Prices for real estate properties are expected to increase by 30% throughout this year, according to 8 Gates for Real Estate Marketing CEO Mohamed Fared.
Fared attributed the increase primarily to the devaluation of the Egyptian pound against the US dollar, and secondly to the high demand of residential units as a safe asset to invest in.
Saving money in banks would garner a profit of 12% annually, which is very low compared to investing in real estate properties, explained Fared.
Fared said it is unlikely that prices in real estate will decrease; however, there is a possibility that they will stabilise, but he expects that prices will increase steadily over the course of the year.
Fared said the areas facing price increases are Fifth Settlement, 6th of October City, and Ain Sokhna due to the high demand on buying units in these areas.
In the near future, Fared explained, Ain Sokhna will be ranked the area with the highest prices due to its proximity to the New Administrative Capital.
The area around Ain Sokhna has recently witnessed significant development with the supply of fundamental services, such as hospitals, schools, and other administrative buildings.
Fared revealed that approximately 60% of the units offered up for sale are sold the same day they are advertised or their marketing phase is launched.
8 Gates markets residential property and commercial offices, as well as residential units owned by individuals, said Fared.
The company is marketing more than 25 projects in Ain Sokhna, El Gouna, Hurghada, Fifth Settlement, 6th of October City and the North Coast.
The continuation of the Egyptian pound’s devaluation accompanied by real demand in the market will result in further price increases, said Nada Kamel, Vice CEO of Business Development and Research at ERA Commercial Egypt.
Prices are expected to increase by 15% to 25% within the next period, added Kamel.
Kamel said that during 2015 the exchange rate trends were more stable than in 2016. With every change a relative cost of risk will affect pricing strategies, which means prices might increase more than once with every instance of the currency’s devaluation.
“Although we are expecting an increase in prices until the year closes, real estate will remain the safest and most secured asset for investment, and the preferred traditional form of investment as we Egyptians love and value owning properties,” said Mohamed Younis, CEO of ERA Commercial.
CEO of E-homes for Real Estate Marketing Ehab Galal also expected that real estate prices, especially residential, would increase during the current year by 25% to 30%.
Galal urged the Ministry of Housing to facilitate investors’ access to land in various governorates to build commercial centres, instead of limiting them to specific cities which is what led to the increase in prices.
Sales Manager at Aldar Properties Emad Fawzy said the prices would increase by 5% in 2016, compared to last year.
Fawzy called for controlling prices of building materials, especially cement and steel, in the market, which is one of the main reasons for the increase in prices.
He demanded that the Ministry of Housing controls the unit prices in new cities through increasing the land offered by the ministry, due to land prices increasing in these areas by 50% of its real value.
Meanwhile, Mohamed Al-Assal, a board member of Misr Italia Holding Company, said the Egyptian pound’s devaluation has little effect on the real estate market compared to land prices, adding that the increase in land prices constitutes 40% of the construction cost.
Al-Assal said prices would increase by 10% to 15% and all companies would have to increase their prices because of the current situation in the market.