Despite the negative economic and financial implications of the novel coronavirus (COVID-19) pandemic, Egypt has been one of the very few countries worldwide to have remained buoyant.
Abdelrahman Agamy, CEO of Diamond Group and Sky Abu Dhabi Developments, sat down in an interview with Daily News Egypt to outline his company’s vision for Egypt’s real estate market within the coming 15 years.
He noted that, despite the sluggish economics of 2020, the Egyptian market is set to rebound in the near future.
How do you see the future of Egypt’s real estate market in the next 15 years?
We have great expectations for the Egyptian economy, derived from its continued positive performance. Despite the challenges that have been facing the world over the past few years, Egypt was the only country in the Middle East and North Africa (MENA) region to record a growth rate of about 3.5% during 2020.
The Egyptian market will rebound soon, as leading research institutions project the country’s GDP to grow at an annual clip of 5.2%-5.4% over the next few years. Local real estate sales will also bounce back and the housing market is widely expected to rise more and more in the next 15 years in terms of investments and contribution to GDP driven by a growing demand as one of the most resilient investment options especially amid the outbreak of COVID-19.
The sector gives the highest return on investment in comparison to other sectors. We forecast local real estate contribution to Egypt’s GDP growth rate will increase, as it already reached 18.5%, and we anticipate that this figure will double during the upcoming few years. As a result, Egypt is expected to become one of the top growing and performing emerging markets in the region which will reflect positively on the overall growth of the local real estate market.
The next decade will also witness unparalleled comprehensive urban development that expands and creates new cities across Egypt, to contain the rapidly growing population.
The sector remains steadfast in the face of any challenges, and while sales were affected during the past few years, real recovery has been evident, and sales have returned to their normal pace and rates.
Tell us more on why your company was encouraged to invest in the Egyptian real estate market?
Egypt has held its position in the list of top 10 most attractive countries for investment in Africa. This is conclusive evidence of the Egyptian economy’s recovery, and the success of the economic reform plan that the government has pursued and sought to implement in recent years.
Moreover, the incentives provided by the government have contributed greatly to attracting new investors and encouraging more foreign direct investment (FDI) inflow while maintaining its position on the global investment map.
The new investment law set in place played a great role in this, as investors became more confident in expanding their projects in the local market. Political and economic stability and the vision pursued by the government during the past years had a great role in preserving Egypt’s position as the primary destination to invest in Africa over the past years.
An ambitious economic diversification agenda, a brightening macroeconomic outlook, and strong structural demand all come together to sustain performance in Egypt’s residential and non-residential housing sector in the coming years. Given the importance of real estate to Egypt’s economy, we expect investment into Egypt’s real estate sector will be particularly robust.
What are the opportunities you see in the real estate market in Egypt?
The strength of the Egyptian real estate sector is encouraging investment in the market due to the ongoing development and construction in more than 20 rising cities across the country. This is in addition to the development of the 23 existing new cities by the Egyptian government.
The new cities provide potential investors, developers, and consumers with attractive investment opportunities, large-scale real estate project opportunities, including in the New Administrative City (NAC), New Alamein City, and New Mansoura City, to name a few.
In this sense, Sky Abu Dhabi came to the Egyptian market aiming to expand its urban development footprint and add value to the real estate sector in the region. Egypt has been chosen as the first and foremost stop for its regional expansion, given the undeniable success that the government has achieved in implementing a strong economic reform program which contributed to achieving high growth rates and creating an attractive environment for investment.
Large population growth and the urban development plan set by the government and Ministry of Housing to address it, is one of the key market potentials. The government’s launch of major national projects provides huge investment opportunities for the private sector, on top of which is the NAC project, which the company chose as its first investment destination in Egypt.
Shall we expect more FDIs in Egypt’s property market?
Egypt’s property market is a magnet for foreign investment. Egypt has all the factors that makes it entitled to become an investment hub in terms of location, natural resources, qualified manpower and the success of the economic reforms program undertaken by the government.
The investment law, the one-stop shop, and tax incentives are all major steps taken by the government to facilitate procedures for foreign investors to attract higher FDIs. It is no surprise that Egypt is considered as the largest recipient of FDIs in Africa according to a recent report by the United Nations Conference on Trade and Development.
The government has framed its investment policies to stimulate investment and enhance production, in addition to supporting economic activity with technical support programs, training, and capacity building.
The Egyptian property market is very attractive and solid. We believe that more FDIs will be driven into the country whether through investments or mergers and acquisitions. Real estate development continues to hold its ground and prove its potential, with the growing population, new cities, and strong economic fundamentals. We do believe that Egypt’s property market will be ranked as the first biggest recipient of FDI in Africa and the Arab world in the next few years.
In your opinion, what are new investment incentives that should be provided to the local property market to attract more FDIs in the sector?
The government is already offering several incentive packages, such as the new legislation providing various incentives, including tax deductions for investments in underdeveloped areas, subsidies for industrial land acquisition and the restoration of free zones for the private sector.
These incentives will help attract more foreign investors to the local market.
Whereas, the government needs to continue attracting foreign investors by offering virtuous land allocation, land licensing, and land payment terms. The potential for development now lies in real estate financing options for consumers, which could mean even more growth for the sector.
In your view, what are the most promising areas and cities for investment in the coming period?
The Egyptian government has a solid strategy to build new cities and develop exciting ones to accommodate more people, create more jobs, attract foreign investments and contribute to the local economy. The most promising areas would be the NAC, New Alamein, and New Mansoura, to name a few as the government is introducing more 4th generation cities.
However, the NAC has been the centre of attention to international investors, particularly thanks to the carefully curated development plan that is underway to have NAC as the new capital, served with an unparalleled road network. The new destination has definitely come to our attention, same as other investors.
The NAC constitutes a civilizational bridge that works to create a political, economic and cultural entity in the Middle East and North Africa region. The NAC was chosen to be the destination of our first project in Egypt, as we believe in its capability to provide a thriving economic climate and infrastructure that forms the nucleus of good living and sustainable development. It is expected to house around 40 million people by 2050.
SKY AD is also always looking for prominent investment opportunities in the real estate market that complements and goes in line with our vision and strategy. The company is studying different available investment opportunities, and we are looking forward to diversifying the investment portfolio of the company in areas experiencing growth and purchasing power.
What are property types (residential, office, commercial, medical, retail) most in need for the market and customer?
Demand on the real estate sector in Egypt is actually very high, either for the residential or non-residential units. In terms of market trends, the commercial property has continued to witness good demand for prime developments across the board.
However, there is a huge demand for “residential type” in Egypt, as the country’s population increases by 2.5 million annually. The soaring rate of marriages in the country, as there are about one million marriages taking place every year, as well as rising levels of rural to urban migration, accentuate the issue.
We cannot deny the importance of other products, which are also witnessing a rise in demand, from the commercial to the medical, and even the retail, thanks to the prospering business environment across sectors.
From this point, Sky Abu Dhabi development came to the Egyptian real estate market with its vision to offer different types of property whether residential or non-residential that addresses the needs and demands of the consumers, where we offer a real exemplary model in infrastructure and design to facilitate the lives of individuals and provide comfort, privacy and innovation.