Property developers suggest solutions to overcome bottleneck in market

Mortgage finance is only and optimal solution to get out of global crisis, says Hisham Talaat Moustafa

Several challenges are facing Egypt's real estate sector at the present time in light of economic changes that the whole world is witnessing, and what i reflected in the hikes in prices of building raw materials.
In addition to a number of internal challenges that the sector faced locally, including high interest rate and the depreciation of Egyptian pound against the dollar, all of this eventually led to an increase in prices of building materials, which represent about 50% of the cost of real estate.
Accordingly, the local real estate sector is at the top of the sectors that have been affected by changes and new conditions that occurred in the Egyptian market. Therefore, developers have taken many measures to preserve the real estate market, calling for several other measures to preserve the large market, which represents 20% of the GDP.
Hesham Talaat Moustafa, Chairperson of Talaat Moustafa Group, said that the problem of real estate development in Egypt is the convergence of demand, while prices of all goods increase globally.
Moustafa added that this crisis has no solution but real and complete activation of the mortgage financing system, as it is the only and optimal solution to get out of the global crisis that knocked on the doors of the world in the last two months of this year.
Moustafa noted: "Egypt has real demand, and we will have 30 million housing units required during the next thirty years, at a rate of one million units annually, and the problem is that the cost of selling the product is not consistent with the levels of income in Egyptian society. The solution is for the mortgage financing portfolio to rise from the banking sector like the whole world, as the volume of financing provided by banks around the world for different sectors of it is approximately 65-70% of it directed to mortgage financing. Mortgage is present in all countries of the world and we need to activate this system in Egypt."
Tarek Shoukry, MP and head of Real Estate Development Chamber at Federation of Egyptian Industries, said that facilitating mortgage financing procedures at the present time has become binding and important compared to previous periods, in light of the high prices and the decline in purchasing power of buyers.
Shoukry added that the current method of selling by developers depends on selling units first and then starting implementation operations and this may cause losses to companies as a result of changing building materials prices, and pointed out that there must be a new method that depends on developers' financing.
"It is necessary to facilitate the financing for real estate developers in easier ways and away from the issue of customer checks, as banks finance companies in an easy and specific manner, with specific requirements and procedures, so that the project can be built first and then start selling to customers," he explained.
Property companies have initiated new and innovative solutions to meet desires and needs of citizens, and create new investment opportunities that suit them and are in line with the current data and changes.
Mohamed Al Bostany, head of the New Cairo and NAC Developers Association, stated that the real estate sector includes developers, clients, and the state. The developer's role is to conduct studies that tackle market issues and circumstances, namely inflation variables and to keep away from competing in the price and his calculations are well thought out. Additionally, the developer should follow the movement of the market and its trends and work according to it, and as for the sale, the developer should not be happy that he sells quickly.
Al Bostany said that real estate development companies should focus on value engineering in developing projects to reduce their costs.
"For the customer, he buys a project that has economic feasibility, buys from a trusted company, and is looking for resale spaces," he elaborated. "Moreover, customers choose the engineer who follows up on the validity of engineering drawings and the lawyer who ensures legal validity."
Meanwhile, the role of the state is to delay payment of installments of lands for developers and canceling dumping fees so that the raw materials are at a lower price. However, the state is offering lands that allow small spaces in units and take into account new needs of the market, he concluded.
Ahmed Shehata sales manager at Dubai Developments said that exporting real estate is one of the best solutions to overcome problems that the sector faces, elaborated that selling Egypt's real estate to Egyptians abroad, and exporting real estate to foreign, European and Gulf countries would revive property sales and allow developers to expand.
Shehata noted that companies must provide exceptional initiatives in order to attract a larger segment of customers, for example, special initiatives to facilitate customers; consequently, his company launched a new initiative that corresponds to the needs of citizens. The initiative is based on benefiting from proceeds of savings certificates in banks, purchasing real estate at today's prices, and paying down-payments after savings certificates are released within a year.
He further disclosed that foreign real estate exhibitions are one of the most important solutions to serve the purpose of exporting properties and provide the companies and the country with hard currency.
Similarly, Head of Sales at NCB Developments Ahmed Samir Al-Desouki agreed with Shehata that the companies should provide financing initiatives and offer different payment plans to customers.
Al-Desouki stated that offering innovative and distinguished payment plans exceeding the normal 10 years and trying to match with the mortgage finance system and approach to make it easier for clients to make an immediate purchasing decision.
He further pointed out that one of the most important methods and solutions that could help developers to expand and sell out their projects is innovating unique and different products than existed because most companies offer the same products with same spaces and features. However, clients at the current period require different products with smaller spaces and affordable prices as well as environmentally friendly.