I was on a tour in Egypt’s New Administrative Capital (NAC) recently, and I saw the extent of project implementation.
There are developers that are racing against time, and others that do not have a presence in reality. Many are lost, without a clue on how to do anything.
But what really caught my attention, and this is very necessary, is that it is essential to support real estate companies in the NAC. The project is huge, and we need time for its features to become clear.
There must be flexibility so that these companies can go on, and here I’m focusing on serious companies, not just ones that are all talk and no action.
Real estate development is not just leaving concrete on sites. It is real estate development. We should not look at companies as banks that pay instalments and create publicity for their projects while implementing them at the same time.
This would be a catastrophic failure, and there are many models that we can look at other than the NAC.
These companies need encouragement to expand and work in order to remain true partners in the development that is taking place in the NAC.
The project needs huge investments and this will not be provided by the state alone. The private sector must be a partner with flexible mechanisms, not pressure programs to implement and paying instalments only.
A new mechanism must be available to deal with real estate companies in the NAC to succeed, finish development work, and expand with new projects.
Financing can only be available in the presence of a distinguished real estate product, but competition in the NAC has led to a decline in sales, while increasing financial burdens that require unconventional solutions.
The New Administrative Capital is a project that grows and develops every day, and receives new investments. However, it must be supported, and there should be a strategy that suits this development in order for the project to succeed without causing losses to the parties of the development process.
In the past couple years, especially during the novel coronavirus (COVID-19) crisis, the state has provided a lot of support to real estate development companies through initiatives and postponing payment of land instalments.
It dealt with this crisis with professionalism that everyone was able to see. Nevertheless, the market needs to be reorganised after this crisis, especially as these real estate companies witnessed a decline in sales during that period, which was reflected on the implementation rates of the projects.
Here, I’m addressing the importance of attracting new investments and developing solutions for some companies that are currently facing challenges, especially as they are main success partners for the development process of national projects.
In the end, I would like to propose some solutions. Currently, it is necessary to study the situation of each company in terms of the strength of financial solvency and the size of the project that it is developing.
This should also take into account the precedent of works and implementation rates before starting the development work. This is so that the authorities can ensure the implementation will take place as promised and trust developers’ ability to develop the project.
These simple requirements can filter out companies that are not serious from the beginning, without a real crisis that hinders the development of the project.
Badawy Shalaby, Deputy Managing Editor of Al Borsa Newspaper and real estate affairs journalist