Tatweer Misr CEO Ahmed Shalaby discusses the promise of the real estate market, Egypt’s prospective developments as well as the company’s partnerships with other stakeholders.
Real estate is arguably one of Egypt’s most significant sectors, contributing to GDP and gathering a large number of clientele. Tatweer Misr is certainly one of the more pioneering actors in this development, and CEO Ahmed Shalaby attributes this to the company’s commitment for innovation, teamwork and integrity. From New Alamein on the North Coast’s magical shores to Upper Egyptian governorates in the south, Tatweer Misr is doing a great job of taking the reins on building the real estate market and overcoming the challenges that have arised over the past few years. Business Today Egypt sat down with Shalaby to discuss its contributions and prospective plans.
Tatweer Misr CEO Ahmed Shalaby
This year marks Tatweer Misr’s fifth anniversary in the market. How do you feel the real estate sector has changed over the past five years?
The real estate sector is one of the strongest in Egypt; construction and real estate contribute 17% to the total GDP, with the real estate alone contributing 7%. Over the past 5 years, drastic changes have occurred in the market. In 2016, the devaluation of the local currency greatly affected prices, leading to an exceptional market growth of 35% in both 2017 and 2018. However, market dynamics began to reassert themselves within an environment not driven by inflation, resulting in market growth more in line with historical averages of 10-15% while it may seem that market is retracting if we compare 2019 to 2018. There is a substantial core of domestic end-users in Egypt, guaranteeing that a strong demand will continue to drive the market.
Additionally, with the Egyptian government launching new cities including the New Administrative Capital, New Alamein, and New Mansoura and Mostakbal City, developers are forced to tap into new markets. However, only the companies that have the proper technical expertise & strong financial base will continue to excel based on their ability to deliver on their promises.
Five years is a relatively short time to make a significant impact, and yet Tatweer Misr has already managed to sell 6,200 units. What gives Tatweer its edge? What short and long-term plans can we expect from Tatweer?
Innovation, teamwork & integrity are the three key drivers for our success. I would have to add to that the fact that we are always keen on adding value in all our projects. As we managed in the past five years to become one of the big players in the Egyptian market, we are determined to maintain our high performance level and focus on three main axes. The first axis is operating non-residential components in our projects such as hotels, international branch universities’ campuses and schools, as well as commercial buildings in partnership with local and international investors. Such expansion in our portfolio will definitely add to the company’s name and value. It is a known fact that non-residential components in any project are considered a recurring asset and a main driver for any company’s sustainability.
The second axis is our expansion within Egypt; we are currently mulling investment opportunities in the Sheikh Zayed extension and the North Coast. We are also looking forward to investing in New Alamein, New Mansoura, and Upper Egypt. I believe that developers should consider investing horizontally across Egypt to maintain the company’s sustainably backed by the expansion and diversification of clients’ base.
The third and last challenging axis is to be a regional and international player in the real estate development sector. We are mulling investment opportunities in Africa, the Gulf (GCC), and Europe. You will soon find the company’s name representing Egypt abroad, and this will support the country’s plan for boosting real estate exports.
Your three main projects IL Monte Galala, Fouka Bay and BloomFields, give you a staggering land bank of 5 million m2, 1 million m2 of which is built up area. All three are in relatively new areas (the Galala Mountains, Ras AlHekma in the North Coast and Mostakbal City); what convinced you to take the risk of developing new areas instead of heading for safer areas such as New Cairo or Sixth of October?
In the past 40 years, the government has invested billions to develop new cities that no one would have guessed will be as lively as they are now; this includes Sixth of October, 10th of Ramadan, New Cairo, and so on. Currently, the government’s plan is to double urban areas during the upcoming years with private sector support, which plays an important role in turning these new cities to livable communities. At Tatweer Misr, we work to live up to this challenge and this is highly reflected in our projects.
IL Monte Galala is built on the Galala Mountains in Sokhna, and the rapid developments taking place there were extremely inspiring to us. We partnered with local and international designers, contractors & consultants who shared our vision to create a one-of-a-kind mountain project that we believe will transform Sokhna. The project is one of the largest mixed-use developments in Sokhna, featuring a diverse array of facilities including the world’s first manmade mountain crystal lagoon & Egypt’s first base camp by adventurer & mountain climber Omar Samra.
We knew from the beginning that competition in Sahel is aggressive; however, we came up with the perfect equation for Fouka Bay. The idea is simple, everyone is willing to pay extra to buy a waterfront home, and we created a master plan that provides a crystal blue water view for each and every unit in the project. We are currently delivering phase one of the project and welcoming the homeowners to their haven under the sun.
The Bloomfields project will be built on an area of 415 acres, 325 acres of which will be for residential buildings, commercial spaces, as well as retail and business areas. The other 90 acres located at the project’s center will accommodate an educational zone featuring an international university campus and three international schools. This educational zone will support and nurture our aspiration for Bloomfields to become a college town, based on entrepreneurship and innovation.
Tatweer Misr CEO Ahmed Shalaby
Orange, Schneider Electric and Kerten Hospitality are just some of the service providers you have partnered up with on your projects. How do you choose partners to ensure they will provide the top-notch services for your clients?
Tatweer Misr’s strategic vision is based on addressing the various challenges in the real estate market, as well as improve its ability to develop new solutions and make them available to customers. For that reason, we partner with the best international partners in different fields to ensure added value to our residents.
Both our partnerships with Orange Egypt & Schneider Egypt focus on building and designing smart facility and infrastructure management to include electricity, water, gas, data networks, data centers, traffic and security systems.
Our agreement with Orange Egypt entails offering ultimate connectivity to our residents, facilitating the connection to a variety of other services inside and outside residential and commercial units. An example of this is Triple Play services, controlling security, water and electricity systems.
Furthermore, our agreement with Schneider Electric Egypt entails implementing a central control system connecting all of our projects, providing clients with a remote-control platform for all operational systems. This comprehensive integrated solution not only reduces operational and maintenance costs, but also increases efficiency to all residents by 30%.
As for Kerten Hospitality, we partnered with them to introduce three different types of hotel services targeting varied customers’ needs. Projects in the pipeline include seven hotels in total, IL Monte Galala in Sokhna will be hosting four hotels and North Coast’s Fouka Bay will be hosting three hotels.
You have considerable background in urban planning; tell us what you think today’s buyer is looking for in a new property. Many millennials expect sustainable features, practical designs and accessibility, not just space and aesthetics. How do you design your units to meet client needs?
Our projects are a result of a collective teamwork between different teams of Tatweer Misr, this includes our partners, consultants, architectural team, sales team, marketing team and all other departments. We regularly hold workshops to listen to new and innovative ideas, and search for ways to implement these ideas. We also had a strategic objective to deliver higher quality than the agreed upon in clients’ contracts and this occurred during the delivery of the first phase of Fouka Bay.
To cater to millennials, we are working on the concept of happy, sustainable and smarter cities. We enable our clients to pay their bills electronically so we save their time as we know they are always on the go, our facility management process is based on smart applications and are environmentally friendly resulting in almost 30% decrease in maintenance fees, to give you an example, all lightening systems are smart and sensor-based therefore no energy is being wasted. Also, all our projects are equipped with desalination water plants therefore, no water is being wasted.
Moreover, we understand that millennials have less time to make choices amid all the alternatives, therefore, we facilitate the decision making process through partnering with several entities to provide our clients with different finishing and furnishing options according to preset categories.
While the dollar fluctuations followed by the 2016 devaluation may have been a setback for local buyers, it has been a marked incentive for expat Egyptian buyers as well as clients from around the region. Would you agree with this reading and if yes, how are you working to shift focus to a regional client base?
This is very true, the devaluation in 2016 was a much-needed corrective economic measure and it tremendously helped increase the percentage of foreign and expat Egyptians’ real estate sales during 2017 and 2018.
Now we can confidently say that the current dollar fluctuation is not aggressive, and does not impose much threat on the local market as Egypt’s real estate market is not that sensitive to change. As regional developers have wide presence in the local market, we too aspire to have presence in neighboring regional and international markets. This has been of interest to several ministries and real estate developers, and will bring dual success to both the country and developers.
The real estate sector is stronger than ever, and has shown resilience despite several blows to the economy post-revolution. Today the economy is much more stable and poised for growth. The question on everyone’s mind, however, is can the real estate sector withstand further growth? Or is it a bubble about to burst?
Egypt is far from an outburst or market crash, due to the following factors: Prices are accurate: Housing prices are based on the cost of land, cost of construction, operation costs and a reasonable developer’s margin in addition to taxes.
Size of population: Our population is increasing drastically, according to CAPMAS, and will continue to increase by approximately 2.5 million each year. Moreover, there is an average of 1 million marriages per year increasing the demand for housing. Real Estate for Investment: Egyptians purchase housing as an investment source. This is still considered “real demand” as it entitles developers to supply the market with more housing.
In fact, in order to reach the government’s vision for the real estate sector over the next 30 – 40 years and reach urban development growth to double the current level, the market needs either local or regional developers in order to supply the Egyptian market’s size. The competition created numerous developers, and this will positively reflect on both developers and clients. It encourages developers to diversify their product range to appeal to different target groups as well as enable clients to choose flexibly.
The problem is not relevant to a market outburst; rather, it is based on purchasing power, even though the prices are real and not exaggerated they are still above clients’ capabilities. In order to resolve this issue, we need a proper mortgage system in place, as adequate interest rates is necessary to encourage the buyer to consider mortgages.
One of the biggest concerns is perhaps the resale market, with many investors believing that the resale market is relatively stagnant. Is it? If yes, how can it be revived? And in light of increased inflation, will we see buyers rushing to liquidate and offload properties?
The problem with the resale market is that many expect to purchase a unit and sell it a couple of years later at a staggering price.
However, this is not the case; real estate investment is a long-term process that takes years in order to bear fruit. Unarguably, there is a slowdown in sales in all different markets, not just the real estate, and this is a result of a decrease in the purchasing power. Adding to that, there is a false belief that investors could sell at the same rates as real estate developers, which of course doesn’t apply.
astly, the absence of a proper mortgage system does not help in a situation where the purchase power is negatively affected. I believe that mortgage finance system should be revisited during the upcoming period, as it has the potential to play a vital role in boosting the market and speeding up our capital cycle, giving us more flexibility to start new projects
If you believe that there is room for growth in the sector, where do you think it will be?
At Tatweer Misr, we believe that the economic factor each project is based on is the way for a sustainable growth, and this economic base is mainly the non-residential aspects of any project as they play a dominant role in flourishing new communities.
We see high potential in this area as clearly reflected in our latest project Bloomfields, where we made the entrepreneurial international university campus the main economic base that will lead the project and the whole surrounding neighborhood to flourish.
To add value to the educational zone and ensure that Bloomfields will become the entrepreneurial city we dreamed of, we partnered with Global Entrepreneurship Network (GEN) to manage GEN@Bloomfields, the first Innovation Hub for GEN in Egypt, the Middle East & North Africa, located at the university campus. Furthermore, as part of a lineup of agreements with internationally acclaimed universities and schools, we signed an MOU with New Jersey Institute of Technology (NJIT) and Ocean County College (OCC) to establish Egypt’s first American International Branch Campus (IBC) at Bloomfields’ educational zone.
There is also considerable focus on newly established destinations such as the Administrative Capital, New Alamein, New Mansoura, Sheikh Zayed expansion and so on. Does Tatweeer Misr have plans to expand into these areas?
In addition to our short-term expansion plans that Include Sheikh Zayed Expansions and the North Coast, we are looking for the right opportunity to present our unique value proposition to new cities. We are currently exploring the opportunities in New Alamein, New Mansura and other areas in Egypt.
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