Egyptian developers pull payment plans from Dubai playbook as prices set to rise 15%

Rising Egyptian consumer confidence has encouraged developers to push forward with new housing schemes. AFP

• Rising consumer confidence and falling inflation is encouraging local real estate developers
• Volume of new developments raises concerns of over-supply in the luxury market

Egyptian property developers are eyeing 15 percent price rises this year as they race to fill a supply gap of an estimated million homes.
Big name developers from the country are in Dubai this week seeking to win over more overseas investors with the promise of attractive payment plans and with a positive macro economic story to sell.
“We expect Egypt’s property market to witness a strong performance in 2018 to reflect the expected improved economic conditions, interest rate cuts and better market liquidity which will have positive implications on the sector’s real demand and investment demand,” said Nemat Choucri, co-head of research at the Cairo-based HC Brokerage.
The uptick in consumer confidence and the slowing of inflation is enouraging developers in the country to push forward plans to develop new housing schemes with the offer of payment plans similar to those that have also been suucessful in boosting offplan sales in Dubai.
“Currently there are some very good payment plans offered by developers to attract buyers with some offering up to 10-years post-completion payment terms. We are currently in a buyers’ market cycle,” said Ian Albert, regional director, at property consultancy Colliers International Mena.
Real estate firm Hyde Park Developments was offering a 10 percent downpayment over an eight-year instalment payment plan for its Coast 82 units — a residential tourism project featuring luxury villas on the north coast of the country, during the Cityscape event.Egypt’s Sodic was offering a seven-year payment plan for its October Plaza project in 6th October City at the exhibition, with a 10 percent downpayment on units due to be delivered from 2020, while the developer ‘Projects’, was offering 10 percent discount on its Blues Tiffany development in Ras El-Hekma on Egypt’s North Coast. Both developers exhibiting at the Dubai event, along with companies such as City Edge Developments and Tabarak Holding, all eager to win over investors in what is becoming an increasingly competitive market.
“Nearly two-thirds of Egypt’s population of almost 100 million citizens are under the age of 30, which presents a tantalising opportunity for developers in the country and indeed, around the Mena region,” said Faisal Durrani, head of research at the consultancy firm Cluttons.
“There is a lot of jostling to be part of the nation’s property market, which is poised to see fantastic growth in the near to medium term, particularly as political stability continues to bed in,” he said.
A total of 10,000 units were added to Egypt’s residential supply in 2017, and deliveries of previously announced projects could add a further 70,000 units within gated residential communities over the next 3 years, according to JLL’s research published in January.
“The development in Egypt now is exceptional … and a unique opportunity for investors to participate especially with the investment incentives,” Abdel Nasser Taha, architect and the president of International Federation of Real Estate — Egypt (FIABCI), told Arab News.
The volume of planned new developments in Egypt has led to some fears that a glut of supply could damp property prices, particularly if developers focus too much on the luxury end of the market.
“There are concerns of oversupply for the top tier of the market, particularly in villas,” said Albert.
“However, whilst real estate has been used recently as a buffer against inflation and the recent devaluation, real estate is traditionally a medium to long-term investment. The medium to long-term outlook for the residential market remains strong,” he said.
There is also a need for more affordable housing in the country, not just luxury coastline apartments. Egypt needs approximately 500,000 new homes every year, said Durrani.
“There is a severe shortage of quality affordable housing and so the race to facilitate  the transition of millions of households into decent housing from informal dwellings remains a top priority for the Egyptian government,” he said.
While there is a growing buzz around Egypt’s property sector, non-Egyptian foreign investors are still tentative about the market, Albert said.
The devaluation of the pound at the end of 2016 did initially cause a “surge of interest” in Egyptian property, with expat Egyptians keen to take advantage of the more favorable exchange rate to buy in the residential and holiday home sectors.
“Whilst this has diminished, many non-resident Egyptians are still investing. Foreign buyers are still uncommon as they wait to see the period of economic stability extend to provide comfort in the buying cycle,” he said.
While overseas buyers might be wary at the moment, Egypt’s property developers may be enthused by recent comments by Mohamed Alabbar, the founder of Dubai’s Emaar Properties, who told Arab News in an interview earlier this month that he was “very positive” about Egypt.
Egyptian real estate stocks rallied on Wednesday after news that two big developers in the sector were mulling a merger.
SODIC and Madinet Nasr for Housing and Development said this week they would start preliminary talks on strategic cooperation that might involve a merger or acquisition.
A merger would strengthen the pair against growing competition from rival developers, combining Madinet Nasr's rich land bank with SODIC’s brand expertise, Naeem brokerage said.