Emirati real estate investment firm considers Egyptian market re-entry

Daily News Egypt
5 Min Read

By Mohamed Darwish

Amlak, a real estate investment company based in the United Arab Emirates (UAE) is in the processof studying the possibility of entering the Egyptian real estate market by developing 10 acres that it owns in Nasr City.

Hatem Amer, the CEO of Amlak Egypt, said that the company is still scrutinising the plan to utilise the land it owns in Nasr City for a housing project. The company is also considering splitting the land up and putting it up for sale.

Amer estimated the land’s value at EGP 640 million, which borders Nasr road as well as the Al-Ahly Sporting Club.

He added that the company plans to begin working in real estate sector once again, having solved a crisis involving an office the company owned. The cabinet had previously required that the government to approve any disposition of assets by the company because of its foreign contributors. The cabinet, however, created an exception for Amlak.

Amer stated that the exception is going to allow the Egyptian companies backed by foreign capital to enter the real estate finance market.

He noted that the talks between UAE officials and their Egyptian counterparts, Essam Sharaf and Kamal Ganzouri, helped solve the crisis which had lasted for two years and prevented the company from undertaking any real estate financing in 2010 and 2011.

Amer mentioned that the financing collateral issues that were referred to the cabinet numbered 106 with a value of EGP 86 million over the last two years. The company was, nevertheless, able to record profits of EGP 5.7 in 2011 and EGP 2.7million in 2010.

He said that the company’s profits were a result of contracts signed since in 2007. Amlak was the first real estate finance firm that was Sharia compliant.

He said that the company’s credit portfolio currently equals EGP 200 million and that the company currently has 400 clients with average financing of EGP 500,000 per client.

Housing units accounted for 95% the company’s loans at interest rates that vary between 14% and 14.5%. The most prominent Amlak-financed projects were owned by Sodic and EemarMisr.

The company developed a plan to increase its credit portfolio by EGP 800 million in the next five years, adding 2,000 clients with average financing of EGP 500,000.

Amer noted that the company is considering expanding its business by offering smaller loans of EGP 100,000 or less with flexible payment plans to low and middle income clients.

Amlak’s plan to takes into consideration its social mission to help less fortunate members of society by financing low cost housing.

The company’s paid in capital reached EGP 150m with assets valued over EGP 793m.

The CEO of Amlak called on the Egyptian government to expedite amendments to its real estate financing laws to facilitate new financial instruments that would catalyse growth in the sector.

He explained that banks in the real estate financing field compete with the quality of services they provide and the speed with which they can evaluate requests for loans, noting that Amlak responds to requests within ten days while other companies take up to two months. Amer also noted that companies cannot compete with interest rates since they are tied to the market rate, which is set by the Central Bank.

He mentioned that Amlak will enter into negotiations with the Egyptian Mortgage Refinance Company (EMRC) to study the possibility of financing loan portfolios owned by the former. The volume of the portfolio will be set according to the EMRC.

Since its foundation, the company received EGP 200 million in loans from the National Bank for Development (NBD) and Barclays. Amer noted that Amlak in the UAE aided Amlak Egypt politically by reaching out to the Egyptian government, and financially by providing financing to purchase the land in Nasr City.

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