Real estate funds and REITs: A key to success for Egypt’s property developers

Daily News Egypt
7 Min Read

Egypt’s property developers are looking for new ways to finance their projects and attract more investors, especially in light of the current economic challenges and global competition. One of the solutions they propose is to establish and promote real estate funds and Real Estate Investment Trusts (REITs), which are common in the international real estate development industry.

Real estate experts shared their insights on the current state and prospects of the real estate sector in Egypt during “The Secret Formula for Successful Real Estate Investments” roundtable, organized by Invest-Gate. They tackled various topics, such as real estate funds, mortgage financing, property registration, hotel apartments, and foreign investment.

Hisham Shoukry, Chairperson of the Real Estate Export Council, said that real estate funds account for 50% of real estate exports worldwide, but they are absent in Egypt due to currency instability. He added that Egypt needs to be prepared for the emergence of these funds, as they can provide financing to developers and offer opportunities for small investors who are afraid of taking risks.

He also pointed out that some of the legislative amendments that have been approved recently can facilitate the creation and operation of real estate funds in Egypt, and that the country should have a solid legislative infrastructure to attract global real estate investment funds.

Abdallah Sallam, President and CEO of Madinet Masr, agreed with Shoukry and said that the current economic changes have created three positive opportunities for Egypt’s property developers: investing in foreign markets, especially the Saudi and Gulf markets; accelerating bonds and real estate delivery; and planning more strategically for the industry by managing real estate funds.

Mohamed Selim, Egyptian Exchange (EGX) Research Manager and Supervisor in the Risk and Indices Departments, stressed the need for Egypt’s real estate sector to develop a strong vision to face the market challenges, especially the ones coming from China’s real estate sector, which will affect the global market. He said that the EGX can support the sector by improving governance, facilitating access to finance, and ensuring fair pricing and liquidity for the company’s shares.

Amr Elhamy, CEO of TSFE’s Tourism, Real Estate & Antiquities Subfund, highlighted the importance of diversifying the real estate products and said that there is a growing interest in investing in the hospitality sector with dollar returns. He also mentioned that REITs are a vital tool for attracting foreign investors and facilitating exit paths, as they allow investors to own and trade shares of real estate assets without owning the physical property.

Ahmed Ehab, CEO of Madaar Development, emphasized the importance of both real estate funds and REITs, as well as the stock market, and called for regulating them collectively. He also said that REITs are a logical and visible investment tool for Egyptians to hedge against inflation and that they should be incentivized with some form of tax exemption to attract more investors amid surging interest rates.

Hashem El Sayed, Chairperson and Co-Founder of ODIN Investments, highlighted the unique advantage of real estate funds being exempt from income taxes in Egypt. He encouraged real estate developers to join real estate funds, which have no restrictions for opening. He also stressed the importance of media, culture, and promotion for real estate funds, citing Egypt’s remarkable real estate experience as a source of inspiration.

Ahmed Abdallah, Vice Chairperson of REDCON Properties, noted that hotel apartments in Egypt generate high profits, usually in US dollars, while commercial units earn profits in Egyptian pounds. He suggested that there is a need to expand in hotel apartments.

Raymond Ahdy, CEO of Wadi Degla Developments, emphasized the importance of registering properties at official real estate registries. He also pointed out that real estate developers play several vital roles besides their main role, such as financier, producer, and designer, all of which affect the final price of the product.

Ayman Abdel Hameed, Vice Chairperson and Managing Director of Tameer for Mortgage Finance (Al Oula), highlighted the significant challenges faced by real estate developers, who have to balance the roles of financier and collector. He also said that mortgage financing faces many obstacles, such as high-interest rates and financing costs. He stressed the need to present properties to foreign investors in an attractive way and provide them with adequate guarantees. He also called for creating a dedicated record for foreign ownership.

Omar El-Tayebi, CEO of The Land Developers, asserted that the main challenge for the market is the uncertainty surrounding the Egyptian economy. He also said that the secondary market needs to address the issue of the business model. He warned that any disruption in the real estate market could harm the broader Egyptian market.

Nour El-Deen El-Serougy, CEO and Founding Partner of HRE Properties Egypt, stated that a bank in the Netherlands offers $100 million in capital to any developer in Egypt who meets certain criteria or establishes factories in Egypt. He also urged real estate developers to not only focus on selling properties to Gulf buyers but also target Egyptians in Europe and the United States, while providing them with information about the real estate market in Egypt.

Maha Abdel Razek, CEO of Misr Real Estate Assets Management, highlighted the changing global trend in real estate demand. She observed that the demand for real estate units has started to decrease compared to the rising demand for hotel units, especially in the downtown area.

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