Daily News Egypt sat d own with Ayman Ismail, the CEOof Construction and Engineering Company Dar Mimar Group (DMG), to talk about DMG’s performance in the Egyptian market and its future real estate plans
What are the projects that DMG plans to launch in near future through its real estate arm Mountain View? And what is the volume of investments targeted for these projects?
The group plans to a launch a new phase of the Hyde Park Cairo project in addition to two additional phases for our latest project which is called “Chill Out Park” in 6 October city, in addition to launching a completely new project in New Cairo. The projected sizes of these investments are in the range of EGP 9bn.
Is there an estimated size for DMB investments for fiscal year (FY) 2015/16? And what are the targeted sales volumes for the coming year and growth rates?
The group is targeting sales of EGP 3bn during the coming fiscal year, and we expect that the group will invest about another EGP 1bn in various projects.
How do you assess the performance of the Egyptian real estate market during the current phase? What are the challenges that the sector faces?
The real estate market witnessed a breakthrough during 2014 and we expect that market activity to increase significantly during 2015, especially in light of the country becoming more stable. The demand for real estate in Egypt is always real in light of current and projected economic and population growth rates. This growth will face many challenges, however, the most important of which is the illogical rise of land prices which has a doubly negative impact by slowing down of projects on these lands. Inflated prices for construction materials are also a problem, especially with the gradual lifting of fuel subsidies and the weak value of Egyptian currency.
How has the increase in raw materials over the past several months affected sales operations? Has the company altered prices like other companies operating in the market have done?
Sales were not affected by the increase in raw material prices due the presence of real demand for property as explained earlier, but the increase in prices of construction materials reflected heavily on construction costs and thus sale prices saw a noticeable increase of 25% over the past year. We cannot overlook the fact that developers bear the costs of price increases and inflation.
Do you have plans to acquire and develop new land in the coming months? In your opinion, is it better to obtain the land through the New Urban Communities Authority by bidding or to buy the land from other companies?
Of course we are seeking to obtain land for our projects through different means, such as through New Urban Communities Authority bids, as well as through other companies that own a large portfolio of lands and want to develop them either though partnership or sale to other developers. El Mostakbal Urban Development did this, for example, and there is no problem with bidding so long as modifications are made to the process to remove the disadvantages that are currently present. Too often, the bidding process turns into unstudied speculation on part of new developers that are not qualified to develop the land after receiving it at exaggerated prices, which ultimately leads to these prices stabilising, and the land is not converted into a successful project.
What is your opinion on the Ministry of Housing’s move toward having developers complete by launching a medium-sized housing project for which it will oversee implementation?
This is good, but it would be better for the private sector and developers to work together in order to achieve better results. The ministry can take advantage developer capabilities to increase productivity and efficiency and reduce costs.
What is the message that you would like to send to foreign and Arab investors on Egypt and the investment climate during the conference?
I want to say to foreign and Arab investors that the Egyptian market is a rare one in that it still holds many opportunities for growth, investment, and success. Egypt has a number of components that are not present in many other global markets like a big population size, as Egypt is the largest in the Arab world, and the presence of basic components of infrastructure that may be developed and expanded in accordance with market growth and investment. All this in addition to the advantages of its strategic location in the middle of the Arab world and very close to Europe, making it a logical market for investors in all these countries. Even though the political situation has slowed investment over the past four years, all indicators point toward stability and development.
Is the company considering registering with the Egyptian Exchange in the near future?
This is the logical thing for every successful company to do and it is one of our top priorities for the coming years.
With regards to the construction sector of DMG, what is the targeted size of business activity in this field for the coming year?
We are targeting a business volume of about EGP 700m for 2015.
What are the tendered projects that DMG Construction Management are currently competing for?
At the moment DMG Construction Management does not seek to receive any civil projects through tenders and the company is competing for electro-mechanical projects instead. This includes infrastructure for Porto October project, electro-mechanical works for the administrative headquarters of Amer Group in the Sheraton area, electro-mechanical projects for the Amer group Medical Center, renovation and development of the Embassy of Malaysia, and work on the future Future School which is affiliated with Future University in New Cairo.
What are company contributions to the field of social responsibility?
We believe that an integral part of our success as a group of companies stems from our positive participation in the wider community in which we live and operate within. We collectively share a great sense of responsibility we feel towards our country.
The many efforts are divided across a number of activities; some of which are directly within our scope, and others have been developed as a partnership to help and support different initiatives. In the end we strive together in order to build a better life.
We take pride in being part of the cooperation between the IEEI – International Executive Education Institute of the American University in Cairo and the Department of Real Estate Studies of the National University of Singapore – one of the top ranked universities worldwide in real estate studies. This union offers the Real Estate Executive Development Program (RE-EDP); a post-graduate programme covering the four main areas of real estate: residential, commercial, touristic and industrial. The programme combines theory and hands-on experience that includes a five-day study tour to Singapore to witness firsthand a mature model of the real estate market. It is designed to provide the necessary exposure to successful global trends through superlative executive education programmes, as well as establishing academic fundamentals in the field of real estate.
Through joint ventures with celebrated charity organizations; namely Resala and the Egyptian Food Bank, DMG is a contributor on both the financial level and in the form of personal efforts from our large family of over 1,000 employees.
We are also involved in the initiative of “Together in Developing Unplanned Poor Areas”, Ma’an from Slum Development where we draw from our experience in construction to improve their inhumane living conditions.
Construction finally began in October 2013 in Salam at the beginning of the Cairo-Ismailia desert road on area approximately 54 acres based on a cooperation protocol with the Cairo Governorate. The organisation received the land under a usufruct contract that ends after the the city is constructed and its management ensured successfully. This is the first city among five others that the organisation intends on building with us in five provinces.
The plan for the community is to include 5,300 housing units served by a number of basic services such as schools, hospitals, clubs, theatres, and mosques. The first phase of the project has been launched which includes the construction of around 1,300 units though a limited tender that was won by El Nasr Company for Building and Construction (EGYCO) with the first phase costing around more than EGP 100m and estimated total costs for the project of EGP 400m.
DMG is offering the drawings for the project at no cost.
Another business related activity is the “Internship Training Program” specially designed for undergraduates in the fields of Engineering and Architecture. In an alliance with both public and private sector universities (Cairo, Helwan, AUC and GUC); this programme allows the student to practically experience professional on-the-job training with the companies of our fully integrated group. This exposure and experience will enable the students to realise which areas they are most suited for, where they can enjoy and excel in their futures, saving them the tedious process of trial and error.
Another successful initiative is the “Vocational Training Program” but not in its traditional sense. Our aim is to train labour extensively in both technical and soft-skill areas, to be more productive, communicative and professional, in order to realise their maximum potential. We are currently seeking government support in order to implement this innovative programme.
What is the possibility of partnerships with Gulf investors in developing real estate projects in Egypt during the coming phase?
DMG welcomes partnerships as one of our strategies for growth and we have multiple successes in this area, provided that the investor will represent value-added and be consistent with our group’s strategy.