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Samcrete launches EGP 600m project by the end of 2017 We are planning to develop a residential project in eastern Cairo with investments of EGP 2.5bn, El-Kheshen says
Samcrete for Urban Development Company plans to develop a residential project in 6th of October City in the next year, which will be an extension of its Pyramids Heights project, with investments of EGP 600m. The company also targets to develop a residential project in eastern Cairo with investments of EGP 2.5bn, and expects the Ministry of Housing's offering of the second phase of the partnership projects. Hisham El-Kheshen, managing director of Samcrete for Urban Development Company, said in an interview with Daily News Egypt that the extension of the Pyramids Heights project is expected to be built on an area of 50 acres. The company will start the establishment of the new residential project in early 2018. What are the company's future plans? The company plans to develop a residential project in eastern Cairo this year with investments of EGP 2.5bn, in partnership with a real estate developer. The company has reached the final stage of negotiations over that partnership. We are currently studying the launch of a tourist project in the North Coast region, and the company is searching for suitable pieces of land with areas ranging between 50 and 100 acres. It comes within the company's investment plan for this year. The investment cost of the Pyramids Heights project in 6th of October City increased to EGP 1.2bn after the flotation of the local currency. What is the size of construction works which the company targets to implement? Samcrete aims to implement construction works worth EGP 250m at the Pyramids Heights project this year, as part of its plan to accelerate the implementation of the project. The total investments of the Pyramids Heights project reached EGP 3.2bn, consisting of two phases. The first phase was built on an area of 211,000 square metres, and was completed in 2000. It has ten buildings including 12 local and international companies and about 640 housing units. It is planned to start delivering these units in the first quarter of 2020. The administrative area in Pyramids Heights includes 14,000 square metres ready for use, in addition to another 35,000 square metres which have not been developed yet. The company is working to complete the whole project over the next five years. How do you see the real estate market in light of recent changes? The real estate market has seen many changes after the flotation, mainly the increase of residential unit prices by 20-25%. This increase affected the purchasing power of customers, so the market created new mechanisms to deal with those changes through offering facilitations in payment. Real estate companies extended payment deadlines up to ten years. Such a step could only be taken with the companies which have a financial solvency, because this measure will affect the sale proceeds, which represent the main supporter of the companies in the implementation of their projects and commitment to deadlines. It is difficult to predict the situation of the real estate market in the coming period, however there is an expected increase in demand, and the companies are expected to accelerate the implementation of their projects despite the increases in construction material prices in order to enhance their competitiveness. The companies with strong financial solvency will seize new investment opportunities, securing large profits in the coming years. I expect that this year will witness great opportunities for companies that present clear investment plans. What about the administrative projects? The administrative projects have seen a change in the type of target customers. In the past, the real estate companies used to deal with global companies operating in Egypt, offering special designs and specifications that fit their requirements. The companies now tend to make changes in the nature of units to suit the needs of local companies. Our company increased the prices of Pyramids Heights' units gradually, after the liberation of the exchange rate, to maintain the company's marketing plan and achieve the company's target size of sales for the last year. Would real estate companies change their policy of selling or marketing? The real estate companies will certainly change the areas of housing units to fit the purchasing power of target customers, as well as finding solutions and alternatives to achieve optimum exploitation of the units. I rule out any decline in sales. Actually, the last three months witnessed an increase in sales, despite the high prices, due to the long payment periods. Samcrete seeks to provide technical training for workers in the real estate sector through the National Academy of Sciences and Skills affiliated to Samcrete Holding—specialised in construction technology—in collaboration with a number of international partners for the development of technicians to compete with other companies nationally and internationally. The programme aims to develop Egyptian workers and enable them to work outside Egypt, in an attempt to solve the problem of unemployment and provide foreign exchange resources. The government is keen to improve the Egyptian economy through increasing production and the development of national projects. Does the real estate sector still offer safe opportunities for investment? The real estate sector offers the most secure investment opportunities in Egypt, whether for housing or investment, which preserves the value of money more than any other sector, due to the high demand. I just urge the citizens to purchase their units from reliable companies. On the other hand, the real estate market still faces several legal challenges, notably the delay in the issuance of the tenders law and the union of real estate developers law, as well as the new real estate regulations. The sector also faces economic challenges due to the high price of the dollar and, in turn, the construction materials prices, in addition to the lack of skilled workers. Does the real estate sector still experience recession or has it begun to recover? Egypt's real estate market has been witnessing a recovery thanks to the undergoing state national projects, following the 25 January revolution and the subsequent events, which negatively affected construction companies. I expect that the construction sector will face some challenges in the implementation of the new projects, mainly the shortage of skilled labour and equipment, and difficulties in obtaining funds due to the high price of the dollar against the pound, as well as other factors that may limit the competitiveness of these companies.
