CAIRO: The Sixth of October for Development and Investment (SODIC) is performing stronger than expected given the current economic climate, company officials said at a roundtable Wednesday.
To face the challenges of the slowdown, the company decided to restructure its high-end development Allegria to include smaller units at lower prices.
SODIC executives discussed the firm’s financial standing and gave an update on their latest projects on the sidelines of Next Move, one of Egypt’s largest real estate exhibitions.
While acknowledging that sales have slowed in Allegria, executives contend that sales were already slowing before the onset of the economic recession as part of a natural cycle.
To date, the company has completed LE 2.4 billion in sales for Allegria and argued that it has only sustained LE 40 million in losses since September.
Expressing optimism at the company results, executives noted that SODIC had and would continue to proceed cautiously as long as global economic conditions remained adverse.
The company said it had to be creative to continue turning profits in this economic climate. Chief Commercial Officer Youssef Hammad called 2007 and 2008 “vintage years.
“We obviously couldn’t continue doing the same things, he said acknowledging the recession.
In an effort to respond quickly to the economic downturn and slumping high-end real estate market, SODIC decided in January to re-work Phase 4 of its Allegria development.
In a quick eight weeks, the firm redesigned the concept for the land and began selling houses that were smaller than had originally planned, in the hopes that a lower price point would attract clients.
About 80 of these smaller houses sold in just a few weeks, executives said.
“It’s a buyer’s market, Hammad said, “so you have to be much clearer, more organized, and more intelligent.
SODIC also announced that it would add an extra 200 houses to the market soon as part of Allegria’s Phase 3. Executives said they expected 90 percent of plots to be delivered ahead of schedule.
By adding more houses to the market in Phase 3 and Phase 4 of Allegria, SODIC appears to be emerging from what was a cautious period of little growth. The company had delayed construction of its Eastown and Westown developments and sales of Allegria had slowed significantly towards the end of 2008. And executives said the company turned down opportunities to make land purchases outside of Egypt last year.
2008’s cautiousness seems to have translated into innovative plans in 2009 to adapt quickly to the negative economic conditions.
Despite efforts to re-work Allegria, executives say SODIC has no plans on the immediate horizon to purchase any more plots of land. They say they’re committed to seeing existing projects through.
They also say that even though SODIC would like to expand into lower income housing projects, land is just too expensive.
“Your entry price for land has to be significantly lower, said Ahmed Badrawi, chief business development officer.