Signs of the times have hit everything everywhere during the global downturn, which erupted in late 2008. As for real estate, the impacts have been excessively huge in the US, Europe and the Arab Gulf region. But has Egypt's property market has been much less affected, given its growing demand, according to expert. The country's property sector grew by 3.7 per cent in 2009 despite the global downturn, official reports say. "Nearly 99 per cent of our clients are Egyptians. [But] We have the opportunity to attract the foreign demand as well," Ahmed Badrawi, the Chief Business Development Officer of Sixth of October Development and Investment (SODIC)," told the Egyptian Mail in an interview. According to him, there's growing demand for middle-class housing exceeding 400,000 units annually, adding more potential to the market, which has been targeted by luxury developers. Badrawi believes middle-class housing will be a great opportunity in the future. "There's no denying that (middle housing) is a growingly important segment that I don't think anyone would ignore in the long term," he said. "Today the focus of our facilities is on the higher-end market on the basis to deliver higher returns to our shareholders. If tomorrow we are able to achieve the same kind of returns through middle projects, we will very much enter that territory," Badrawi said. Credit provided by local mortgage finance facilities totalled LE9.3 billion ($1.7 billion) in 2009, according to the Mortgage Finance Authority. The figure accounts for less than 0.01 per cent of Egypt's gross domestic product (GDP), which is estimated to hit LE1.2 trillion in the fiscal year 2009/2010, according to the Ministry of Finance. Mortgage finance stands at around 14 and 80 per cent of GDP in Morocco and Britain respectively. "The target was to reach three per cent of GDP by this time. I don't think its infrastructure to reach that is in place yet," he argued. "We still don't have a secondary market. There's a direct correlation between the mortgage finance and the real estate market. Interest rates, I think, are too high for a mortgage company," he said. "Banks here have deposits of around LE800 billion, of which nearly 50 per cent are loaned out. Can you imagine if we are able to utilise that remaining 50 per cent into investments and projects that create jobs? That would be momentum for the economy and real estate," he explained. A thunderstorm hit Dubai last November, shaking world markets after Dubai World said it wanted to postpone debt payments. The announcement sent shockwaves around financial markets worldwide. Many analysts have seen a silver lining in Dubai's fallout. Badrawi thinks Egypt may benefit from the situation. "There's no reason why we shouldn't benefit from the fallout. All those people who were looking for developing in the Gulf, where the prices is high and margins are high, are now looking to new countries. And Egypt is a very healthy destination," he said. Over the past five years, competition from Lebanon, Syria, Tunisia and Algeria has been attracting more and more global property developers. But that's of no concern as the local market relies heavily on internal demand. "There could be competition from other regional markets regarding tourist development. But here it's different as more than 90 per cent of our customers are Egyptians," Mohamed el-Mikawi, the General Manager of Al Futtaim Group Real Estate Egypt, told this newspaper. "After shooting up by unprecedented ratios from 2005 until 2007, property prices have eased. In my opinion, the market will pick up again," el-Mikawi argued. "Egyptians consider properties as a store of value and a haven from market gyrations and inflation. This culture increases demand for real estate," el-Mikawi said. The worldwide recession seems to have no impact on Al Futtaim unlike some Dubai-based property firms, according to el-Mikawi. "Al Futtaim comprises 68 companies in various fields. This diversified nature has been a shield against the global downturn." With a population of around 80 million, the Egyptian property market is "very promising and has great potential". "According to statistics, the market here needs three million housing units. The market isn't saturated yet, and has the capacity for all real estate products. Al Futtaim, for instance, offers apartments starting from 120 square metres," he said. "Egypt's population is growing, and the larger it becomes, the more diverse the needs of consumers get. Launching Festival Living allows us to diversify our residential mix and cater to the growing needs of the public," he added.
