Egypt's property prices are set to hike in 2021, EBA

Mohamed Abd El-Gawad, member of the Egyptian Businessmen Association and chairman of Vantage Urban Development, predicted prices of residential units to surge this year, signaling the elapse of one year and a half of stable prices during which developers struggled to achieve sales targets.

Developers kept prices as fixed as possible, as they continued to dole out long-term payment schemes to clients.

"But that happened at the cost of sacrificing profit margins targets, while prices of raw materials and inputs were skyrocketing for several months."

Any negative impact for the expected rise in prices of housing units on clients will be assuaged by adjustments that were recently approved by the Central Bank of Egypt put in place to finance developers, as well as by decreasing interest rates on mortgage loans, he maintained.

The Central Bank of Egypt has amended several articles spelling out how developers can borrow from banks, as they stipulated that lands of the housing units must be owned by the borrowing company or licensed by the owner. The amendments also made it possible for existing projects to be financed; given all parties have high credit rating, good reputation and financial solvency.

Any developer shall submit a detailed schedule for finalizing each construction phase, and earnestness of companies shall be monitored by a relevant consulting office by means of checking the actual implementation of works.

A banking account shall be opened to deposit sales revenues together with funds allocated for the project. Another current account shall be created to disburse banks' financing, while making sure that the accounts balance is spent on the project.

" CBE's latest amendments will help stimulate the real estate sector and cut the financial burdens long endured by developers since the flotation of the Egyptian Pound and rising construction costs, as they extended payment terms from 4-5 years to 8-10 years in order to reduce installment values and keep the purchasing powers intact."

He noted that fine-tuning the financing policies will fulfill the profit targets for companies and speed up capital turnover ratio.

Lower interest rates on mortgage loans will drive clients to tap this mechanism that created massive demand when rates hovered around the staggering 20 percent, he added.

Real Estate Registration amendments needs further clarifications so as to respond to citizens' queries, he elaborated, adding that these amendment are key for preserving Egypt's property wealth which remained squandered and unregulated for decades. "These amendments also fit in with efforts exerted to rectify and legalize encroachments."

Egypt's property market, witnessing a constantly rising demand for both housing units and investments, is promising, because it is a prime safe-haven, the most stable and ideal for generating high returns.