Madaar Development targets EGP 1.8bn in sales during 2016, according to chief executive of the company Gasser Bahgat.
Bahgat said that the company has succeeded in securing funds of more than EGP 500m through a financial lease mechanism, collaborating with a financial lease company operating in the market.
The fund will be spent in segments guaranteed by the company’s real estate assets. The first segment will start in a few days and will be directed to finance the construction of a hotel in Azha project in Ain Sukhna, Bahgat added.
Bahgat estimated the investment cost for the new hotel at about $70m.
Bahgat confirmed that his company is negotiating with the Commercial International Bank (CIB), and with another private bank to obtain a fund by which the company can develop its real estate portfolio. The company’s real estate portfolio is estimated to be 745,000 sqm.
The company owns 45,000 sqm in Sheikh Zayed. The company will consider it as a multipurpose project; its designs and development will begin in 2017, according to Bahgat.
In addition, about 160 acres along the Cairo-Alexandria Desert road will be developed for a large housing project to be designed during 2016.
Bahgat contends that the housing units’ prices will witness inflation of 15% to 20% during the next phase, influenced by the government low supply of lands. These lands are provided at high prices with no facilities.
The devaluation of the Egyptian pound against the US dollar will inevitably increase the cost of housing units’ production, especially as real estate development relies on about 120 feeder industries which are influenced by the high value of the dollar against the pound, Bahgat added.
Madaar Development started the Azha project in 2015 on an area of 1.6m meters and with an EGP 7.7bn investment provided by the Egyptian state and Arabian Gulf states. The company’s most prominent stakeholder is the Sun Rise Group for managing resorts and hotels.
The group targets sales of EGP 11bn over the course of the five-year Azha project. The project is implemented in three stages: residential, administrative, and the final stage of commercial and hotel construction.
Bahgat excluded his company’s participation in social housing projects in the coming period due to the excessive prices of lands and the lack of funding mechanisms that help citizens pay for the housing units in instalments, in addition to the inflation of construction costs after the increase in the dollar price.
Bahgat said that the company’s long-term plan over the next five years, after finishing the development of a large part of the current real estate portfolio, is to put its shares in the Egyptian Exchange as a mechanism to expand the shareholder base and to obtain finance expansions.
“We have good investment opportunities in the Gulf, but we expect to stay in the Egyptian market because it is the most profound and the highest return on investment (ROI),” Bahgat said.