Ahmed Sabbour speaks about the company’s new approaches to deal with the impact of COVID-19 and how the latter have reflected on market dynamics.
One of the first engineering consultancy firms in Egypt, Al Ahly Sabbour is a leading real estate developer with a profile of +20 commercial, residential and touristic projects. CEO Ahmed Sabbour speaks to Business Today Egypt about how the company has handled the impacts of COVID-19 pandemic, and his insights on the real estate sector in the midst of the ongoing crisis.
How do you see the effect of COVID-19 on the real estate sector?
COVID-19 has affected entire economies and their growth around the world, impacting all industries, not only real estate. We are currently witnessing a period of expected slow-down where customers are adopting a wait-and-see attitude, which is normal during times of uncertainty. However, developers are not expected to wait until the picture is clearer, we have to be proactive and engineer plans that serve not only our initial targets, but also ones that are in favor of keeping that sector, which comprises almost 20 percent of the country’s GDP.. Moreover, the COVID-19 outbreak will also have a long-term effect on the products that customers are seeking, which is why developers now are working on ways to incorporate more work-from-home options in their units, enabling their infrastructure to accommodate the needs of this new trend.
How is Al Ahly Sabbour dealing with the effects of the COVID-19 outbreak?
I’ve always believed that with challenges comes a great opportunity to press a refresh button and make lasting changes that influence the way we make business. For instance, we at Al Ahly Sabbour have made a great deal of changes to the company’s sales and marketing plans. We are currently focusing on internal marketing and sales through online operations, employing new techniques and developing brand new approaches, while amplifying marketing campaigns on various social media outlets, in order to reach our target customers, and also as an alternative to local and global exhibitions that have been canceled.
Have current circumstances affected sales; and if so, in what way? Do clients and investors still view the real estate sector as promising?
We have been closely monitoring the impact of this crisis on our sales, which is currently experiencing a slower-than-usual pace. However, we have also noticed an increased demand for our most recent project, KEEVA in 6th of October city, as well as second-home units, especially ones in the North Coast. I believe this is a sign that despite the current circumstances, market needs remain potentially the same. Real estate has always been Egyptians’ safest form of investment, especially during times of uncertainty; and I don’t see that changing anytime soon.
What is the effect of the current situation on construction and delivery time?
While the situation remains unstable, how the market reacts is what affects our dynamic. In this respect, the rate of construction is our main concern; of course it experienced turbulence, especially at the beginning of the crisis, on account of reduced working hours; however, we are determined to continue with the scheduled development processes while committing to the government’s regulations. We are also in constant communication with our contractors, engineers, and consultants to ensure our workers’ safety as well as experiment with efficient ways to mitigate against the effects of this pandemic on our plans and targets.
Has the pandemic had an effect on property prices?
At the start of 2020, grade A & B apartment prices were projected to see a 5-8% increase, while villas were expected to increase by 10-15%. However, the price of construction materials has seen a decline recently, including steel, for example, which has the potential to ensure price stability of the final product.
How has Al Ahly Sabbour worked on incorporating virtual services and Augmented Reality in order to adjust to lockdown regulations, changes in the market and customer behavior during the recent period?
Adapting to the changing environment is the only way developers are expected to exceed customer expectations and emerge stronger after this crisis, which is why we are investing time, money and energy towards implementing new marketing strategies in order to best use the tools at our disposal. We have also developed and recently launched a new tool, The Virtual Sales Office, to ensure that we remain accessible to our customers and provide them with services that suit their needs during these times.
What is your view on the future of real estate regarding working from home options, providing the necessary infrastructure for robust businesses to function remotely, and the effect of Covid-19 on demand for administrative and commercial real estate?
In order to ensure that their agendas are compatible with the post COVID-19 market, real estate developers must offer products that cater to the needs shaping our “new normal.” Customization is key; having a residential area with an ability to be easily divided into living and working areas, as well as efficiently using all space available, is going to be a top customer priority. Another crucial element is investing in state-of-the-art infrastructure that enables high-speed Internet, cyber-security, and 24/7 maintenance for customers working remotely. As for administrative and commercial real estate, it is too soon to predict the effect on their demand; however, there is no doubt that office spaces as we know them will definitely see a profound change. Business owners will seek office spaces where they can ensure employee safety and well-being; meetings will be held in open spaces and rooms will include less employees. While growth in e-commerce was already underway before COVID-19, it is expected to flourish in the years that follow, causing a rise in investments in logistics space to cater for the increasing demand. However, customers will remain in need of physical commercial destinations; shopping is regarded in our society as a recreational activity, one where people pursue valuable experiences, which means developers will have to reimagine and repurpose existing spaces to accommodate changes and provide a better value proposition.
Do current circumstances and lockdowns that are applied everywhere have an effect on exporting real estate?
Current circumstances caused major exhibitions to cancel this year’s editions, ultimately reducing our exposure to target customers around the world. But when it comes to exporting real estate, Egypt is still in the initial phase in comparison to other countries in the region; the number of foreign homebuyers is not enough for us to assume that it will cause a major problem to the sector’s dynamics. While Egypt has excellent benefits that developers capitalize on when marketing for their products abroad, it’s still too early to have fears or concerns related to a dramatic effect of COVID-19 on that branch of the sector.
What is the role of the private sector and its responsibility towards communities during these times? Tell us about Al Ahly Sabbour’s contribution to dealing with the crisis.
I believe the private sector has a major role towards communities in times of crises, which is why Al Ahly Sabbour has made it a priority to take a number of initiatives that provide support to communities affected by the COVID-19 outbreak. We joined forces with Tahya Misr Fund to provide medical supplies to combat COVID-19 and support 30,000 low-income families. We have also launched the Ehna fi Dahrak (We Got Your Back) campaign in cooperation with the Ministry of Health to donate 12000 Ramadan packages, with a total value of EGP3 million, to families of healthcare workers treating COVID-19 cases across isolation hospitals in 25 governorates.
Do you think things will be better during the second half of 2020?
I’m an optimist and I think that there’s room for a gradual improvement following the measures taken by the Central Bank to overcome the economic repercussions resulting from the COVID-19 outbreak, which included providing EGP50 billion for real estate financing for medium housing, a 3% interest rate reduction, and other measures that aim at encouraging Egyptians to invest in real estate.
How do you see Al Ahly Sabbour’s prospects in both the short and long term? Tell us more about Al Ahly Sabbour’s future plans for expansions.
We have a set of ambitious plans and strategies which we look to put into action over the upcoming period, including expansion in many areas of significance like the New Administrative Capital where we are arranging a partnership with NUCA for a 200-acre project, New Alamein, Upper Egypt, and the Delta region where we are looking to develop in El Minya. On the other hand, we have recently acquired a 15-acre plot of land adjacent to our coastal project of Amwaj, the fourth phase of which is to be delivered later this year.
Tell us more about Al Ahly Sabbour’s latest project, KEEVA.
Strategically located in 6th of October City, KEEVA overlooks South Dahshour Road, is two minutes away from 26th of July Corridor, and around eight minutes away from Mall of Egypt. Spread across 144 acres, and expected for delivery by the second half of 2023, KEEVA will see a total of EGP5 billion in investment. The project is the result of an agreement between Al Ahly Sabbour and NUCA, stating that Al Ahly Sabbour will possess 59.5% of the project, while 40.5% will be owned by NUCA. The project, which will be delivered over four phases, offers a total of 1138 units; villas start at 260m2 and 360m2, townhouses stand between 225m2 and 265m2, while residence apartment sizes range between 120m2 and 190m2. Al Ahly Sabbour is also partnering with the National Bank of Egypt through an Escrow account, where the bank will act as the project’s account manager by providing all banking services related to the project, as well as arranging the financing needs for the development in order to achieve on-time targets.
The bank will also be responsible for organizing the deposited revenues and their distribution across the project’s partners. With a design that combines classic and contemporary architecture, the project is comprised of multi-storied, low altitude buildings (G+2) where all units have a front view. Moreover, the efficient master plan is designed to employ a concept called “Biophillic Design” where natural elements are in harmony with and integrated in buildings. This is exhibited through large glass facades that invite sunlight and greenery from the outside in, providing a comfortable and serene environment. Moreover, 18% of the project’s area has been allocated to buildings’ footprint, while green spaces, gardens, water features, entertainment areas and roads take up 82%. KEEVA is set to provide residents with all elements of stability as it comprises commercial, infrastructural, and entertainment components, making this projects ideal for families seeking tranquility, comfort, and security.