CAIRO: Emirates developer Damac Properties launched its operations in Egypt July 17, under the slogan “Live the Luxury.
Damac plans to implement three projects in Egypt: one on the Red Sea, another in Sixth of October City, and the third in New Cairo, said Damac’s Chairman and Founder Hussain Sajwani.
“Egypt is well on the way to becoming [one of the company’s] largest investment areas outside Dubai, he added.
The most ambitious of the three projects is Gamsha Bay, Damac’s Red Sea township project, which will cost a hefty $16 billion of investment over ten years time, according to Damac.
“When we carried out our market research, we found very strong interest, particularly for Gamsha Bay, from the European market, specifically Italy, Germany, and the United Kingdom, said Damac CEO Peter Riddoch.
Covering 30 million square meters in the north of Hurghada, the new project may very well compete with Orascom’s more established El Gouna resort.
Established in 1996, Damac has evolved into a major developer in the region with upscale properties in 18 countries.
The company would not disclose how much it paid for the land to be used in its Gamsha Bay or Sixth of October projects. “I think we are confusing two things: invasion of privacy is unacceptable, and we are a private company, not a publicly listed company, said Riddoch, when asked why the prices of land could not be made public.
Damac paid LE 4.7 billion for the land of its development in New Cairo, and the price was made public only because it was sold in a public auction, said Damac’s chairman.
Sajwani said the land was purchased from the company’s own funds, but also hinted they may turn to Egyptian banks if necessary.
Their marketing slogan was greeted with a degree of cynicism from journalists, many of whom understood that living in luxury was something only a small percentage of Egyptians enjoy.
An estimated 20 percent of Egyptians are unemployed, and the hope is that these large-scale development projects may help absorb a portion of the approximate 300,000 university graduates that enter the job market every year.
Salaah Higab, architectural consultant and president of the Urban Planning Association, welcomes the entrance of Gulf developers into the Egyptian market, but cautions that some guidelines should be followed.
“These companies must bring in real capital into the market and not simply depend on their reputations, said Higab.
Higab criticized real estate development companies that depend on foreign architects to design their projects, saying that they should use local resources. “Egypt has 380,000 architects and 600 consulting firms that are competent enough to design these real estate projects, which don’t require nuclear magic to design, Higab said sarcastically.
On his part, Sajwani explained that they will mostly utilize local resources: 98 out of the company’s 100 employees are Egyptians. “The truth is that in Egypt, highly-experienced technical know-how in luxury design is not there, and that is why we cooperate with Western firms in that respect, Sajwani said.
Higab is wary about what he calls Egypt’s “real estate bubble, prompted by the recent surge in prices. “I fear that if such companies depend too much on credit and prices depreciate, this may cause a collapse in the construction sector, Higab said.
Sajwani is confident that the boom Egypt’s real estate development market is witnessing will continue for a long time. “The surge in Egypt’s real estate prices has been gradual, so I doubt that it is a bubble, I would rather call it a reawakening of the Egyptian real estate market, said Sajwani.
He also added that despite the increase in Egypt’s land prices, they are still much lower than other nations in the region, like Jordan and Tunisia.