Egypt’s Real Estate Development Chamber to propose new financing mechanisms in coordination with CBE

Shaimaa Al-Aees
10 Min Read

The Board of Directors of the Real Estate Development Chamber at the Federation of Egyptian Industries presented the most prominent successes achieved by the chamber during 2022.

These successes were based on the continuous follow-up of market developments, cooperation with the Housing Committee in the House of Representatives, and government support to discuss the most important challenges facing real estate market.

In a press conference held last week, Tarek Shoukry — Chairperson of the Real Estate Development Industry Chamber and Deputy of the Housing Committee in the House of Representatives — said that the chamber is working with all its efforts to support real estate development companies operating in the market.

Additionally, it assists these companies in facing any challenges in cooperation with the concerned authorities to solve any problems facing the sector.

Shoukry added that the unprecedented government support for the real estate sector and the existence of cooperation with the government with all its concerned agencies are factors supporting the chamber’s efforts.

He also noted that the government discussing with real estate developers before making strategic decisions regarding the local market is one of the factors that maintain the continuity of the sector’s business.

Furthermore, Shoukry praised the vital role of the New Urban Communities Authority (NUCA) and the speed of issuing licenses and ministerial approvals for projects.

About 220 ministerial approvals are issued annually, which is a huge number that contributes to increasing development rates and supports investment and attracts new investors to the real estate sector.

He disclosed that the real estate sector is a strategic and promising sector that contributes about 20% to the GDP, creates about five million job opportunities, and is a focus in the comprehensive urban development plan that the state is currently implementing throughout the republic.

As for the most prominent features of the chamber’s strategy for the new year, he explained that it aims to have an urgent discussion on the prices of building materials and their impact on construction costs and the selling prices of properties in light of purchasing power stability.

This is one of the files that will be adequately studied during the coming period to come up with solutions and proposals for the Ministry of Housing, Utilities, and Urban Communities.

He pointed out that there are a number of solutions currently proposed in this file, including an increase in the development period of projects in order to reduce risks resulting from the high prices of building materials.

Furthermore, the chamber is considering developing new mechanisms in coordination with financing agencies, the Central Bank of Egypt (CBE), and the Cabinet regarding mortgage financing for the sector with lower interest and easier procedures, as mortgage financing is the appropriate mechanism to support the market during the current period and bridge the gap between selling prices and the purchasing power of customers.

Additionally, the chamber will continue to work on changing the philosophy of mortgage finance in banks, so that it is based on a guarantee of the unit and not the credit of the buyer — a step that the chamber began working on during 2022 and will continue to discuss and communicate with the concerned authorities in 2023.

The chamber will also work on addressing the housing ministry about the position of mortgage financing initiatives with an interest of 3 to 8% from the CBE vis-à-vis the Ministry of Finance, so that the position of these initiatives is clarified and whether there are changes in their application or not.

Moreover, discussions will be initiated with the Chamber of Building Materials to launch an online application that can track the prices of building materials, through which, indicative and final prices are set to protect the market and companies from unjustified hikes in prices.

This is in addition to establishing unconventional mechanisms and removing obstacles in order to exploit promising opportunities for global competition through property export.

Furthermore, Shoukry explained that real estate export is one of the main files that the chamber is prioritising in the new year in order to fully support the real estate market and Egyptian economy.

Moreover, the chamber is preparing for international property exhibitions to encourage the export of real estate and showcase the excellence of Egyptian properties.

The chamber’s strategy includes supporting real estate companies’ plans to achieve a balance between construction costs and selling prices, along with ensuring their ability to continue marketing their projects without interruption.

This is in addition to searching for ways to activate the online sale of properties and seek the assistance of specialised companies in this regard.

Shoukry also stated that the chamber will focus on following up on the procedures of the Egyptian Federation of Real Estate Developers’ draft law and recruiting all the capabilities of the chamber until this new entity emerges.

Additionally, the Real Estate Development Chamber will prepare a real estate guide that includes all real estate developers with their classification according to financial and technical capabilities and the previous work of each company, which benefits the local market and customer in knowing the developer they are dealing with, which maintains the strength of the real estate market.

Shoukry pointed out that the files that the chamber aims to focus on during the new year have already seen much progress, and that there are ongoing discussions about them and strong efforts from the chamber and real estate developers to quickly conclude these files, which benefits the entire market and maximises the returns of urban development.

He also stressed that the chamber will continue to hold meetings with its members to find out the most prominent challenges facing companies operating in the market while addressing concerned authorities, presenting proposals, and finding solutions to these challenges.

Regarding the successes the chamber has achieved during last year, Shoukry said that it succeeded in obtaining the approval of the Cabinet to grant an additional deadline for construction for a period of six months to real estate companies without calculating any fines for delay as a result of the global economic changes that affected the sector.

It has also held meetings with the prime minister, CBE officials, and real estate developers to set up a mechanism for changing the mortgage finance philosophy in banks so that it is based on the guarantee of unity and not the buyer’s credit capacity, which is an important step that contributes to revitalising the entire real estate finance system.

Furthermore, it has formed a committee to support real estate developers in dealing with government agencies and solving the problems of the sector.

Moreover, it has participated in discussions to have legislation issued by the finance ministry to reduce taxes on rented units in malls and commercial centres from 14 to 1%.

For his part, Osama Saad Al-Din — Executive Director of the Real Estate Development Chamber — stated that the chamber made strong efforts during the past year to meet the demands of real estate companies from various parties in addition to participating in a number of important events, during which, the companies presented their most prominent projects and various real estate products.

He also explained that the chamber succeeded during the past year in participating in several important events, including the first industry forum and exhibition with a pavilion on an area of 500 sqm. Moreover, it participated in the annual conference of the African Union for Housing Finance in its 38th edition.

Finally, Saad El-Din noted that it is intended during 2023 to add 350 new memberships to the chamber, as the number of current members is 862 permanent members, the number of companies under incorporation has reached 1,908 companies, and the number of companies under examination at the General Authority for Investment and Free Zones (GAFI) is 4,668.

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