LIVING "By the Real Estate Leaders" Fall 2015 - Issue #7 | Page 10

Insights on

NEW
Cairo
Properties

Reyad notes that, over the past ten years, Egypt’s property
market has gained on other markets in the region.“It used to
be cheaper to invest in Egypt compared to other countries in
the area like Cyprus, Turkey or Greece, but that is not the case
anymore,” he explains. “But there are many factors that determine the price of property, including political and economic
stability, whether you import building materials, and the stability of the Egyptian pound.”
He goes on to explain that Egypt “has a culture where the
price of real estate does not go down. This does not exist
anywhere else in the world, and frankly speaking, it’s wrong,”
explains Reyad. And although he does not expect prices to fall
anytime soon, he notes that there have been notable changes
in the market over the past few years.

“People have begun to learn that when you raise the price,
the property doesn’t sell or it takes longer to sell it, so they
have begun to get their properties assessed by specialists,”
he says. “This is true even when it comes to re-sale, where
prices are often determined by the whim of the seller rather
than by the actual value of the property.”
Al-Saghir, on the other hand, notes that one of the reasons for
the real estate boom in Egypt is the fact that many GCC investors are finding it lucrative to invest in real estate in Egypt. As
for buyers, Mr. Al-Saghir explains that investments from
abroad – particularly remittances from the Gulf – play a large
role in raising the value of property. With over 20 million
expats living outside of Egypt, he explains that Egyptians
looking to consolidate assets at home often invest in the real
estate sector.
“People who work abroad represent the largest segment that
pump money into the real estate market. Compared to
getting a 9-10 percent interest rate for putting your money in
a bank, real estate returns anywhere between 30 and 50
percent, so it’s natural that they want to invest in real estate,”
he explains.

A

lthough New Cairo was established less than 20 years ago, the
area has ballooned with new properties and new communities in
record time. We speak to a RE/MAX's broker owner and and a RE/MAX
agent about why developers are looking to New Cairo, and what their
expectations and forecasts of the market's challenges are in the
coming years.
Over the past 10 years, Cairo’s satellite cities have gone from being
far-flung developments in the desert to bustling communities that
draw thousands of employees, prospective buyers and visitors every
week. And as more and more Egyptians look to escape life in Egypt’s
congested capital, they have turned to suburban settings like New
Cairo and 6th of October City.

“The market in New Cairo changes every 3 months, as opposed to 6th
of October, which changes every 6 months or every year,” explains
Abdullah Al-Saghir, agent of RE/MAX Almohager 1. “But the real difference is that 6th of October has been 35 years in the making, as
opposed to New Cairo, which started to come up in 2000.”

But far from being the isolated community that it was when Katameya
Heights was build in 2000, today, New Cairo is an impotant commercial
and business center. Ashraf Reyad, broker owner of RE/MAX R.F.M,
estimates that New Cairo is 20-25% more expensive that 6th of
October, partially because of the region’s centrality and accessibility to
and from Cairo’s older districts. More recently, the announcement of
the new administrative capital has created yet another price hike.

8

Mortgage and
Registration
One of the main challenges
to buying property in Egypt
has been the dearth of
financing schemes. And
although mortgage was
introduced a few years ago,
it has so far had limited
success
in
facilitating
payments for prospective
buyers.

This mismatch
in the needs of the
local market is a problem.
Developers have learned
from this and many of them
are starting to do a market
analysis to find out what the
market needs so they can
develop and price accordingly, explains Reyad.

“RE/MAX is one of the companies that
pioneered mortgage, but it still hasn’t picked
up for many reasons. Mortgage is successful
abroad because the interest there is 2-3
percent, but in Egypt, interest is 15-16
percent, which means that if you buy a unit
for EGP 300,000 over 15-18 years, it will
cost you EGP 1.2 million on the long run,”
explains Al-Saghir.
Al-Saghir goes on to note that, besides inflated interest rates,
conditions for mortgages are not favorable. “To get a
mortgage, the villa has to be built, and you have to get a
document from the developers proving that they own the
land, so all of this makes it very challenging.”