Real State boom

Two new governorates have been added to Egypt’s 26 provinces last Thursday. Helwan, South of Cairo, and October 6 th, 38 km west of Giza City, are now officially two governorates. This timely decision, as many experts say, highlights Egypt’s urbanization achievements over the past three decades.

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Cairo alone has a population exceeding 16 million. In fact, geographically extended capital like Cairo required administrative splitting so that better governance could be concentrated over a limit span of supervision consequently, better service and more attention will be given to these faraway district.

Urbanization in this country reflects its enigmatic fix regarding a population surpassing 70 million confined to less than 4 per cent of total of a one-million-square-kilometer area. Since the 1970s, a number of new residential districts have been created to to alleviate the country’s housing dilemma in view of growing construction costs and low incomes. Many district were created in the metropolitan outskirts like Nasr City, el-Salam City, el –Obour, el-Shorouk, October 6 th and New Cairo. These new urban destinations have provided citizens from all walks of life with a variety of housing units according to their financial potential. “The real state sector is function of economic status,” Maher Maksoud, the CEO of the Sixth of October Development of Investment Company (SODIC), told the Egyptian Mail.

Maksoud refers to policies of economic reform carried out by the government of Prime Minister Ahmed Nazif, which took the helm in 2004. in 2005, a government campaign was launched to reactivate the Mortgage law of 2001. The new legislation allows banks to push for speedier foreclosure in case of default. Yet the mortgage market stands at 0.5 per cent of GDP, compared to 14 per cent in United Arab Emirates and 65 per cent in the US.

“In Morocco, it’s 15 per cent. Certainly, the low is not enough… We are still at a very early stage, “says Maksoud. In 2001, the Government created the mortgage Finance Authority (MFA) seeking regulation of the mortgage market. The NFA entitled to set rules governing the mortgage market.

Provide listings for mortgage appraisers and license mortgage firms. As a regulator, The MFA also monitors companies working in this sector. The Egyptian property sector has attracted a number of local and Arab companies to invest in this booming domain. Egyptian firms and Arab property developers have pumped massive investments. But much of these investments have gone to luxury real estate, leaving low and middle-income Egyptians in the doldrums.

Maksoud believes this will change when the fruit of economic reform will be shared by the majority of the population. “In the future, there will be a huge opportunity for middle and low-income housing, “he forecast. “The real estate sector is very diversified, including residential, hotels, office buildings, retail, infrastructure, etc. As for Egypt, until recently the only activity was tourism development… The market was polarized in a way that a limit proportion of people had purchasing power. Egyptian private sector firms working in tourism were very small. The country wasn’t a regional hub for business and many foreign companies refrained from coming here. Now the real estate sector is booming in Egypt,” he argues.