The 6th Think Commercial roundtable stressed the importance of market controls issued by the Egyptian Cabinet to regulate the sale of real estate units in Egypt.
The roundtable, titled “Egypt’s Real Estate Market: Mechanisms to Overcome the Global Economic Crisis” was held on Tuesday by Media Avenue.
The roundtable highlighted the role of these controls in market growth; however, some participants did not agree on the timing of issuing these controls.
Executive Board Member at Bayt Misr and the roundtable moderator Mohamed Samir talked about the decisions issued by the Cabinet to regulate offering real estate projects and their impact on work mechanisms in the sector.
Chairperson and Co-Founder of The Land Developers (TLD) Ahmed El Tayebi said that the controls will allow for a more effective regulation of local real estate market, especially since it has specified specific areas for projects, and each area has controls starting from areas less than 50 acres to areas exceeding 1,000 acres.
El Tayebi added, “The controls also determined percentages of work phases in projects and their financing accounts in banks before they are offered for sale to consumers. This situation allows serious companies to continue working on their already existing projects.”
Mohamed Al Bostany, Director of the New Cairo and NAC Developers Association, said that the regulations recently issued by the government will undoubtedly control the real estate market, which is a good step. However, it is necessary to separate the situation of the real estate market in the past, and its situation in light of these new procedures.
Al Bostany noted that the current situation needs bank support in some way, especially since it is not permissible for a developer to pay 30% of investment cost of a project whose investments reach billions of pounds.
Meanwhile, Chairperson of ECB PM & Consultancy office, Mohamed Abdelghany, said that the recent decisions are indeed a step on the road towards meeting the needs of real estate developers to obtain a financing entity, and financing must be from banks.
Abdelghany added: “According to new controls, financing will be agreed upon with the bank if the developer actually obtained it, provided that investments are in specific accounts for the project and they will come out with an account, and the developer’s role will be in payment and project development only.”
“It is necessary to find a way to float projects, and we have talked about this since 2017, and every day the danger in the scene increases. Consequently, existing challenges today did not exist 5 years ago, and a different model must be made for everything,” he explained.
Ayman Abdel Hamid, Managing Director and Vice Chairperson of Al Taamir Mortgage Finance – Al Oula, said that there is a gap in the mortgage finance market as developers act as banks and finance projects, and the recent decisions issued by the Cabinet will control the real estate market. In addition, the decision of the Supervisory Authority Finance by allowing the financing of projects under construction will lead to the expansion of mortgage financing.
He pointed out that guarantees must be provided, such as the imposition of fines on development companies that do not adhere to delivery dates, because the cost of debt in the event of delay costs mortgage finance companies a lot.
Similarly, Ahmed Amin Massoud, Chairperson of Menassat Developments, said that the Cabinet’s controls need clarification, considering that real estate product is different from rest of goods and products, and it cannot bear bank interest, so a new financing product must be introduced, such as the mortgage finance initiative with a bank interest of only 3%.
He went on saying: “Considering the secondary market in financing, we find that the banks are the ones who enter to buy bonds when they go for financing by securitizing dues of companies with clients.”