages. About 94-96% of the units have been sold. We have already started work on infrastructure [connecting water and sanitation] and construction in the first two villages. This is aside from digging the lagoon and planting.
As we are located close to the New Administrative Capital, we don't consider our project as a second or third home, but rather as a first home. Many Cairenes have long dreamed for a beach for Cairo, so we planned to make the Azha project the beach of Cairo. We are planning to finish our project in the next three or four years alongside the completion of the New Administrative Capital, which is located about 30 minutes from our project, the same distance from the capital and Fifth Settlement. However, the difference between our project's location and Fifth Settlement is the sea.
We provide varying unit sizes. Our first unit consists of two bedrooms on an area of 125 sqm; a three-bedroom unit is on an area of 160 sqm. Among the things added to the spaces are an extra room for guests or a staff, a terrace, a reception and a dressing room.
Azha offers its residents a variety of services such as a downtown area, a lagoon, and a central park. The central park is located on an area of about 10 acres, and includes a cinema and a restaurant.
Our project also includes a downtown area for shopping, which is not available elsewhere in Ain Sokhna. Due to this, many people prefer the North Coast to Ain Sokhna because it features downtown areas with restaurants and shops.
The downtown area is located on an area of 120,000 sqm and will include more than 13 restaurants and about 20 to 25 shops to serve the Azha residence and other real estate projects in the area. Construction has not yet begun on this area—it is expected to be launched in the last quarter of 2017, or in the first quarter of 2018 at the latest.
The downtown area will also include a sports club for residents to enjoy different types of sports and activities such as water sports, squash, tennis, and football. Moreover, we have signed memoranda of understanding with a couple of German Football teams to hold football camps there in the winter.
How many hotels are located inside the project?
The project includes six hotels: five are 5-star hotels and one is a 6-star [deluxe] hotel. We are negotiating with an international company to manage the deluxe hotel. I expect to sign the contract with the company by the end of this year. Further, once we sign a contract with the company, we will start construction on the hotel. We will reach out to other companies to manage the five other hotels.
When will you start delivering the four villages?
We will start delivering them between 2018 and mid-2019. We will deliver the unit [apartment] 36 months after the contract is signed.
Will you offer new villages besides the four that have been already offered?
In the second week of October, we will offer two new villages. The value of sales of these villages is between EGP 400-450m.
Who are the project's contractors?
We are negotiating with an international Chinese construction company, which has massive equipment with the capacity to develop the project in time. Otherwise, we will contract four local contractors, each one will develop one village out of the four, which were offered and sold.
What is the source of project funding?
The funding depends on three sources: sales, shareholders, and banks. Egypt's biggest financial institutions are funding the project with over EGP 650 million. I expect to acquire the funds before the end of the current year.
What is the size of Azha project's investments and its sales?
The project's investments amount to EGP 7bn, while sales exceed EGP 11bn.
How much is the downpayment and prices?
We offer a 15% downpayment and instalments over a period of six years. Prices range from EGP 1.1m to EGP 20m.
How many villas are in the project?
We have 70 special villas located on the sea. Their prices range between EGP 20m to EGP 22m. However, the overall project consists of 50% apartments and 50% villas.
What is the company's expansion plan?
The company has bought 45,000 sqm in 6th of October City for building hotels, offices, malls, and apartments. The project will be one of the biggest projects in the area because the land price exceeded EGP 1bn and we will invest about EGP 3-4bn.
In addition, we acquired 160 acres along the desert road, but we will not offer them during the current period.
Currently, we are negotiating expansions in two areas: the North Coast to purchase 1.5-2m sqm and in Fifth Settlement to purchase 700,000 sqm.
What is the size of the company's land bank?
The total land bank is 5m sqm.
How much in investments has been pumped into the 5m sqm?
The investment costs between EGP 20bn and EGP 25bn.
There is a debate going on about a bubble developing in the real estate market in the coming period. What is your opinion?
People who are talking about the existence of a bubble want to destroy the market. There is no bubble in this sector. Our culture of association to the place and our love towards the acquisition of property play an important role in the revitalisation and growth of the sector.
What is the master plan of the project's crystal lagoon and the value of the contract with the Crystal Lagoons Company?
We are negotiating with the Crystal Lagoons Company to sign the contract. The value of the contract is between EGP 300-350m. The project's lagoon is located on 160,000 sqm. We started digging the lagoon and it will be launched by the end of 2018.
What is the rate for maintenance in the contracts for the project's units?
The maintenance is 5% of the contract's value and we will increase it this month to 7%. Further, at the beginning of next year, this percentage will reach 10%. The maintenance period, according to the contract, is 10 years. Moreover, we will establish a maintenance company to maintain the lagoon and the units with separate headquarters and management.
Did the change in the exchange rate between the Egyptian pound and US dollar affect your business?
It affected all businesses in the country, especially us because we deliver semi-furnished units that include air conditioners, kitchens, and wooden furnishings, which are imported from abroad.