The Egyptian state is exerting much effort to regulate the local real estate market and boost its sales to revive the industry.
Besides several facilities the government has provided to property investors and developers, it has issued some regulations and controls to guarantee clients money and ensure that properties are delivered on time.
Daker Abdellah — Member of the Real Estate Investment Division of the Federation of Egyptian Chambers of Commerce and Member of the Construction Committee of the Egyptian Businessmen Association — said that Prime Minister Mostafa Madbouly’s decision to set controls to regulate selling real estate in Egypt is in the interest of citizens first and to combat non-serious property developers. It also reflects on the strength and credibility of the local real estate sector.
Furthermore, Abdellah said that the new controls would participate in increasing demand for properties and boost the sales of companies as well as foster adherence to delivery dates.
Additionally, the decision stipulates that the state authorities are obligated to include the controls for selling units of real estate projects within documents for offering real estate projects and including them in the annexes of contracts concluded with developers to ensure the rights of buyers.
Moreover, he said that the new controls stipulate when and how real estate developers market their residential units and the amount of capital they must allocate for each project.
They also obligate them to submit semi-annual financial reports on their projects and activities to the responsible authorities — provided that they are approved by auditors — and to create a separate bank account for each affiliated project.
Furthermore, they stipulate that in the event the project is divided in phases in terms of delivery, the state agency has to include the masterplan and controls for the sale within the contract of sale.
He also explained that these controls will also be applied on real estate projects that have been in development before they were imposed.
He further explained that such controls encourage those who wish to buy residential units to pay their money in projects under construction and achieve an abundance of cash flows for real estate projects.
They also contribute to accelerating the pace of project implementation and reducing borrowing opportunities or relying on bank financing at interest rates that have a role in increasing the final price of a real estate unit after calculating the interest rates on borrowing.
“The real estate sector in Egypt enjoys promising opportunities in the coming period as a result of the state’s establishment of 17 new cities, the growing demand to buy residential units, and the belief of some that real estate is still a safe haven for saving,” Abdellah said.
For his part, Bashir Mostafa — CEO of First Group Development and Member of the Construction and Building Committee at the Egyptian Businessmen Association — said that these decisions will revive the market revive and boost sales and demand for buying units.
Mostafa also believes that the market will experience a huge boom in the coming period due to the implementation of such controls, commenting that “these controls would be a new beginning to regulate and organise issues and challenges in the local market.”
Last week, PM Madbouly issued a decision regarding controls for the sale of real estate units.
The decision specified the controls for selling units of real estate development projects to ensure the rights of buyers through a number of articles.
Article (1) comprised a set of definitions, including project area — which is determined between a limited area of less than 50 acres, a small-sized plot of land of 50 and less than 100 acres, a medium-sized plot of land of 100 and less than 500 acres, a large-sized plot of 500 and less than 1,000 acres, and a maximum land size of 1,000 acres and more.
The decision also included other definitions represented in construction costs, schedules, and completion rates, which is a percentage of actual implementation of the phase’s work compared to the approved schedule for the project.
It also defines what a calendar year is and that expenses should constitute 20% of revenues.