Delays in the delivery of real estate projects in Egypt are not merely construction-related issues but are closely linked to financing structures, risk management, and corporate governance, Basem El-Sherbiny, Founder and CEO of Etqan Consultancy, said.
El-Sherbiny explained that buyers purchasing off-plan units often base their investment plans, expected rental income, business operations, or housing arrangements on the agreed delivery date. When projects are delayed while developers continue collecting instalments according to the original payment schedule, buyers ultimately bear the financial impact of delays for which they are not responsible.
He pointed to exceptional economic conditions as one factor, including exchange-rate fluctuations and increases in construction materials, energy, transportation, and financing costs. He noted that urban inflation reached 38% in September 2023, while benchmark interest rates rose by a cumulative 800 basis points during the first quarter of 2024.
However, El-Sherbiny stressed that economic conditions cannot justify every case of delayed delivery. He identified weak financial structures as another major factor, particularly among developers undertaking projects beyond their financial capacity or execution capabilities.
Some companies rely heavily on sales proceeds as their primary source of project financing while offering buyers extended payment periods and low down payments. “This creates a dangerous mismatch between the timing of cash inflows and the timing of financial obligations, including land payments, construction costs, and contractor commitments,” he explained.
He also pointed to uncontrolled expansion, with some developers launching new projects before securing sufficient financing for existing developments. “New sales may temporarily cover funding gaps in earlier projects, but this model becomes highly vulnerable when demand slows or construction costs rise. Launching a new project is not a financing strategy,” El-Sherbiny said.
Project management is another key factor, he added, citing delays in designs and permits, inaccurate bills of quantities, contractor selection, specification changes, and delays in securing critical systems and materials.
“These challenges are particularly evident in commercial and administrative projects, especially in the New Administrative Capital, where completing the concrete structure does not necessarily mean that the project is ready for handover or operation,” he said.
El-Sherbiny emphasized the distinction between construction completion and operational readiness, particularly for commercial and administrative developments, where property value also depends on professional management, occupancy, visitor traffic, maintenance, security, technology, parking, and compliance with civil defence requirements.
He also called for greater transparency in off-plan sales, arguing that buyers effectively contribute to project financing without always receiving sufficient information about payment utilization, construction progress, remaining costs, or potential funding gaps.
“It is difficult to justify a system in which instalment payments continue according to time while construction progresses according to available liquidity,” he said, calling for financial flows to be linked to measurable and independently verified construction milestones.
Regarding the presidential directive to form a committee to inspect real estate projects and ensure timely delivery and compliance with contracts, El-Sherbiny said, “The effectiveness of this intervention should not be measured by the number of companies facing penalties or land withdrawals, but by the committee’s ability to identify the actual causes of delays.”
He also highlighted Prime Ministerial Decision No. 2184 of 2022, which provides a 12-month period following the contractual delivery date. Under the framework, further delays trigger instalment deferrals, while delays exceeding 24 months give buyers—subject to the decision’s conditions and the relevant contract—the option to continue with the deferral mechanism or request a refund.
He called for separate financial accounts for individual projects, quarterly progress reports certified by independent consultants, and stronger links between instalment payments and verified construction milestones. He also recommended limiting new project launches when significant gaps emerge between sales and construction progress, while distressed projects should be subject to recovery plans involving additional shareholder funding, development partners, financial restructuring, or management changes where necessary.
“Protecting buyers does not conflict with protecting serious developers. Both ultimately depend on a more transparent, disciplined, and sustainable real estate market,” he concluded. “In real estate, trust is not built through advertising; it is built through commitment, execution, and delivery.”
