Egypt will seek to pass a new mortgage financing law in its next parliamentary session to boost the growing property sector, the investment minister said late on Tuesday. Strong local demand has helped shield Egypt's real estate market from a global credit crunch, but analysts say it will need to grow its tiny mortgage market and develop a more efficient, transparent system to draw more international firms. Copious red tape and conservative lending rules have hamstrung the nascent mortgage sector, executives and officials told a real estate conference in Cairo. The new bill, to be submitted after parliamentary elections due later this year, aims to address some of these problems, Egypt's Investment Minister Mahmoud Mohieldin said. "We have a complete law ready to push forward the current mortgage regulations, to have better enforcement and enhance the efficiency of the sector," he said, adding there wasn't enough time in the current session to discuss it. Officials said authorities would seek to avoid the excesses which led mortgage-fed bubbles in developed countries. Total mortgages represent under half a percent of gross domestic product (GDP) in Egypt, compared to 14 percent of GDP in Morocco and more than 80 per cent in Britain in 2008. But Egypt now boasts 11 mortgage financing firms, up from just two in 2005, Mohieldin said, while the ratio of mortgages to total real estate financing grew between 1.5 per cent and 4 per cent annually from December 2005 to March 2010. "A new law will fuel demand for real estate and will allow us to sell over 5 million vacant units," May Abdel Hamid, deputy chairman of the Mortgage Finance Fund, said on the conference sidelines. "We are setting the stage for this industry to grow." Abdel Hamid said total mortgages stood at 4.5 billion Egyptian pounds ($812 million), representing no more than 75,000 customers, but the new law could help double that in two years. The draft would give the Egyptian Financial Supervisory Authority (EFSA) regulatory control over the property sector, Mohieldin said. He added that under the proposed law mortgage financing firms would only be allowed to merge after getting government approval, an effort to make sure firms do not use money allocated for mortgages to fund other operations. Independent investors would not be allowed to hold shares exceeding 10 per cent in any fund, Mohieldin said. The new laws would allow agencies to evict those who default on their loans in six to seven months, as opposed to as much as seven years under the current lax system, Abdel Hamid said. Executives said Egypt's conservative banks would also need to lend more freely to the property sector for it to flourish.
