LIVING "By the Real Estate Leaders" Fall 2018 Issue #16 | Page 10

Compounds
Vs. The City;
A Closer Look at Real Estate Investment
build a life
outside
the city.
age bracket
50-65 are
the are the
build
a life of
outside
of The
the city.
The age of
bracket
of 50-65
ones who
will who
buy will
in the
They
are They
not going
leave to leave
ones
buy city.
in the
city.
are not to going
because because
they are they
tied to
community.
And when
they
do they do
are the
tied
to the community.
And
when
move to move
compounds,
we get a we
lot get
of calls
them
wanting
to compounds,
a lot from
of calls
from
them wanting
to go back
city.
the younger
generation,
who
to to
go the
back
to However,
the city. However,
the younger
generation,
who
are frustrated
with the with
denseness
and the and
deteriorating
are frustrated
the denseness
the deteriorating
infrastructure
of the city,
are city,
the ones
who
will who
choose
infrastructure
of the
are the
ones
will the
choose the
more spacious
and new and
compounds.”
more spacious
new compounds.”
There are There
certain
that are considered
the most the
popu-
are locations
certain locations
that are considered
most popu-
lar and the
investment
within the
city and
lar safest
and the
safest investment
within
the compounds.
city and compounds.
“Zamalek “Zamalek
and some
areas
in Heliopolis
and Maadi
are
consid-
and
some
areas in Heliopolis
and
Maadi
are consid-
ered the ered
most
areas in areas
the city.
terms In of terms of
the popular
most popular
in the In city.
compounds,
New Cairo
and
its vicinities,
as well as
compounds,
New
Cairo
and its vicinities,
as Sheikh
well as Sheikh
Zayed are
high are
in demand,”
Mr. Fanous
Zayed
high in demand,”
Mr. states.
Fanous states.
Mr. Farah,
the other
hand,
believes
that the that
most the
popular
Mr. on Farah,
on the
other
hand, believes
most popular
locations locations
for compounds
highly depends
on the reputation
of
for compounds
highly depends
on the reputation
of
the developer.
“The compounds
built by very
devel- devel-
the developer.
“The compounds
built reputable
by very reputable
opers are opers
the most
sought
despite
location.
It
are the
most after
sought
after their
despite
their location.
It
depends depends
on the developer’s
name and
quality
work. If
has If it has
on the developer’s
name
and of quality
of it work.
proven to proven
be of high
from previous
projects, projects,
people people
to be standard
of high standard
from previous
will invest
them
will and
also will
recommend
them to them to
will with
invest
with and
them
also recommend
others.” others.”
Whenever we consider capitalizing in real estate, regardless of the kind of unit we are looking for, we are always faced
with the difficult choice of either investing in the city versus the new compounds.
compound versus the value of the upfront cash needed to
buy in the city. Other factors to consider include when the
unit is expected to reach its potential as well as the demand
in that area in order to sell with the maximum ROI,” he
explains.
For compounds, Mr. Attar and Mr. Farah both agree that the
developer’s reputation is essential. “The reputation and previ-
ous experience of the developer, the area where the project
is developed and its accessibility are all important factors,” Mr.
Attar says. However, these are not the only factors mentioned
by our experts. Mr. Farah continues by stating other dynam-
ics such as “Whether the project will be delivered finished or
semi-finished, the time of delivery, the location of the
compound, and the facilities available such as schools,
malls… etc. In addition to the accessibility of services in
general such as electricity or water, because when you live
there you pay a hefty sum for those services, and some
compounds do not deliver their full responsibility.”
For the city, Mr. Farah believes there are some fundamental
factors to take into consideration as well. “It all depends on
making sure that the documents of ownership are all verified
and registered. Also making sure of the condition of the unit,
especially if it is in an old building. You must look at the
plumbing, electricity or wiring, and details of the building
itself. Finally, you must also make sure you are investing in a
decent clean area, with good public transportation and
parking places,” he concludes.
Whether you are looking to invest in compounds or the city,
the general consensus seems to be that you must do exten-
sive research first. Find a developer and agent you can trust,
and make sure the unit you are purchasing is a smart, guaran-
teed investment.
Naturally, each option has its pros and cons. On one hand, compounds come with a myriad of luxuries which are hard to
resist, but then again, there is the old, irresistible charm of the city. So, how do we choose?
To help clarify this dilemma, we spoke with three experts; Mr. Mahmoud Attar, Broker Owner of RE/MAX Today, Mr.
Michael Fanous, Director of Sales Primary Division at RE/MAX 1st Choice, and Mr. Gamal Farah, Real Estate Consultant at
RE/MAX 1st Choice.
The Pros and Cons
According to Mr. Attar “Compounds are easier in terms of
payment and people tend to lean more towards them due to
the security and services they offer, which gives them an
advantage”. Nevertheless, Mr. Attar also believes that there
are certain perks to investing in the city. “For those who can
afford it, it is a more guaranteed investment. The various
neighborhoods in the city have existed for a long time and are
also complete with services unlike the new places which will
only show after being fully constructed.”
Mr. Farah, however, has a different point of view. “The long-
term lease in compounds comes at a very minimum down
payment, a luxury you do not find in the city. As for invest-
ment, people stay away from the city and go to locations
where the ROI has proven to be very high and lucrative.”
compounds is easier because they make a small down
payment and then the rest is paid in installments over a few
years. During this time, the value of the money paid in
installments decreases. In the city, they buy directly from
the owner who usually wants the entire sum in cash. ” That
does not negate the fact that some people simply prefer the
convenience of the city. “The units are already constructed
and ready to live in. You know the neighborhoods, the
surroundings, and the facilities, in addition, services and
public transportation are already working,” Mr. Fanous
explains.
Most Popular Locations
Both Mr. Both
Attar Mr.
and Attar
Mr. and
Fanous
that
compounds
are
Mr. agree
Fanous
agree
that compounds
are
the
more
popular
option
for
most
buyers
at
the
moment.
the
more
popular
option
for
most
buyers
at
the
moment.
Payment Facilities
“People want
to escape
crowded
capital and
are chasing
“People
want to the
escape
the crowded
capital
and are chasing
When it comes to payment terms, all three experts agree that the potential
of making
good ROI,”
Mr. ROI,”
Fanous
the potential
of a making
a good
Mr. explains.
Fanous explains.
when purchasing a unit in a compound there is a vast range However, However,
Mr. Farah Mr.
believes
it actually
on the age
Farah believes
it depends
actually depends
on the age
of facilities which are not easily available when purchasing a of the buyer.
has to “It be
split
according
to age groups,
of the “It
buyer.
has
to be
split according
to age groups,
unit in the city. Quoting Mr. Attar “For the client, investing in those who
wish who
to stay
city,
the ones
who
wish who
to wish to
those
wish in to the
stay
in and
the city,
and the
ones
8
The Matter of ROI
All three experts agree that the more guaranteed ROI is that
of the compounds. According to Mr. Farah “People who
want to invest do not go for the city because the ROI in those
locations is nothing compared to investment in compounds.”
Mr. Fanous even singled out New Cairo. “New Cairo has a
more guaranteed ROI due to its high and increasing
demand,” he says. Mr. Attar believes the high ROI of
compounds is a result of the installment systems. “The
amount of money paid in installments becomes of less value
over the years, this means the ROI for the buyer is better. On
the long term, the price you paid in installments makes you
feel like you’ve paid less than someone just purchasing now,”
he explains.
Mr. Mahmoud Attar
Broker Owner of
RE/MAX TODAY
Mr. Michael Fanous
Director of Sales
Primary Division at
RE/MAX 1st Choice
Mr. Gamal Farah
Real Estate
Consultant at
RE/MAX 1st Choice
The Factors One Should Consider
Whether investing in compounds or the city, there are certain
factors that one should first consider. As a start, Mr. Fanous
believes the following is a good and helpful comparison.
“The payment plan plays an important role in comparing the
cash value of the down payment needed to purchase in a
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