CAIRO - 19 June 2018: The Egyptian real estate market has seen a growth of 133 percent during the first quarter of 2018 due to the number of new projects launched in late 2017, particularly the New Administrative Capital and Future City projects, according to a report by the online real estate platform Property Finder.
The report by Property Finder, which tracks users’ data to analyze the market, outlines that a clear market trend is investment-driven home purchases to safeguard investments against inflation, and highlights the changing demand environment and the demand for oversea properties.
Property Finder was launched in 2007 in Dubai, and is now operating in eight countries; Egypt, KSA, UAE, Bahrain, Lebanon, Qatar, Morocco, and most recently Turkey. They are an online platform that showcases and markets properties and developments from established brokers and developers for the home buyer. The website only displays units sold by licensed real estate marketing companies and developers and was introduced to the Egyptian market five years ago.
Their research also estimates the shortage in housing units to be 3.5 million of affordable units to accommodate the growing population which requires 75,000 to 200,000 units every year to meet demand. Even though reports confirm there are over 5 million vacant units across the country, the prices of those units are beyond the purchasing power of low and middle-income classes.
Property Finder recommends that the best places to invest in property this year are: Sixth of October City, the Fifth Settlement in New Cairo City, North Investors Area and South Investors Area in New Cairo City, El Katameya in New Cairo City, and Sheikh Zayed City. The top searched areas for residential rent on the platform are Maadi, particularly in Sarayat Al Maadi, Zamalek, New Cairo, and Sheikh Zayed.
CEO of Property Finder Group Micheal Lahyani and Managing Director Mohamed Hammad talk to Egypt Today Egypt about their group, their work in Egypt and their insights on the Egyptian real estate market.
Tell us about Property Finder’s business model.
We do digital marketing. We are an online digital platform that is specialized in online technology and that is our focus. Our mission is to help people find real estate and the home they are searching for through the internet. We build technology that enables brokers and developers to list all their properties on the platform. For the users, we provide them an easy interface to find the properties they search for.
Our website is free for the end users who are searching on the platform to find real estate while it’s paid for by the real estate brokers and developers. We only work with real estate agencies and developers and therefore can guarantee a high standard of quality in our listing, which is something usually missing in the internet and the market.
Latest reports are talking about the recession in the UAE and Lebanon. Is this why you are exploring other countries?
The real estate market in the Middle East is quite volatile; it goes up and down, especially in Dubai. We started expanding to other markets back in 2010. We are expanding because we feel that the service we are offering doesn’t exist in those markets.
Everything is good in Dubai, actually our business there is growing, and there is not really a recession in the real estate in Dubai, but the prices are going down, meaning that there are a lot of developers and a lot of supply so prices go down a little bit.
As for Lebanon, God bless Lebanon, it’s a challenging market and there is always an obvious political reason, but in every market we operate, our business has grown year-on-year.
We are an online platform, and users want information and data so they are coming to the internet and that is what we are.
How do you see the competition in Egypt?
In all markets, there is competition, and it is good because it pushes everyone to deliver a better service. We work with real estate professionals, so we want to provide a professional service to the users, so we don’t allow individual users to advertise on the website.
New Cairo is at the top of the best buy areas list, could recent rains and floods affect the prices there?
It might affect specific projects, but not [the entire] district because as an individual if I work in New Cairo, I will prefer to live in the same place. The strong infrastructure will be one of the factors that the investor [will] look for, especially after the latest crisis.
How has inflation affected the real estate market?
We are very optimistic about the Egyptian real estate market, especially after the meetings and interactions with brokers and developers in Egypt. It’s a very strong market because of the large population and many Egyptians needing new homes. So we are absolutely confident that this is going to be one of the biggest and booming real estate markets in the Middle East and even beyond.
Flotation turned the real estate market into an attractive one and raised the interest of foreign investors and expatriates in real estate more so than before. The increase of real estate prices after the flotation was about 1.5 percent, unlike other prices that were doubled by about 100 percent. Real estate developers were afraid of this huge increase so they decided to lower their profits to be able to sell.
Real estate in Egypt is very attractive for all kinds of investors, and especially for expatriates as it became very cheap for them. There is a real demand in Egypt every year for real estate, especially with newlyweds searching for apartments; 800,000 weddings annually translate into 800,000 real demands.
How could the interest rate cut affect the Egyptian real estate market?
I think it will be positive, we were in a session with all the top brokers and they explained that there will be a lot of liquidity coming into the market and that this liquidity is going to ease a lot of the transactions, as this is the challenge now in Egypt.
Everyone is feeling very optimistic for a month ahead with what is happening.
Lowering the interest rate is a healthy indicator for Egypt’s growth. I think in the next period, the interest rate will be lowered again.
An important factor is that many of the one- and two-year deposits are going to mature shortly, so there will be an influx of liquidity across Egypt during the upcoming period that is estimated at around LE 200 billion. We expect that 50 percent of this liquidity will be directly invested in the real estate market. Egyptians have a belief that the real estate market is the best saving bank.
How can the mortgage market be revived in Egypt to attract investors?
We have to apply many steps to revive mortgages in Egypt; but we can start with the process of registering the real estate properties as the number of registered properties is very low. The second factor is that the interest rate is very high. Those are the biggest and the most important reasons behind why investors don’t resort to mortgages, in addition to bureaucracy.