07 ig october 2017

REAL ESTATE NEWS REPORTING & ANALYSIS

October 2017 - 48 Pages - Issue 7

BROKERAGE Markets Across

Egypt and The GCC: THE COMPLETE PICTURE

COLDWELL BANKER NEW HOMES, YOUR ONE-STOP REAL ESTATE SHOP

REAL ESTATE STOCK MARKET: WEATHERING INSTABILITY IN WAKE OF MONETARY CHANGES EGYPT’S BROKERS AND DEVELOPERS: SHARED GRIEVANCES, SUCCESSES AMID ECONOMIC INSTABILITY

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EDITOR’S LETTER

WELCOME TO INVEST-GATE To all our readers out there, we present to you a more in-depth overview of the real estate market in Egypt and GCC. As we approach the final quarter of 2017, we seized the opportunity to look into the property sector through the eyes of brokers. We give you the complete picture on the investment climate and the dynamics of the property market of Egypt and the Gulf.

It was a privilege to capture the old and new of the brokerage business here in Egypt beginning by Coldwell Banker. We sit with Coldwell Banker Senior Vice President Mohamed Banany in a thorough discussion about the nature of investment in Egypt, property market challenges, changes, and trends. Banany also shares his outlook on the future. We also learn more about Coldwell Banker’s latest Coldwell Banker New Homes with its ‘One Stop Real Estate Shop’ scheme.

We then visit a new key player in the scene, BYC, consultancy and brokerage firm; and speak to its CEO and Founder Karim Ghoneim. Ghoniem shares his insights on the market as a whole and carefully discusses the major changes in the market and the upcoming new trends. Both Banany and Ghoneim put an end to the so-called “Real Estate Bubble”!

Adding to our expert’s voice, we head to KSA and speak to Arron Browne, managing director of Sloanes Real Estate KSA, to give us insights on the market’s latest trends and current status.

Moving onto the market, our Invest-Gate team of writers and researchers head to the streets of Cairo to speak to the top brokerage firms. Also we present the dynamics within the GCC brokerage world.

As everything goes online, we take a closer look at the digital brokerage market and how it caters to clients. We speak to masterminds behind some modern online brokerage platforms, including OLX’s Storia, Estabena, and Propertyfinder Egypt.

We feature a special architectural and design firm, Archplan, and take a look at its latest projects in urban planning and development. Archplan also sheds light on the highly anticipated New Administrative Capital and its contribution to this massive project.

As the Voice of Real Estate, Invest-Gate aims to cater to all needs from homebuyers to big property investors. We bring you stories covering Egypt’s most interesting and vibrant sector, as it changes under the current economic environment. With the sentiment on Egypt gradually improving, we are delighted to explore how that impacts the most favorite investment outlet.

Enjoy!

General Manager Yasmine El Nahas Editor-in-Chief Farah Montasser Managing Editor Passant Darwish Staff Writer Julian Nabil Nayrouz Talaat Market Researcher Hagar Magdy Database Executive Taghreed Mounir Operations Manager Nada El-Labban Business Development Director Safaa Abdel Bary Web Master Ayman Rady Art Director Omar Ghazal

EDITOR-IN-CHIEF

Inside this issue p.16

p.20

Graphic Designer Ahmed Sabar 3D Visualizer Maged Makram Financial Manager Abdallah El Gohary Distribution Officer Mahsoub Kenzi Mohamed El-Sayed ABDEL RAHMAN MEDHAT

Coldwell Banker New Homes, Your One-Stop Real Estate Shop

p.26

BYC Seizes the Brokerage Market with an Edge IN PARTNERSHIP WITH

p.28

Publisher MOHAMED FOUAD

Sloanes Real Estate KSA Explores Real Estate Brokerage Market in GCC

Real Estate Stock Market: Weathering Instability in Wake of Monetary Changes

All rights to editorial matters in the newspaper are reserved by Invest-Gate and no article may be reproduced or transmitted in whole or in part by any means without prior written permission from the publisher.

/invest-gate p.30

p.38

/invest gate /invest.gate_magazine

Egypt’s Brokers and Developers: Shared Grievances, Successes Amid Economic Instability

Archplan: Creating the Nation’s Capital

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NEWS

UPDATE

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EGYPT RANKED TOP INVESTMENT SPOT IN AFRICA – RMB REPORT Egypt becomes Africa’s top investment destination for 2018, Invest-Gate reports.

The Multilateral Investment Guarantee Agency (MIGA), affiliated to the World Bank (WB), approved the provision of guarantees worth USD 210 mn to a number of international companies working on the largest solar power project in Egypt, Invest-Gate reports.

For the first time in seven years, Egypt knocked South Africa from its- longstanding- top spot as Africa’s investment destination, according to the- recentlypublished- Rand Merchant Bank’s ‘Where to Invest in Africa 2018’ report.

Egypt has displaced South Africa at the top spot due to “its superior economic activity score and sluggish growth rates in South Africa”, according to the press release accompanying the report.

The rating is based on two key considerations; the economic activity in terms of market size and growth as well as the business environment.

EGYPT’S ECONOMIC GROWTH PICKS UP – MOODY’S Egypt starts to benefit from its strong reform plan, despite constraints like weak government finances, confirms Moody’s Investors Service, Invest-Gate reports.

The country’s “B3 stable” credit profile reflects its large and diversified economy and strong reform momentum as well as a balance between credit strengths and challenges, Moody’s Investors Service says in an annual report on September 19.

“Although Egypt’s economic growth is still below pre-revolution levels, it has started to pick up, and investor sentiment has also improved,” Steffen Dyck, a Moody’s vice president and co-author of the report, says.

“We also expect that Egypt’s high fiscal deficits and government debt levels will gradually reduce,” he adds.

The ratings agency estimates that the general government primary deficit has been cut to 1.8% of GDP in fiscal year 2016/17, which ended on June 30, with expectations to start showing small surpluses from 2019.

Preliminary official figures expect real GDP growth of 4.2% in 2017, and Moody’s

expects a further acceleration to 5.0% in 2019, spurred by the government’s structural reforms.

Faster-than-expected progress on the reform program, rapid fiscal consolidation, and improvements in debt metrics would have a positive impact on the rating, the report adds.

Early signs of the successful implementation of economic reforms that stimulate foreign direct investment (FDI) inflows, and continued strengthening of external buffers would also be credit positive.

However, any signs of reform slowdown would jeopardize the stable outlook, the report warns.

EGYPT’S ANNUAL URBAN INFLATION FALLS TO 31.9% IN AUGUST Egypt’s inflation indicators eased slightly in August compared to record-high figures registered in July, Invest-Gate reports.

Annual urban consumer price inflation fell to 31.9% in August year-on-year from 33% in July, the official statistics agency CAPMAS said in a statement.

The country’s core inflation, which excludes volatile items like food, decreased to 34.86% in August year-onyear from 35.26% in July, the Central Bank

To be located in Aswan, the project will be co-financed by WB’s International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD) with investments over USD 2 bn.

Under this project, six companies from

global and Egyptian private sector will set up 11 solar farms in Aswan worth USD 730 mn and a capacity of 500 megawatt, according to Minister of Investment and International Cooperation Sahar Nasr.

GOV’T TO BUILD 15 TOWERS IN NEW EL ALAMEIN CITY The Egyptian government will start developing new construction projects in the New El Alamein City, located on the western side of the North Coast, Invest-Gate reports.

The Housing Ministry will start construction work on 15 towers in the city by the beginning of October in addition to finalizing 1,920 residential units already built in the area, Housing Minister Mostafa Madbouly said in a statement.

The government has allocated around

EGP 2.3 bn to develop the new city’s infrastructure. The work will include constructing 110 km of roads as well as creating electricity grids and sewage, water, and irrigation networks.

The government has started the implementation of the first phase of a touristic project in New Aswan City, Invest-Gate reports.

Food prices in August rose 42.2% year-onyear, while housing, water, electricity and gas prices went up by 7.7%.

305-feddan administrative area and an- 8.5-feddan integrated commercial complex.

Oct 11, 2017 BUILD EXPO EGYPT Location: Cairo International Convention Centre, Cairo Duration: 3 Days Oct 11, 2017 Egyptian Coatings Show 2017 Location: Cairo International Convention Centre, Cairo Duration: 2 Days

Oct 23, 2017 ICEC (INTELLIGENT CITIES EXHIBITION & CONFERENCE) Location: Fairmont Heliopolis Hotel, Cairo Duration: 2 Days

Egypt signed eight investment agreements with the United States Agency for International Development (USAID) worth USD 121.6 mn, Invest-Gate reports.

The agreements are a product of President Abdel-Fattah El-Sisi’s recent meeting with US President Donald Trump in New York, a statement by the Ministry of Investment and International Cooperation reads.

Since the start of their cooperation, the USAID pumped USD 30 bn to boost Egypt’s various economic reform projects, the statement added.

The eight agreements comprise a

With the pound having lost half of its value against the dollar and inflation running at 33%, property was seen by Egyptians as the primary repository of value.

Demand has been spurred by purchases from Egyptian expats whose dollar savings doubled as a result of the floatation.

Expat buyers now make up around 16% of Palm Hills Developments’ clients, compared to 8-9% in the past, according to the company’s co-CEO Tarek Abdel Rahman. The resilience of the market is mainly attributed to the paucity of supply in relation to growing demand.

Egypt’s property developers provide a maximum of 20,000 new units a year, Abdel Rahman said, adding that many are beyond the reach of poorer Egyptians. Demand from the middleand upper classes for new housing stock is in the order of 70,000- 80,000 units a year. Many developers face pressure from rising costs that threatens margins, according to Mohammad Kamal, analyst at Arqaam.

In addition to higher costs due to high inflation, companies find borrowing more expensive because of the currency flotation, Abraj Misr Chairman Ali Rabie stated. Highinterest deposit accounts that offer annual returns of 20% are competing with property as a haven for wealth and savings.

“There are no indications as of now to suggest any catalysts for a major correction of prices,” Kamal says, adding that “But I would say that developers are mindful of affordability and signaling that they are at the end of their pricing increases.”

TATWEER MISR PARTNERS WITH UNICEF, ABDEL WAHAB FOUNDATION FOR CHILDREN

EGYPT SIGNS EIGHT AGREEMENTS WITH USAID WORTH USD 121.6 MN of Egypt revealed in a statement.

Egypt signed eight investment Egypt’s real estate market is picking up well despite hikes in prices that followed the EGP floatation in November 2016, the Financial Times states in a report quoting analysts.

High-end developers increased prices in nominal terms by an average of 30% compared with last year, the report quoted research by Arqaam Capital, a regional investment bank based in the United Arab Emirates.

GOV’T STARTS IMPLEMENTING TOURISTIC PROJECT IN NEW ASWAN

The tourist strip covers an area of 181 feddans, with a total length of 1,330 meters across the Nile. The first phase will include a-three-feddan hotel, in addition to a- 33.5-feddan high-end housing units that will boast 400-meter villas and 19.5 feddans of greenery, swimming pools, and footpaths.

EGYPT’S PROPERTY MARKET HOLDING UP DESPITE EGP FLOATATION – FT

SODIC LAUNCHES SKY CONDOS PHASE II IN NEW CAIRO Real Estate developer, SODIC, announces the launch of the second phase of Sky Condos, the newest phase of its project, Villette, located in New Cairo, Invest-Gate reports.

The Villette project offers villas, townhouses and apartments. It spans an area of 300 acres.

The project will also feature a-

EVENTS:

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MIGA TO PROVIDE USD 210 MN GUARANTEES TO EGYPT SOLAR PROJECT

number of development projects in the fields of education, investment, health, and agriculture.

The projects will focus on the country’s less developed governorates, the statement adds.

Egypt’s real estate developer, Tatweer Misr, signs an agreement to bring hope and color to Egypt’s Borollos, in northern Egypt’s Kafr El-Sheikh governorate, Invest-Gate reports.

The developer inked a memorandum of understanding with the United Nations International Children’s Emergency Fund (UNICEF) in Egypt and Abdel Wahab Abdel Mohsen Foundation.

Under this agreement, the foundation will provide solutions for children and youth at risk of unsafe migration as well as help young people and adolescents become self-employed using artistic and vocational training.

The foundation will leverage the International Symposium for Drawing on Walls and Boats held from October 1 to 15 in Borollos to provide art and vocational training to youth and

Sky Condos is five minutes away from both Road 90, and the New Administrative Capital, SODIC’s senior property consultant, Yasser Rayed, tells Invest-Gate.

“Villette phase I will be delivered in 2018,

The project’s prices are starting from EGP 2.5 mn to EGP 10 mn, with a 10 percent down payment and a seven-year installment plan.

THOMAS COOK MULLS RESUMING FLIGHTS TO EGYPT British travel agency Thomas Cook unveiled plans to resume flights to Egypt in the near future, the Independent reports.

The agency will be running flights from the UK to Egypt and Turkey soon, as both countries are attracting more British holiday bookings than other destinations.

Demand had picked up “as customers look for quality and value,” according to Peter Fankhauser, chief executive of Thomas Cook.

“People want to go back. We are not a security company; as long as we have the

advice of the Foreign Office that we can fly to Egypt and Turkey, we offer a great product,” Fankhauser added.

EMAAR MISR UNVEILS NEW INT’L SCHOOL IN MIVIDA Cairo-based developer, Emaar Misr, announced on September 16 the signing of a new contract to establish its second international school in Mivida’s fully-integrated community, Invest-Gate reports.

Emaar signed the contract with Merge Plus Education to deliver a first-class school in New Cairo, integrating the International Baccalaureate (IB) curriculum with a dual-language immersion program, which aims to teach pupils both English and French.

Merge Plus Education is a global educational network established in Dubai

adolescents in Borollos and Baltim.

The symposium will allow Egyptian and international artists to interact with families through UNICEF on initiatives related to positive parenting and early childhood development.

“Our goal through this cooperation, is to equip youth in the area with comprehensive skills that would eventually result in sustainable careers,” Tatweer Misr’s Managing Director Ahmed Shalaby says in a statement.

“We also aim to bring joy to communities struggling with poverty and neglect through creating job opportunities,” Shalaby adds.

while Phase II will be in 2020,” Rayed adds.

in 2015, according to the developer’s official Facebook page.

The new international school will be operational for kindergarten and primary stages in 2020-2021 as a first phase, with expectations to be fully operational by 2022-2023.

MNHD INKS DEAL WITH BNY MELLON TO ISSUE GDRS Egyptian urban developer, Madinet Nasr, for Housing and Development (MNHD), says its board of directors approved on September 12, the conversion of 1.5 mn shares of its capital to global depository receipts (GDRs), Invest-Gate reports.

The developer signed an agreement with the Bank of New York Mellon (BNY Mellon) to issue the GDRs, which will be listed on the London Stock Exchange.

Every four shares will be converted into one GDR, a company statement read.

In an earlier extraordinary general meeting, the public shareholding company approved the conversion of up to 33% of capital into GDRs. The Company’s projects include

Nasr Gardens, which is a commercial development project in the northern suburbs of Cairo as well as Nasr City, a residential and commercial project comprising 752 houses and more than 41 shops.

THE VOICE OF REAL ESTATE | 9

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UPDATE

INVEST-GATE

SODIC, CIB INK EGP 270 MN CREDIT FACILITY AGREEMENT Egyptian-based, Sixth of October for Development and Investment Company (SODIC), announces a new credit facility agreement with Commercial International Bank (CIB), Invest-Gate reports.

SODIC and Egypt’s largest private-sector bank CIB signed, on August 30, a medium-term credit facility agreement worth EGP 270 mn.

The loan will be used to fund SODIC’s October Plaza compound, located west

of Cairo, the company said in a bourse statement. The first phase of the 30.90 feddan compound has been offered for sale in February 2017

HYDE PARK TO LAUNCH PARK CORNER EXTENSION SOON Egyptian developer Hyde Park Properties for Development will uncover a new project soon, Invest-Gate reports.

Following the success of Park Corner zone in New Cairo, the company will launch Park Corner Extension on September 24.

The project comprises twin houses, townhouses, standalone villas, and apartments.

Interested clients are offered a sevenyear payment plan, with a 10% down payment.

REMCO UNVEILS STAR ISLAND IN AIN SOKHNA’S STELLA DI MARE Egyptian construction firm Remco Tourism Villages Construction Company (RTVC) is launching new residential units in the latest phase of Stella Di Mare in Ain Sokhna, Invest-Gate reports.

Star Island will comprise a limited number of standalone villas and chalets with modern and unique designs, the company said on their official Facebook page.

The company launched the newest phase of Stella Di Mare in July, comprising different types of units ranging from

NAKHEEL ASSESSING 10 CONSTRUCTION BIDS FOR NEW RESORT Master developer Nakheel is assessing 10 proposals for the construction of an800-room- beachfront resort on Deira Islands, with the lowest bid at AED 363 mn, Invest-Gate reports.

With a construction contract to be awarded by the end of 2017, the- AED 670 mn- RIU resort is set for delivery in 2020.

The project is a joint venture between Nakheel and Spanish hospitality group RIU Hotels & Resorts.

The resort will offer mid-scale, familyoriented, all-inclusive beachfront

UAE’s developer Emaar Properties unveils a new project at Dubai Harbor, Invest-Gate reports.

The project is a- 10 mn- square - foot of waterfront residences and a brandnew hotel.

Emaar will focus on building a series of high-rise residential apartments overlooking the Arabian Gulf. In addition, the hospitality project will be operated by its Address Hotels + Resorts and will include branded residences.

The residential neighborhood to be

Dubai-based developer Kleindienst Group plans to build ‘the world’s first underwater luxury vessel resort’ worth USD 680 mn.

The project, called ‘The Floating Venice’ will be located on The World, an archipelago of islands developed off the coast of Dubai by state-owned developer Nakheel.

Visitors will be able to reach The Floating Venice by boat, seaplane or helicopter, and check-in at the underwater lobby.

Kleindienst said in a statement that the floating resort has a capacity to host more than 3,000 guests per day, with accommodation, restaurants and recreation facilities split over four decks, one of which will be underwater, Reuters affiliated website Zawya reported.

UAE’s real estate developer Azizi Developments has achieved sales of AED 1.3 bn at Cityscape Global 2017, Invest-Gate reports.

Located in Meydan One district in Dubai, the waterfront project boasts 69 mid-rise residential buildings of 13,000 units of studio, one- and two-bedroom apartments, a mega integrated retail district, as well as a four- and a five-star hotel.

in July 2017. Phases one and two are slated for completion in the second half of 2018.

Azizi Developments is expected to announce two new mega developments at Meydan One in the final quarter of this year, which are expected to be four times the size and value of Azizi Riviera.

SEVEN TIDES BREAKS GROUND ON SE7EN RESIDENCES THE PALM UAE-headquartered property developer Seven Tides reveals it broke ground on a- two-tower- residential development, Invest-Gate reports.

The developer has broken ground on SE7EN Residences the Palm that is worth over AED 500 mn and is located on the trunk of Palm Jumeirah.

The hotel will feature 414 bespoke cabins over four decks, with views of coral reefs and gondolas.

Guests will be able to go to their cabins on gondolas through winding canals or walkways along the edge of the canals.

developed by Emaar will be part of an integrated tourist destination, with the master plan set to include Skydive Dubai, and Dubai International Marine Club.

AZIZI DEVELOPMENTS RECORDS AED 1.3 BN SALES AT CITYSCAPE GLOBAL

Construction in the project started

DUBAI’S KLEINDIENST TO BUILD UNDERWATER VESSEL RESORT

accommodation, featuring seven food and beverage outlets, three swimming pools, a fitness complex, children’s club, and water park.

EMAAR TO DEVELOP WATERFRONT RESIDENCES, HOTEL AT DUBAI HARBOR

The -AED 12 bn- Azizi Riviera’s entire phase one and 50% of phase two were sold out on the first day of the event, which was held from September 11 to 13 in Dubai.

chalets in shared buildings to standalone villas on private islands connected by bridges.

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The -1.24 m- foot- square- complex comprises 1,118 units varying from studios to one-, two-, and threebedroom apartments.

The two towers will be connected by an infinity swimming pool, providing retail, and food, and beverage offerings.

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10 | INVEST.GATE | October 2017 - ISSUE 07

egypt.regus.com

THE VOICE OF REAL ESTATE | 11 Print October Invest-gate - Page: 1

2017-09-19 10:18:29 +0000

MARKET

ADVERTORIAL

STATS EVALUATION OF EGYPTIAN CITIES

General Evaluation New Cairo Heliopolis Maadi Sheikh Zayed 6th of October Mohendessin Zamalek Garden City Nasr City Dokki Al Rehab & Madinaty Giza El-Agouza Manial Downtown Mokattam El Koba Gardens Shorouk & New Heliopolis El-Abbasiya Obour Ain Shams El-Haram Helwan Faisal 10th of Ramadan Shoubra 15th of May Badr City

Schools and Universities 9.8 9.7 9.6 9.6 9.6 9.4 9.3 9 8.9 8.8 8.5 8.3 8.1 8.1 7.6 7.5 7.3 7.1 7 6.7 6.7 6.6 6.4 5.7 5.5 5.5 5.5 4.5

Sheikh Zayed 6th of October New Cairo Heliopolis Nasr City Giza Ain Shams Mohendessin Dokki El Koba Gardens Maadi Zamalek Helwan El-Abbasiya Al Rehab & Madinaty Shoubra Mokattam El-Haram Garden City Downtown El-Agouza Manial Shorouk & New Heliopolis Faisal Obour 15th of May 10th of Ramadan Badr City

Location 9.6 9.3 9.3 9.2 9.2 9.1 9.1 8.6 8.5 8.4 8.2 7.9 7.9 7.8 7.7 7.5 7.2 7.1 7.1 6.9 6.8 6.2 5.8 5.6 5.1 3.2 2.7 1.9

9.3 9.3 9 8.7 8.3 8.3 8 7.7 7.7 7.7 7.3 7.3 7.3 7.3 7 7 6.7 6.7 6.7 6.3 6.3 6.3 5.7 5.7 5.5 5.3 4.7 3.7

Heliopolis Nasr City Maadi New Cairo 6th of October Mohendessin Sheikh Zayed Al Rehab & Madinaty Zamalek Dokki El-Agouza Manial El-Haram Garden City Mokattam Helwan Ain Shams Shoubra Giza Downtown El Koba Gardens El-Abbasiya Shorouk & New Heliopolis Faisal 15th of May 10th of Ramadan Obour Badr City

Badr City Shorouk & New Heliopolis New Cairo Obour Sheikh Zayed Al Rehab & Madinaty 10th of Ramadan 15th of May 6th of October Mokattam Helwan Maadi Manial Giza Garden City El Koba Gardens El-Agouza Zamalek Ain Shams Heliopolis El-Haram Downtown El-Abbasiya Nasr City Shoubra Mohendessin Faisal Dokki

9 8.3 8 8 8 8 8 8 7.3 6.7 5 4 4 3.7 3.7 3.7 3.3 3 3 2.7 2.7 2.7 2.7 2.3 2.3 2 2 2

Heliopolis Nasr City Giza Garden City Downtown El Koba Gardens El-Abbasiya Maadi Mohendessin Dokki Ain Shams Shoubra El-Agouza Manial Mokattam Zamalek El-Haram Helwan Faisal New Cairo 6th of October Sheikh Zayed Al Rehab & Madinaty Obour Shorouk & New Heliopolis 15th of May 10th of Ramadan Badr City

37.8%

Elderly

70%

30%

5%

TV Ads

Ratio of Buyers by Region

72.5% Cairo

10.5% Delta

9.5%

Alexandria and Matrouh

12 | INVEST.GATE | October 2017 - ISSUE 07

4.5%

Upper Egypt

Level of Demand for Apartments 9.7 9.3 9.3 9.3 9.3 9.3 9.3 9 8.7 8.7 8.7 8.3 8.3 8.3 7.7 7.3 7.3 7 6.3 6 6 5.7 5.5 4.5 4.3 4.3 3.3 2.7

Manial Dokki Garden City El-Agouza El Koba Gardens Mohendessin Shoubra Sheikh Zayed Nasr City Obour Downtown El-Abbasiya Maadi Heliopolis Zamalek Al Rehab & Madinaty 6th of October New Cairo Shorouk & New Heliopolis Mokattam Faisal El-Haram Giza Helwan Ain Shams Badr City 15th of May 10th of Ramadan

3%

Canal Cities and Sinai

85% 81% 79% 79% 65% 61% 59% 57% 55% 49% 48% 47% 46% 45% 44% 41% 40% 38% 36% 31% 27% 26% 18% 17% 17% 17% 15% 12%

Source : INVEST-GATE

Print Media

Youth

9.7 9.3 9.3 9.3 8.7 8.7 8.7 8.3 8.3 8 8 7.7 7.7 7.7 7.7 7.3 7.3 7.3 7.3 7.3 7 7 6 5.7 5.5 5.3 5 3.7

ONLINE MONTHLY SURVEY

9%

62.2%

Heliopolis Maadi Mohendessin Dokki Nasr City 6 of October El-Haram El Koba Gardens El-Agouza Sheikh Zayed Ain Shams Zamalek Giza Helwan Downtown New Cairo Garden City Shoubra Manial El-Abbasiya Mokattam Faisal 15th of May 10th of Ramadan Al Rehab & Madinaty Shorouk & New Heliopolis Obour Badr City

How to Find a Property?

Ratio of Buyers by Gender & Age

Female

10 9.7 9.7 9.3 8.7 8.7 8.3 8 8 7.3 7.3 7.3 6.7 6.7 6 6 6 6 5.7 5.7 5.7 5.7 5.3 5.3 5.3 4.7 4.5 2.3

Transportation

BEHAVIOR OF ONLINE REAL ESTATE BUYERS IN EGYPT Source : Propertyfinder

Male

Health Services

Shopping and Restaurants

Quietness

Downtown Zamalek Manial Giza Mohendessin Dokki El-Agouza Maadi Heliopolis Nasr City El-Abbasiya Mokattam Garden City Shoubra New Cairo El-Haram El Koba Gardens Sheikh Zayed Faisal 6th of October Ain Shams Shorouk & New Heliopolis Al Rehab & Madinaty Obour Helwan Badr City 10th of Ramadan 15th of May

Source : Aqarmap

0%

Radio Ads

9%

Agents

77%

Online Search OLX, Facebook Broker Websites

INVEST-GATE

From Forbes Awards to Shaking Up The Retailing Market of Sheikh Zayed City,

DORRA SETS THEIR TARGETS ON EAST CAIRO

D

ORRA, one of the leading real estate developers and contractors in Egypt and the Middle East, continues to demonstrate excellence with a new project launching

in the East of Cairo, just off the heels from being awarded the distinguished trophy by Forbes Middle East for ‘Top Real Estate Companies in the Arab World’ in a glamorous Dubai gala Ceremony earlier this week, a recognition well deserved for this historical

With regards to the Forbes Middle East Award, Invest-Gate were curious to know what else is in store for this exciting epoch in DORRA’s strategy, “this award is the culmination of decades of hard work and top quality projects reflected in over 70 years in helping to shape, define and navigate the Egyptian Market, with regards to our current and future strategy, I am very excited for what’s in store,I cannot reveal it all at once unfortunately but we are targeting a variety of much needed developments shortly that penetrates market demand,” Sultan concludes.

and influential Egyptian company. Invest-Gate sits with the company’s Marketing Director Karim Sultan, to learn more about those recent updates.

The Address East, DORRA’s newest developments, is located five minutes away from Suez Road in what is becoming widely known as “the Golden Square, which hosts some of the most prestigious residential compounds in New Cairo,” Sultan tells Invest-Gate.

The residential compound will comprise G+4 apartment buildings, duplexes, and twin houses, with units delivered fully-finished and ranging from 120 to 210 square meters.

DORRA is offering clients competitive pricing starting at EGP 13,750 per square meter, according to Sultan, a price that is considered one of the most competitive for fully-finished units in the “Golden Square” area but goes on to add that this price point won’t last for long as it will organically increase due to heavy demand.

Clients are offered a- seven-year- payment plan with a 5% down payment and delivery within three years of signing the contract.

But the price point and fully-finished units are not the only features that The Address East boasts. The project will also have underground parking space for all apartments and will devote 80% of its area to greenery, landscape, and water features that include zen garden charm, inspired by the harmonizing environment of Feng Shui.

In a -one-of-a-kind master plan, The Address East provides a “mirrored-feature,” meaning that highly sought after locations in phase one for instance, are duplicated in phase two and future phases “so buyers that come on board at a later time, will not miss out on prime locations,” Sultan elaborates.

The Address East will also encompass a 700-meter commercial strip to house a number of prominent brands. Sultan reveals that DORRA already signed a contract with the Ultimate Fighting Champion (UFC) Gym, who are planning on opening their first gym in the country later this year in west of Cairo, while the rest of the commercial area will be “tailored from brands already signed on at their flagship commercial project in Sheikh Zayed City, Capital Business Park ,” he says.

“DORRA still sees a huge demand for residential areas in the east of Cairo,” Sultan explains, estimating that the purchasing power between east and west of cairo is approximately four to one.

With sales, “We have already exceeded our initial expectations” as Sultan describes, The Address East pre-launch sales plan achieved “in five days what the company expected to achieve in a- three-week- period,” he confirms.

The project, which will announce its official sales launch soon, is also considered an “investment-haven,” in the words of Sultan.

“Investors are looking at handsome returns anywhere between 25 to 30% on their investments within a- 12-month- period, conservatively” he asserts.

THE VOICE OF REAL ESTATE | 13

INVEST-GATE

EGYPT REAL ESTATE | SUMMER 2017 ANALYSIS

EGYPT REAL ESTATE | SUMMER 2017 ANALYSIS

Supporting Factors Analysis & Recommendations

North Coast Inbound Analysis

North Coast, Egypt Matrouh International Airport

Borg Al Arab International Airport Kuwait

Analysis

UAE KSA

The North Coast witnessed a greater flow of international and local visitors this season, from International Tourists and Gulf Citizens to Egyptians living abroad. The mass population came from Egyptians living abroad creating a huge demand on North Coast Airports (Matrouh and Borg El Arab International Airports) Tourists from the Gulf

Government Plans

Egyptians from the Gulf

1

Despite the increase in flow of individuals and families to the number one summer destination in Egypt, most crucial aspects were not met to conveniently accommodate the mass crowd

Emergency Aid

 Many emergency cases from accidents to baby deliveries were met with shortage in staff, equipment, etc. which resulted in many critical cases

Traffic

 Highways were jammed on concerts & events at weekends and Eid holidays given the unorganized resort entries

Transportation

 Low supply of local transportation; this season Uber expanded more across the North Coast but not enough to accommodate the demand  Int. transportation accommodated the flow with minor drawbacks

Infrastructure

 Many problems rose concerning all roads towards the North Coast from sandy, dark, to limited supply of road signs and critically located U-turns, and lack in the mobile signal coverage

Food & Beverage

 Despite the increase in prices on all food chains, demand on the food outlets stayed strong given the diversity in designs, cuisines, and locations

Nightlife

 Despite Increase in the number of night clubs, bars, and café/lounges with the best services, still the supply is lower than the demand

 Construction of one of the biggest Airport terminal at the Borg El-Arab Airport with capacity of up to four million passengers a year; according to Egyptian Holding Company for Airports and Air Navigation (EHCAAN), the project is expected to cost US $150 million which will be financed by the Japanese Government after the two countries got into agreement

2

3

4

5

 Accommodation --> Serviced Apartments – Serviced apartments are the solution for most accommodation issues. Offering serviced apartments for all society levels will assist in accommodating destination travelers

Accommodation

 Emergency Aid --> Awareness Campaigns and High Quality of Services – There are more than 15 hospitals/ clinics serving the whole Coast that a very few travelers know of which calls for awareness campaigns of such services while enhancing their quality of services provided

Emergency Aid

 Traffic --> Specific Gates and Organized Lanes – On concert weeks, resort administrations should appoint certain gates for concert attendees different from owner gates to facilitate their entrances. Also, the Government should appoint only the right lane to be the main line for concert attendees so as not to block the highway

Traffic Transportation Infrastructure Food & Beverage Nightlife

Recommendations

 Transportation --> Uber, Careem, and Other Operators Presence along with Chartered Flights – Increase Uber and Careem presence in the area and introduce more means of transportation. Also, provide more chartered flights on all supporting Airports in the area, such as, Borg Al Arab and Marsa Matrouh Int. Airports  Infrastructure --> Maintenance – Constant maintenance should be imposed by the Government on an annual basis to ensure safety of travelers on the roads

The North Coast continues to attract local and international demand despite shortage in facilities and services given unique project designs, crystal clear waters, night entertainment, etc. However, this demand might come to an end if the facilities and services were not maintained properly to support the increasing flow of travelers to the summer destination

For more details, please contact | Sherif Hassan, Development Manager Email | sherif.hassan@cb-egypt.com

14 | INVEST.GATE | October 2017 - ISSUE 07

 Many Egyptian travelers coming from the Gulf strived for places to stay given that most places were either occupied units or over priced hotels  Most available units are for sale; the rent model is poorly supplied

 Construction of New Alamein City (current project name) which will include entertainment parks, hotels, serviced apartments, etc.

Ratings of Main Supporting Factors

Lack of Supporting Factors

Accommodation

Tel | +2010 940 11466

Website | www.cb-egypt.com THE VOICE OF REAL ESTATE | 15

VOICE OF THE EXPERT

INVEST-GATE

How do the ups and downs of monetary policies affect real estate?

Monetary policies are, without a doubt, harsh on the market. However, those, who understand the market well, know that these policies are divided on short-, medium-, and long-terms. It can be seen negative on a short-or medium-term, leading to inflation for example; but it is definitely very beneficial on the long run. In more simpler words, we can say that we are “a very sick patient” and we need a long treatment plan to recover. It is severe medicine but we all need to take it to survive! I do not have a doubt that this will lead us to better and more stable economy in the future.

COLDWELL BANKER

NEW HOMES, YOUR ONE-STOP REAL ESTATE SHOP

Our economy was based on many wrong strategies

Our climate is promising and the biggest indicator to us is the number of foreign and Arab investments that poured into the country. Had our climate not been attractive to them, they would not have invested at all!

BY FARAH MONTASSER

D

espite the political turmoil of recent years and the harsh economic reform plan set by the government, the Egyptian real estate industry stays strong. It is true that the country experienced times of slow growth but as we approach the fourth quarter of 2017, recent international and domestic figures show the market picking up steadily. Invest-Gate sits with one of the industry’s icons, Mohamed Banany, Senior Vice President at Coldwell Banker and Coldwell Banker New Homes CEO in a thorough discussion about the status of the real estate market in general and the dynamic role Coldwell Banker New Homes plays as a market consultant and broker specifically, presenting its “One-Stop Real Estate Shop” strategy. Banany also puts an end to the “Real Estate Bubble” misconception.

How do you assess the real estate market of Egypt today?

have turbulences but this does not mean that the overall picture is bad. In fact, it is very promising.

Now that we have passed the tough patch, we are at the end of the trough stage of the economic cycle, which took seven years, when the economy hits a low point in growth, like in any economy, from which a recovery can begin. We have passed those seven years of trough following the political turmoil and the harsh economic reform. Today, the market is picking up at a steady pace but we are still lagging behind. As an economist, I believe that the economy is to grow at a faster rate as of 2018 in terms of GDP and, of course, real estate.

What do you mean by turbulences?

Our climate is promising and the biggest indicator to us is the number of foreign and Arab investments that poured into the country. Had our climate not been attractive to them, they would not have invested at all!

Even among the locals, there are a number of Egyptian investors, who have invested in this sector.

We are approaching a new cycle especially in real estate although obstacles remain evident and we 16 | INVEST.GATE | October 2017 - ISSUE 07

I mean some developers or new investors to the market will face some obstacles in terms of cost and end-prices. I specify those, who have not studied the market well and have not done a lot of research.

As an economist, I believe that the economy is to grow at a faster rate as of 2018 in terms of GDP and, of course, real estate.

I expect those people to face some obstacles in construction, material costs, land allocation, and pricing. Some developers will stagnate while others will shine…Again, this is natural and it will take its course until real estate is stable again. We always say that this market is driven by “deep pockets”, meaning those who know the market well; unlike others, who have not studied it at all and have little experience in such types of investment.

How do you view the current flexible payment plans marketed by many, if not all, developers given the harsh reform plan and following the pound float?

I find it very healthy to the market so long as it is aligned with the developer’s cash flow. Such currently marketed payment plans substitute the lack of a strong healthy mortgage market due to the fact that today’s mortgage rate has reached a high interest rate of 20%. Thus, such plans are diverse marketing tools that differ from one developer to the other yet, I find them healthy alternatives.

and, unfortunately for us all, it needed an entire makeover and was reformed all at once but again it is for the better future. We need to be patient and wise because finally we are on the right track.

Mind you, our previous strategy was solely based on subsidies, giving a positive indication on the economy. However in reality, this was all fake as we had two different prices on products like the value of currencies, for example. No strong economy subsidizes any commodity.

Given this reform plan, what challenges did/ does Coldwell Banker face? And how did it change the purchase power?

To be honest, Egypt’s survival depended entirely on the so-called “grey economy”, which experts believe to be triple the size of our actual economy. We heard on several occasions of cash squeeze or the lack of cash in the country, when we find nothing of that sort and people are still buying. This is another mishap of being a subsidy-based economy especially on the EGP; let alone, no tax monitoring.

Yes, there was a struggle among some developers and purchase power but nothing evident or can be put in a study due to the so-called “grey economy”.

Now with our reform plan, order has been set and we are to have a proper healthy economic growth. In the past six months, reports state that approximately EGP 220 bn were deposited in banks across Egypt. Of course, this is in regards to classes A and somewhat B, although I find class B is currently demolishing.

We have seen recently, some mortgage plans and investment plans catering to classes C and

D like that of the Central Bank, giving individuals residential loans of upto 8 and 9% for investments of EGP 600,000 and more. This is a great step to cater to such classes; however, many developers and industry experts have called on the CBE to raise the ceiling on this amount even if they prolong the payment plan; as due to price increase on everything, developers cannot give out a product of good quality at this price point. They are asking to raise the ceiling to EGP 1.5 mn to meet market demand and cater to today’s purchase power. I believe the CBE will soon approve such a request.

Egyptian land and we have now five new cities being developed by public and private sectors.

Real estate is an industry that links around 100 to 150 other industries together, including residential, of course, as well as medical, commercial, infrastructure, services, and roads, etc. So by all means how can there be a bubble!

Also, today we see the government catering to the lower classes and has partnered with a number of big developers to build housing units for such classes; this is a huge step and I applaud Minister of Housing Mostafa Madbouly on that.

Speaking of banks, with their high-yield certificates and new saving plans, do you find them competing with the industry as real estate has evidently remained the safe haven for investment?

We cannot prove or deny such a statement. There might be minimal effect on the market but it can never create a threat or an actual competition. As a general rule, property ownership is crucial to Egyptians and it is inherited from one generation to the other. It is part of our culture unlike any other nation. We are a cash market. Some have gone to banks for investment but this new investment scheme is a short-term plan for banks to collect money but it will not last long. Sooner or later, they will decrease their interest rates to go back to normal; however, people will still put their money in real estate, which is a long-term saving plan with increasing appreciation year after year. Even among foreign and Arab property owners in Egypt, real estate in Egypt is and will remain to be a safe haven.

You will rarely find one selling.

Why do people claim that we live in a real estate bubble in Egypt?

People read headlines and ignore the content of any article… Well, scientifically speaking, Egypt can never have a “bubble” for a number of reasons. To begin with, we are a cash market. Unlike Europe and USA and the great recession of 2008, we do not rely on credit and foreclosure. The bubble is only a “media bubble”.

Another thing is the real demand in the market. Our population increases by a million each year and we have about 250,000 marriages on average each year and yet, I believe that the production of this industry cannot exceed 150,000 units yearly nationwide, of which class A only consumes roughly 20,000 units.

So our demand in Egypt is high and will continue to be so. We are far behind saturation.

Finally, we, as a nation, consume only 7% of the

The IMF loan is the biggest warranty of the Egyptian economy

Today, we have a number of social reforms to meet the IMF standards and to improve the livelihood of Egyptians.

How do you view the IMF loan?

The IMF loan is the biggest warranty of the Egyptian economy. Again, by removing all subsidies or at least the major subsidies, you limit the room for corruption. Having a “grey economy” and two prices for each and every commodity eats your GDP. If we go back to history, the 2011 uprising was because of people not seeing the economic growth Egypt had reached back then. This was because of those dominating the many industries, pricing services, and commodities to their benefit and not as planned by the government. Egypt had previously spent over EGP 150 bn on subsidized commodities that profited distributors and traders and not the end user. One of the biggest economic problems we had was subsidizing services and commodities and, thankfully, this phase has passed.

Where the IMF is concerned, it is the Central Bank with its governor, Tarek Amer, along with the Ministry of Finance that put a strategic economic reform plan for Egypt and this plan was presented to the IMF and hence our loan was approved. The IMF loan, to us, is a “trust guarantee” that we are moving on the right track and it creates discipline for all entities. The IMF conducts quarterly reports to display the performance of economies in general and, from what we find so far, we are one of the THE VOICE OF REAL ESTATE | 17

VOICE OF THE EXPERT booming economies. Maybe most people do not know that part of the reform plan to get the IMF loan was to ensure a better quality of life to all individuals, which is what the government is continuously working on. Today, we have a number of social reforms to meet the IMF standards and to improve the livelihood of Egyptians. So according to the plan, Egyptians for the first time in modern history are to profit from Egypt’s GDP. A year after the IMF loan, we have reached growth rate of 5.2%, which is very good. The unemployment rate is also decreasing and this is an excellent indication. I believe that in the near future, the common man will feel this growth as taxes decrease and the monthly income increases. We just need some patience.

When will real estate be stable?

Real estate in Egypt will never be stable as the demand continues to increase annually. However, where prices are concerned, it is becoming more stable. Prices and value of lands are not to see a jump like that of last year but it will gradually go back to a stable higher fragment. Meaning that from 2016 to 2017, we saw a price hike of up to 30%. In 2018, the rate of increase will be of about 10 to 15% and gradually the percentage of increase is expected to decrease yearly.

How does the brokerage market work? What are the services Coldwell Banker New Homes provide?

The real estate market is divided into a number of sectors. We have a primary market that is direct sales (off-plan) by developers; and secondary market and that includes resale, cash market, and where brokers play their roles. We have also the commercial market that includes any business that exceeds six or seven apartments to put it in a simplified way and consumes industrial, administrative, and medical, etc.

As Coldwell Banker, we started as a broker in the market renting and selling residential units. In 2008, we founded Coldwell Banker New Homes. It is the first subsidiary of Coldwell Banker worldwide with its scope of business. This business is all about real estate consulting. Now we present 135 developments by Egypt’s major developers. We found that the brokerage market is diminishing in Egypt so we created this new company to cater to clients’ needs; by clients, I mean the regular investor.

What is the relationship between Coldwell Banker and developer? In other words, when do developers seek brokers given their existing sales teams?

The idea behind Coldwell Banker New Homes is to present a real estate “department store” to clients. We follow a zero commission model from clients. Units are sold according to prices and payment plans provided by the developer. We get commission from the developer.

We consult and present 135 projects to clients and guide them through the best options that meet their needs. We take projects by developers, who have a profound track record to guarantee a proper investment.

We are very selective in our portfolio. We assess the client’s needs and budget, and cater to those needs.

We filter all projects to meet the desired criteria.

Then we display units and projects until we make 18 | INVEST.GATE | October 2017 - ISSUE 07

INVEST-GATE

a sale. We consult for free and our profit is from the developer as we help them make more sales.

Why would a developer seek our services? Well it is because we pioneered in presenting many projects under one roof for clients. We sought after an anchor and we took off with a few leading developers and we succeeded in that. Our networking added an indirect sale to the developer. As to our services to the developer, we get him new clients through a third-party credibility. To some developers, the indirect sales by brokers consume about 60% of their sales. This concept proved success and added revenues to developers and is currently adopted by many other brokers and agents in the market.

And how do Coldwell Banker New Homes team remain unbiased to certain projects?

Our challenge was to gain developers’ trust. We managed to get a market key player as an anchor.

Our anchor got us followers until we reached our135- project portfolio. Today, we have around 3,000 trained agents graduated from our academy and we manage to deliver only objective consultation to clients. Our target is to cater to the clients needs so we never look at the projects we present but what the average individual is looking for when buying a home. We have a fixed commission from all developers in order to eliminate any possible bias. The profit the agents get is the same from any developer we represent. This is the only way we function.

How does resale of units compete with those of developer’s given the attractive payment plans?

Real Estate is about location of a unit within a project and the location of the project itself. Given that now the elite locations across Egypt are sold out whether we speak about 6th of October and New Cairo in Greater Cairo, the North Coast, the Red Sea, and Ain Sokhna. Sooner or later, the market will change back to the secondary market and resale will boom again as people will only seek the location.

Resale has its own clientele. Indeed, it is a clientele seeking investment, but are more keen on ready to move in now, and are entirely targeting a specific location. Their numbers today, of course, are not high when compared to those who go to developers for their shortage of cash and flexible payment plans marketed everywhere.

What are the challenges you face today as a broker and consultant?

We are in need of a regulatory system that monitors and gives license to credible and experienced brokers to protect the real estate market in general and the individual specifically. We need something like RERA in the UAE. In Egypt, most people become brokers, without experience, seeking profit. A regulatory system will end the grey economy in that aspect and monitor corruption as well.

Brokerage online, is it a tool that can be used today in Egypt?

We are not there yet due to the lack of transparency and no regulatory body that protects brokers, developers, and, of course regular individuals. In Egypt’s online brokerage market, people claim prices according to their preferences and not based on the actual value of the property and its neighborhood.

The IMF loan, to us, is a “trust guarantee” that we are moving on the right track and it creates discipline for all

What advice do you give to those who want to sell their units today?

We say that speculators in the market have decreased tremendously in recent years. Buyers are after the long-term investment and those in need now. Those, who are only after the investment gain, we always tell them to wait until the project is fully delivered as you will always find those after this exact location for a greater profit margin.

THE VOICE OF REAL ESTATE | 19

VOICE OF THE EXPERT

INVEST-GATE

faced. This is the case when you open a brokerage firm. We had to build a proper and precise business model to overcome such a challenge and to gain market share. We took off with a good budget and, thankfully, it gave us a good push at the beginning.

We opened our second branch in new Cairo in less than 18 months.

The barrier to BYC when entering the market was hiring the right people to join the firm; we are always hunting for talents. My three partners and I have profound experience in this business as we all have worked for a number of multinational organizations. This by default has helped with the building of BYC but the challenge was to find those who can fulfill the roles we were after. We are very picky when it comes to employment and we prefer to hire people from outside the real estate market.

We seek those who have no knowledge of the sector and we give them our expertise and guide them through the process to grow, although this of course requires a lot of time and effort from our side.

BYC Seizes the Brokerage Market with an Edge

Why did you acquire such a different strategy to the norm?

BY FARAH MONTASSER

With experience, we have seen that it is more than often people within this sector share some background that we perceive as somewhat distorted and different to us. So we take longer to make them fit our scheme of model. Whereas newcomers constitute fresh minds and can adopt our strategy easily.

How do you train the BYC family not to be biased towards particular projects? How did you gain developers’ trust?

R

eal estate investment has become crucial to Egypt’s GDP and continues to be a safe-haven for individuals today, according to market analysts. In 2017 and following the pound float and the ongoing economic reform, Egypt has witnessed massive projects being developed across its booming destinations, which were met with a strong purchase power despite all odds. Invest-Gate pays a special visit to BYC consultancy and brokerage firm and speaks to its founder and CEO Karim Ghoneim on the current investment climate, real estate trends, and the sector’s major challenges. Ghoneim sheds light on how the economic reform has affected the investment climate and the purchase power, and gives an insight on the dynamic market and its possible shifts in the future.

What is special about BYC? And how is it different from any other brokerage firm?

We position ourselves as real estate consultants.

Our Business model is built on three main pillars Leads, Inventory, and Leverage (People, Systems & Tools). We cater to a “Build Your Community” concept. We are focused on external and internal networks. This is our business model and it gives us an edge in the market.

Our services include new homes, second homes, resale and portfolio management. Recently, we added a commercial and administrative platform. Our first project of that sort was Linx an administrative office inside Smart Village.

We also consult small- to medium-sized developers, especially in acquiring and training their sales team.

We also have become part of the educational training in Egypt. We acquired 10% of the newly established real estate academy in Egypt, Evolve Real Estate Academy. This, to us, is very promising and we believe it adds a great value to the sector in general.

20 | INVEST.GATE | October 2017 - ISSUE 07

What are the challenges you see today in the market? And what were the challenges you faced when introducing BYC to the market?

Competition is always a challenge. The market itself needs to be educated from buyers and sellers. BYC adds value to their decisions and process itself.

People are still unaware of the tremendous efforts that are put to guide such decisions… how to make a proper investment in this market or how to make the best sale.

The most important challenge is the lack of regulations. We do not have a regulatory body that protects the relationship between buyers, sellers and intermediaries. By that I mean broker/ agent, developer and, of course, the buyer or investor. The lack of legalization of the business creates many obstacles to us. The standard is there… there are contracts and everything but there is no entity that regulates the sector as a whole and protects rights of brokers/ agents.

Cost was also, to us, among the challenges we

We position ourselves as real estate consultants. Our Business model is built on three main pillars Leads, Inventory, and Leverage (People, Systems & Tools). We cater to a “Build Your Community” concept.

We are unbiased when it comes to advice and market information. However, we are biased towards certain projects because we do not work with anyone. We pick certain developers/ projects that are credible and carry a high reputation in the market in terms of secured investments, professionalism, and product quality. So when we consult, we make sure that investors are to make the best investment decision for their money’s worth and to guarantee we meet our clients’ needs.

To developers, we only work with those we truly believe in.

Why would developer seek brokers when they have their active sales departments?

Well, there are two types of sales, direct sales coming from the internal sales department and indirect sales coming from brokers/ agents. Each developer has its sales strategies. Some depend on the majority of sales coming from their direct sales department. There are those who depend on the majority of sales from brokers/agents, while others balance between both. Those, who rely more on indirect sales, are normally small companies and their dependence on brokers can make up to 80% of their sales.

Brokers usually work on larger channels and networks because we tend to work on a number of projects all at once, whereas sales teams of direct sales focus on a sole project/ development they are promoting. Thus, if a developer wants to increase his reach, he acquires an indirect channel. Basically,

we help developers reach more leads prospects through network, marketing channels and our wide reach.

Some claim the Egyptian real estate market to be a bubble that will burst soon. What is your comment on that?

I believe not. In real estate, we say, “The Egyptian market slows down but never dies.” Real estate bubbles cannot happen in Egypt because we are a cash market with no mortgage plans. There are some with high interest rates and very tight regulations so their effect is very minimal for us to take into consideration. If we take the US as an example, we see that their market relied on credit and high mortgage plans with high leverage.

People took several mortgages on a number of properties. The supply was much higher than the demand as well. This is not the case in Egypt.

Our demand is less than the supply. According to recent studies by the Central Agency for Public Mobilization and Statistics (CAPMAS), Egypt has roughly 600,000 marriages with 300,000 to 350,000 units per annum. So we are underdeveloped in this aspect.

Our culture is a buying culture and home owning is a priority to us. The market is steadily picking up and I see it continuing to grow. It is a very cheap market when compared to the rest of the world.

It is also the Egyptian expats who invested in real estate following the devaluation that secured the sector and saved it from the so-called “bubble.”

Developers, too, have compensated with flexible payment terms.

We also have become part of the educational training in Egypt. We acquired 10% of the newly established real estate academy in Egypt, Evolve Real Estate Academy.

How do you view the real estate investment climate in Egypt today?

The real estate market remains to be seen as one of the safe havens for investments in Egypt; first-hand sales from developers are still moving; however, secondary market is slower for sure, yet prime units in good projects with a healthy formula are the trigger in keeping the secondary market active.

Everything gets flipped but some slower than others. Recently, with the attractive saving plans by banks of up to 20% interest rates, some investors have shifted to depositing their capital, escaping the price hikes of properties. Such banking tools have made real estate investors think twice about entry/exit points.

How do the recent economic reforms affect the market?

With the devaluation of the EGP, we have seen many games being played. Some real estate investors sold their properties prior to the float and bought USD; and following the float, they returned with, of course, a larger capital for bigger investments to double the returns. This was the common trend among the so-called “deep pockets”, who had previous insight on the market.

As for the general masses, luckily the devaluation has had, so far, a limited impact on the market.

Indeed, prices of property units increased by 3035% except for the high-end real estate brands, including SODIC, PHD, New Giza to name a few, who have increased their prices even more. Such an act, made the regular buyer look for value of

We are unbiased when it comes to advice and market information.

However, we are biased towards certain projects because we do not work with anyone. We pick certain developers/ projects that are credible and carry a high reputation in the market in terms of secured investments, professionalism, and product quality.

THE VOICE OF REAL ESTATE | 21

VOICE OF THE EXPERT investment rather than the brand name… I find it interesting to see how this ever sought-after sector will continue to reshape, especially in the coming months.

Having said that, I still find it too early to measure the effects of the EGP float on the market today.

Given Egypt’s large and growing population, I do not fear the future, as the demand on real estate will continue to grow. I don’t see a problem in the supply/demand equation at all. The market offers

INVEST-GATE

I believe the market is still more appealing to Egyptians living abroad, who make a good living at this stage. To them, properties in Egypt have become very lucrative and affordable post devaluation. This element shall change according to variations in USD value. If USD stabilizes or increases then their appetite shall follow and vice versa.

In real estate, we say, “The Egyptian market slows down but never dies.” Real estate bubbles cannot happen in Egypt because we are a cash market with no mortgage plans.

What are the common market trends? And how did it change over the recent years?

BYC adds value to their decisions and process itself. People are still unaware of the tremendous efforts that are put to guide such decisions… how to make a proper investment in this market or how to make the best sale.

approximately 20,000 units per annum, which is nothing compared to our growing population.

What remain evident to us, today, are the changes in the investors’ attitudes and choice mechanism and criteria. There are those with unexplained tremendous cash ready to invest and those who only care about “value for money.” Everyone is revising their priorities but not to the extent that the market would tighten up.

Is the Egyptian real estate market attracting foreigners? Are we on the international map?

22 | INVEST.GATE | October 2017 - ISSUE 07

Prior to the 2011 uprising, people were driven towards big spaces on the outskirts of the capital.

With price increase and the mentality of the new generation, the common trend today is acquiring smaller units, also on the outskirts of the capital. Big houses are no longer tempting like before due to price hikes and maintenance costs. What I see as an upcoming booming trend is rent.

Rent will take a large size of the market soon because of a number of reasons. Prior to the uprising, investors focused on buying then selling quickly with premium. Lots of investors are currently focused on revenue-generating assets.

The new generation- with tight budget- sees rent as more valuable to save on money; and the renting opportunities on the outskirts of Cairo are very attractive and affordable when compared to the popular districts inside the capital.

How do you view the online brokerage market?

Can our market depend on such a new tool?

BYC’s business relies 80% online and 20% offline or face-to-face. We believe that our business within the next five years will shift to a digital business.

BYC’s digital platform is currently booming.

We have listing online like OLX, Propertyfinder, Home360 and Aqarmap, to name a few. We have also digital marketing through GDN and social media. At this stage, we are generating leads online.

These leads turn into prospects. If we succeed in those prospects, we gain clients and seal deals.

In Egypt, not all are generating leads online. This organization of entirely buying and selling online

is still far from our market. Unit prices according to current values and neighborhood or district prices are not registered by the government. Again, this is because we have no official regulatory entity that monitors the sector.

How do you foresee the future? Can you predict the market of 2018?

We see that 2017 trends shall sustain, providing the financial markets remain the same, although this might not be the case. Egypt has a lot of foreign debt to settle; and if tourism does not pick up quickly as expected, there might be more strain on the USD. If this happens, then its value will continue to increase and it would be difficult to predict how the overall market would look like and how the property market would react. It is very random in Egypt.

The only digital platform, where buying and selling is provided, is Capital Group Properties because they only market a few projects in Egypt. But on a larger scale, there cannot be such guaranteed service in Egypt at this stage.

To conclude, with political stability, our future is very bright. Unlike the rest of the neighboring countries, which got affected by the so-called Arab Spring, business in Egypt is safe. Our infrastructure is ready, so we are internally expanding. A large number of developments are coming into our market. The sentiment is very promising. Also, with the new Investment Law, we are to see European investors coming in. We have high R-O-R and profit margins. Externally, and this is more interesting, today we see a number of Egyptian developers and contractors expanding abroad to help build such devastated nations, including Libya and Iraq, for example.

Do you predict prices units to further increase as it did in 2017?

This price hike, we witnessed, is not likely to reoccur. It happened because of correction following the float and to cover for the materials’ cost. Prices will definitely increase but at the normal rate, depending on the area. This market is very dynamic and shifts from one area to another.

Buyers Club.

International Business Club.

Site Tours.

Egypt Projects Summit.

Business Matching.

Do you see the market shifting to Upper Egypt and Alexandria?

There are in fact a number of developments taking place in those areas and also a number of developers coming to Cairo from such places, working especially on non-gated communities in Cairo. They established small and medium companies here and their businesses have been booming following the Uprising of 2011. AlHokair is among the market key players, who have acquired land in Upper Egypt. Also Palm Hills is to launch its latest project in Alexandria by the end of this year. Orascom, too, has started its Byoum project in Fayyoum. The purchase power coming from Mahala, Mansoura, and Alexandria, etc… are increasing more and more in the capital. BYC, too, plans to expand in such areas by the beginning of 2018.

Organised by

&

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How do you see the real estate brokerage in the UAE differs from that in KSA? Brokers offer a variety of options to the property market in different conditions, which otherwise may not be available; locally and internationally.

The UAE has a great deal to offer in terms of the number of brokers and the variety of product, and KSA started to quickly realize that there is a need for property consultants who can be transparent in their advice on where buyers can invest their money.

KSA and UAE have advanced sales and rental markets. Developers will often avoid renting directly so brokers help investors rent their units and similarly offer renters options for a variety of tenancy agreements.

What are the challenges facing brokers in both countries?

Both KSA and UAE have authorities governing developers and brokers in the way they do business. These governing bodies are in place for exactly the right reasons; to ensure that buyers and renters are protected from the flaws, which can affect the property market. However, these evolving markets create more challenging laws and

SLOANES REAL ESTATE KSA

Explores Real Estate Brokerage Market in GCC

BY JULIAN NABIL

S

pecialized in buying, selling, and renting exceptional homes, Sloanes Real Estate is a boutique agency that managed to be one of the pioneers in the professional GCC real estate brokerage market. Invest- Gate goes behind scenes in real estate brokerage market across the region, mainly United Arab Emirates (UAE) and Saudi Arabia. Here is a special interview with Arron Browne, managing director of Sloanes Real Estate KSA, to give us insights on the market’s latest trends and current status.

What is your opinion about brokers’ role and how they are affecting the real estate market in KSA and UAE? Brokers play a vital role in offering clients two elements a developer cannot; variety and options especially in the re-sale and developed market.

Developers are a great mean of going “direct to source” to get the best deal on their own product.

However, brokers will not only often be able to offer the same product in case agreements have been made between agent and developer, but also provide an unbiased consultation on what the rest of the market offers, as well as price comparisons in

either similar or alternative locations within city or region.

Not only that, but we are seeing brokers play an increasing role in offering a diverse international portfolio of investment opportunities, which allow interested parties to purchase property outside the UAE and KSA.

In terms of online browsing in both countries, I would say, again from experience, that the development of “property portals” has been extremely influential in buyer behavior.

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I would say that browsing properties online is probably the most popular way, and hence brokers and developers alike use these portals to drive traffic either physically to their office or respective websites. precedents that brokers must follow to the letter in order to operate legally in the GCC. Brokers must be able to quickly adopt any new rules and regulations announced, without making that affect the normal flow of, typically fast-paced business. Additionally, the rules and regulations usually target brokers more than developers, as brokers have to be more closely monitored, given their association with multiple properties.

fully independent broker acting in the same way as our UAE office. And this gives a perfect perspective when looking at differences between and benefits of developers’ sales offices or brokers.

Who makes sales better in your opinion, developers’ sales offices or brokers in KSA and Dubai? or is there a cooperation between both parties?

I am afraid I cannot state who is better at sales, leasing, or property management, but I can safely say that cooperation between both parties is the best way to sell units easily.

Developers’ sales departments are usually armed with more products and development knowledge; they have information on all units within the development. As for brokers, they may only have partial knowledge about units through some information provided to them, but they are certainly better equipped to give a more in-depth consultation and comparisons within the market.

When developers’ sales departments and brokers work together effectively, they give investors a complete and transparent insight into property options in either KSA or UAE.

Real estate markets in the Middle East have been reportedly slow in the last few years, with prices dropping slightly across the board as more projects are completed and come online.

The low oil prices since 2014 have also certainly affected many industries in KSA and the property market is not immune to this. browsing properties online is probably the most popular way, and hence brokers and developers alike use these portals to drive traffic either physically to their office or respective websites.

How do you see the real estate market nowadays and your outlook for it?

From my experience, I would say that KSA and UAE differ greatly in this respect when it comes to selling property.

Real estate markets in the Middle East have been reportedly slow in the last few years, with prices dropping slightly across the board as more projects are completed and come online. The low oil prices since 2014 have also certainly affected many industries in KSA and the property market is not immune to this.

Our KSA office has little footfall as buying is not a common practice in that market. In Jeddah, you can see very few “high-street brokers”, whereas there are a huge number of offices in accessible areas with high demand in UAE.

The Middle East now has a more controlled and normally functioning property market, where demand and supply dictates market activity and developers are more realistic with prices and delivery promises.

However, our development in Jeddah, Bayat Plaza, has benefited greatly from having an on-site presence, where clients can see the property and especially the “show apartments”.

The regulatory authorities have made “flipping” process more difficult with necessary rules and regulations imposed to control unprecedented price hikes and empty properties with exceedingly high values.

What is the market trend nowadays? Do people usually go online to rent or buy units? or go to offices in KSA and UAE?

In terms of online browsing in both countries, I would say, again from experience, that the development of “property portals” has been extremely influential in buyer behavior. These portals allow investors to access hundreds or even thousands of complete and under construction properties offered by a variety of brokers or direct from developers, all on one site. I would say that

Developments, such as Bayat Plaza, sold through brokers like Sloanes Real Estate aim to convince buyers that current market conditions produce variety and quality. Only property developers and brokers that are trustworthy and transparent, and can deliver true consultancy will be trusted by investors. And it is these quality outfits that will prosper and stand out in an otherwise slow market.

What is the nature of Sloanes operations in the GCC? Sloanes Real Estate Brokers is a broker with offices in KSA, Qatar and UAE. KSA and Qatar’s offices were opened specifically to sell units on behalf of the Sabban Group’s respective development arms, Manazil LLC in KSA and Sabban Property Investments in Qatar. And our office in UAE was the first to open and act an independent agency that is associated with multiple developments for multiple clients, both developers and individuals.

In Qatar, Sloanes Real Estate Brokers has morphed from an exclusive broker for the Sabban Group to a THE VOICE OF REAL ESTATE | 27

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REAL ESTATE STOCK MARKET:

Weathering Instability in Wake of Monetary Changes

T

BY NAYROUZ TALAAT

he Egyptian Stock Exchange’s real estate sector has been tremendously affected in the wake of new measures taken by the government to achieve its long-term economic growth and stability, according to analysts. Invest-Gate takes a deeper look into the real estate stock market.

The recent governmental measures include the floatation of the Egyptian pound, raising interest rates and cutting energy subsidies. Financial Analyst Wael El-Nahas, who also works for a brokerage company, says real estate is always a safehaven to those who want to purchase, invest, and even to the middle class.

The choice of investing money in the real estate sector is considered one of the inherited cultures in Egypt, however, El Nahas explains that when the government announced its economic reform measures, a double impact happened on both the short- and longterms.

He adds, “ once the monetary policies went into effect, the revenues of real estate top achievers were doubled and, as a result, the value of the shares of the top achievers in the real estate market were also raised.”

According to market statistics, the prices of residential units increased from 30% to 50% as the result of the price hike of construction and building materials.

On the other hand, El-Nahas explains, “some companies experienced low performances in the stock market as their revenues declined following the Egyptian pound floatation.”

Many expectations and budgets have already been built up on the old prices, he notes, explaining that this has led to losses in some companies. Moreover, the interest rates on getting funds for projects has also increased.

Mohamed Bahaa Eddin, a financial analyst in one of the brokerage companies, explains that there are many developers achieved high financial results, and raised their shares’ value. But both analysts agree there are worries that there will be a crisis in liquidity when assets are changed to real money.

The rise in the stocks are like a bubble in the market, shares are up because the real gains in revenues happened in the last fiscal year, but the same results will not be achieved in the upcoming year. El Nahas estimates that around 1,500 companies

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are facing financial difficulties due to the ups and downs in the market.

The market has been withstanding the changes since the floatation of Egyptian pound. “We have seen a rise in prices by 35% to 40% after last November,” says the CEO of ARDIC for Real Estate Developments and Investments, Ashraf Dowidar.

Some real estate developers kept changing their future strategy, Dowidar explains, concerning the pricing policies because cost changes are happening day and night. The prices of construction materials rose due to the increase in the inflation rates that hit 33%.

Analysts believe that those developers, who withstood and overcame the difficulties in the market are those, who tried to secure payments from clients by increasing the period of installments.

However, those who could not adapt to the situation suffered huge losses.

Inflation rates will of course be a challenge to most developers, “who seek to maintain their performance, both on the stock market and in the financial results in the upcoming fiscal year,” Dowidar concludes.

Stock Market Figures For Some Developers Property developer SODIC has performed very well in the stock market, recording a rise of 76.34% since the devaluation of the pound with shares rising from EGP 7.33 to EGP 12.94 per share.

As for Emaar Misr, it did not manage to benefit much from the floatation decision; their share moved from EGP 2.32 to EGP 2.40 only.

While the shares of Madinet Nasr for Housing and Development (MNHD) achieved a limited increase, rising from EGP 13.78 per share to EGP 14.06.

MNHD achieved sales worth EGP 201.4 mn during Q1 of 2016, compared to EGP 83.3 mn during the same period in 2015.

This coincided with an 89.6% increase in profits, reaching EGP 68.6 mn.

Amer Group shares recorded a poor performance compared to other real estate stocks. It dropped from EGP 0.36 to EGP 0.29 per share since the devaluation of the pound.

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EGYPT’S BROKERS AND DEVELOPERS: Shared Grievances, Successes Amid Economic Instability

recent monetary policies of floating the pound and raising interest rates, according to Tharwat, is targeting their online campaigns towards foreigners and Egyptian expats, who get paid in hard currencies and thus are unaffected by the pound’s devaluation.

Meanwhile, Ahmed Amin, CEO of Brokerage company Property Advisors, tells Invest-Gate that many developers put up overpriced housing units, thinking that it would attract higher classes who seek exclusivity, however, they don’t realise that many of the A-class segment are ready to put their money in moderate-priced units.

He perceives that the demand of the middle-classes on housing units will increase as many developers will start adjusting their payment plans.

Egyptian Developers’ Woes Meanwhile, Basheer Mostafa, chief executive officer at First Group development company tells InvestGate that brokers constitute an integral part of his company. Brokers, according to Mostafa, sell 60 to 70% of total units in coastal areas such as Ain El Sokhna and the North Coast.

BY PASSANT DARWISH ADDITIONAL REPORTING BY NAYROUZ TALAAT

B

rokerage in Egypt is not defined by clear-cut laws and regulations, some brokers solely aid clients in selling and buying properties while others offer more extensive services such as conducting market research. In order to

With the continuous expansion of Egypt’s real estate developments and projects, the relationship between broker and developer is constantly being defined and tested. Invest-Gate speaks with brokers and developers asking them about their dynamics in the market; challenges they face at the moment, particularly in the aftermath of the recent monetary policies that saw the floatation of the Egyptian pound and hiking the interest rates; as well as what they perceive to be the current trends dominating the real estate sector.

Brokers vs “Intruders” Mohamed Tharwat, CEO of Sakan, a Cairo-based brokerage company, tells Invest-Gate that one of the major challenges he faces as an owner of a brokerage company is prices.

“People can’t believe these high prices, they are incapable of paying such amounts, and they don’t know where the economy is heading so they can’t pluck up their courage and start buying again,” he states.

A major problem that the Egyptian Brokerage market faces, according to Tharwat, is that some licensed brokers are “intruders to the market.” He explains that such brokers easily obtain the legal work to set up companies but they have no knowledge of how the sector works.

“They heard that this job is profitable, but they don’t have any experience in the market or with clients,” Tharwat says, adding that these intruders misprice properties as well as charge less than the generally agreed-upon market commission of 2.5% from sellers and 1.5% from buyers.

“They have few employees and their companies are small, so they can afford to lower their commissions as opposed to well-seasoned brokers who provide 30 | INVEST.GATE | October 2017 - ISSUE 07

become a broker, one simply has to apply for a regular company licence and provide the necessary paperwork such as a proof of having an office and issuing a tax registration card.

better services,” Tharwat explains.

These less qualified and less experienced brokers force developers to limit their dealings with brokers, Tharwat adds, complaining of the side effects brokers face as a result of their amateur counterparts.

He also criticizes some developers who want to deal with fewer brokers as part of a new trend that propagates that “if a developer deals with very few handpicked brokers, then, his residential compounds house a special clientele and is a well-respected community.”

As to the trends Tharwat currently notices in the

real estate markets, he says buyers want extended installments, reasonable prices, and a strong developer who delivers on time.

“This is a tough equation, but clients choose what really matters to them; some of them prioritize reasonable prices while others want a strong developer and so on.”

“Resale is currently not very popular in the market.

No one wants to pay two or three million pounds upfront, they want to pay 5 to 10 % of the total price and the rest over long installments,” he adds.

Another trend that brokers adopted in light of the

Mostafa also tackles what he describes as the “many challenges” currently facing developers in the sector. He says these challenges include, but are not limited to, the method by which lands are priced and distributed, banks’ interest rates, and the current soaring inflation rate.

But of all these problems, he proclaims that the most urgent is the prices of lands and the difficulty to obtain them.

Mostafa, however, finds a silver lining to the devaluation of the pound, “in reality, the price of a housing unit has decreased after the floatation of the pound to Egyptians who work abroad.” He explains that Egyptian expatriates’ salaries remained the same as they get paid in hard currency and, although the dollar almost doubled, the prices per square meter increased but did not double.

Mostafa adds that the appetite of Egyptians working abroad for buying property in Egypt has increased but the increase is neither significant nor clearly reflected in the market due to the surplus in supply of properties as well as the clients’ distrust of developers, fearing that they will not deliver on time.

This fear, according to Mostafa, becomes augmented when some developers deliver units four or five years after the agreed upon delivery date.

As to the effects of the pound’s floatation, Zaalouk says that the positive impacts of the new monetary policies balanced its negative impacts, thus having a “little effect” overall on their sales.

He explains that the negative effects of the floatation is that Egyptians’ purchases decreased. However, he adds that one of OUD’s projects, Oriental Coast, located in Red Sea’s Marsa Alam City, is tailored towards foreign clients who increased their purchases after the pound’s floatation as, to them, the housing units have become “cheaper.”

continue to grow and expand, there is no doubt that the relationship between developers and brokers will continue to change to meet the market’s demands and conditions. One thing is for certain though, developers and brokers who will benefit most from what the market has to offer are those who set the client’s’ needs as their priorities.

“It all balances out in the end,” he affirms.

As to the current trends observed by Zaalouk in the market, he sees people purchasing units in new cities currently under construction such as the new North Coast, Al-Mostaqbal City, and the new administrative capital in New Cairo.

These trends, according to Zaalouk, will last for at least five to ten years as more developments are being built in these “new markets,” which he concludes are good investment opportunities for buyers.

As Egyptian developments and residential projects

Meanwhile, Sales Director of Oriental Urban Development (OUD) Ahmed Zaalouk tells Invest-Gate that OUD sales generated by brokers only constitute 2 to 5% while the remaining 95% of sales are achieved by the company’s own in-house sales team.

“Brokers are an asset to developers when developers have low sales figures, but our projects are met by a significant demand in the market and our sales figures increase monthly by millions of pounds” he explains.

“We sign contracts with brokers if they ask us to, but there is no dire need for them to increase our sales’ figures,” Zaalouk states. “We benefit from brokers in terms of branding and marketing, but we don’t heavily rely on them in selling units.”

Zaalouk believes that one of the major problems currently facing Egyptian developers is the continued increase in construction materials.

“We start a project with a set budget, but with the jump in prices of steel and construction materials every two to three months, we either have to raise our [units’] prices or suffer losses,” he states.

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to make informed choices about any property purchase. As important stakeholders in the industry, we see positive synergies in their role and value to the property sector,” Emaar adds.

SPECIAL FOCUS ON GCC REGION

WATCH OUT TRENDS IN SAUDI REAL ESTATE MARKET

DEVELOPERS AND BROKERS IN THE GCC:

KSA and UAE differ greatly when it comes to selling properties. Buying is not a common practice in the Saudi market. You can see very few “highstreet” brokers, Arron Browne, managing director of Sloanes Real Estate KSA, says.

THE COMPLETE PICTURE

In Saudi Arabia, around 53% of Saudi families live in rented accommodation and rent disputes there can take up to a year to be resolved, the National reported, based on governmental data. With the rising demand on rents and the need to regulate the real estate rental market, the Ministry of Housing set up Ejar Program, a rental services e-network, in June 2012 to protect the rights of owners and tenants and control prices.

“KSA is quickly realizing that there is a need for property consultants, who can be transparent in their advice on where buyers can invest their money,” he adds.

In February 2017, the ministry said in a statement it launched an e-portal, through which brokers can register to be certified. For registration eligibility, the broker should be a Saudi citizen, who completed the qualification course and the brokerage should have a valid commercial registration that includes managing and renting owned, rented residential, or non-residential properties, in addition to having a verified national address as provided by Saudi Post.

BY JULIAN NABIL

P

rovided by many qualified real estate brokers in GCC, brokerage in the Gulf region is a service that involves comparative market analysis, facilitation of a purchase or sale as well as managing, exchanging and auctioning property.

Some real estate brokers also provide consultation based on a fee along with CLOSER LOOK AT UAE BROKERAGE MARKET Real estate brokers in Dubai are regulated by Law No. 85/2006, under which brokers may not carry out brokerage activity in the emirate unless they are licensed by and registered in the Real Estate Regulatory Agency (RERA).

Aiming at regulating the real estate industry in Abu Dhabi, UAE President Sheikh Khalifa bin Zayed Al Nahyan also issued Real Estate Law No. 3/2015, making it mandatory for all property professionals, including brokers, to be licensed by the Department of Municipal Affairs and Transport (DMAT) before carrying out any business activities.

taking care of the client’s’ property exposure too.

Some brokers work as agents for buyers, only representing them, while others work as dual agents who work for both buyer and seller. Invest-Gate gives you the complete picture.

addition is in offering them informed insights on various properties, and tailoring purchase options that meet their lifestyle aspirations and investment goals,” Samak explains.

“The GCC has now a more controlled and normally functioning property market, where demand and supply dictate market activity and developers are more realistic with prices and delivery promises,” Arron adds.

Developers are a great means of going ‘direct to source’ for the best deals on their own products. However, brokers also provide an unbiased

consultation on what the rest of the market offers, as well as, price comparisons in either similar or alternative locations within city or region, he explains.

“When developers’ sales departments and brokers work together effectively, they give investors a complete and transparent insight into property options in either KSA or UAE,” Arron concludes.

Between January and the end of June this year, over AED 820 mn worth of brokerage commissions were made in Dubai’s real estate market, according to a report by Dubai Land Department (DLD). Dubai has 5,856 active brokers and 2,340 offices registered so far in its database.

“Property brokers play an integral part in the overall dynamics of the real estate industry. They have in-depth industry insights and understanding of all market trends, and this is of critical importance in driving the success of real estate launches,” a spokesperson for Emaar Properties tells Invest-Gate.

“In any property ecosystem, it is important to have stakeholders, such as agencies and property advisors, to deliver value for the end-user,” he notes.

“We offer expert consultancy on selling and renting properties, and add value to the developers. We provide clients with stronger customer leads in addition to supporting them in delivering a seamless customer experience.”

“At Emaar, we organize events dedicated to brokers coinciding with the launch of our major projects to inform them of our developments and unique selling propositions,” the spokesperson adds.

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In 2014, the Saudi ministry of housing made it mandatory for all real estate firms to join its electronic Ejar system, which seeks to regulate the rental market with measures to protect the rights of owners and tenants, and control prices.

“Our commitment is to promote customer satisfaction so as to have high regard for the counsel we offer,” Samak notes.

“As one of the oldest and most trusted real estate service providers in the UAE and a subsidiary of Emaar, we see a strong complementary relationship between roles of brokers and developers,” Mohab Samak, general manager of Hamptons International, tells Invest-Gate.

“Buyers today have the opportunity to purchase directly from developers or through an agency such as Hamptons, with no additional cost. Our value-

Licensed brokers would be able to sign rent contracts online during the first quarter of 2017, Mohammed Al-Bati, the head of the Ejar Program said earlier in a statement released back in February. There are around 1,086 certified brokerage firms in Saudi Arabia, according to the Ejar system’s website.

“Customers have more choices – to buy directly or from brokers, based on their preference. Many investors actually prefer the counsel of brokers,” Emaar’s spokesperson notes.

“With clear guidelines in place set by the government, customers have the opportunity now

PHOTO BY EMAAR PROPERTIES

PHOTO BY EMAAR PROPERTIES

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HOW DID EGP FLOATATION AFFECT BUYERS IN EGYPT’S PROPERTY MARKET? Trying to understand current trends of Egypt’s real estate market, Invest-Gate speaks to a number of experts, who shares their views on how EGP floatation affected buyers’ behavior.

Mohamed Tharwat, CEO of Sakan Resale is currently not very popular in the market. No one wants to pay EGP 2 or 3 mn upfront; they want to pay 5% to 10% of the total price and the rest over feasible installments plans.

Buyers want extended installments, reasonable prices, and a strong developer, who delivers on time. This is a tough equation, but clients choose what really matters to them; some of them prioritize reasonable prices, while others want a strong developer and so on.

Mohamed Banany, Senior Vice President at Coldwell Banker and Coldwell Banker New Homes CEO There was a struggle among some developers and purchase power but nothing evident or can be put in a study due to the so-called “grey economy”. Now with our reform plan, order has been set and we are to have a proper healthy economic growth. In the past six months, reports state that approximately EGP 220 bn were deposited in banks across Egypt. Of course, this is in regards to classes A and somewhat B, although I find class B is currently demolishing.

Karim Ghoneim, BYC CEO and Founder Given Egypt’s large and growing population, I do not fear the future, as the demand on real estate will continue to grow. I don’t see a problem in the supply/demand equation at all. The market offers approximately 20,000 units per annum, which is nothing compared to our growing population.

What remains evident to us, today, is the changes in the investors’ attitudes and choice mechanism and criteria. There are those with unexplained tremendous cash ready to invest and those who only care about “value for money.” Everyone is revising their priorities but not to the extent that the market would tighten up.

Ahmed Amin, CEO of Property Advisors Egypt Many developers put up overpriced housing units, thinking that it would attract higher classes, who seek exclusivity; however, they do not realize that many of the A-class segment are ready to put their money in moderate-priced units.

The demand of the middle-classes on housing units will increase as many developers will start adjusting their payment plans.

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Ahmed Zaalouk, Sales Director of Oriental Urban Development (OUD) There was a struggle among some developers and purchase power but nothing evident or can be put in a study due to the so-called “grey economy”. Now with our reform plan, order has been set and we are to The negative effects of the floatation is that Egyptians’ purchases decreased. However, foreign clients increased their purchases to them as the housing units have become “cheaper” to them.

And generally, people are also purchasing units in new cities currently under construction such as the El-Alamein City, El-Dabaa, Al-Mostaqbal City, and the New Administrative Capital.

These trends will last for at least five to ten years as more developments are being built in these “new markets,” which he concludes are good investment opportunities for buyers.

have a proper healthy economic growth. In the past six months, reports state that approximately EGP 220 bn were deposited in banks across Egypt. Of course, this is in regards to classes A and somewhat B, although I find class B is currently demolishing.

Basheer Mostafa, CEO of First Group In reality, the price of a housing unit has decreased after the floatation of the pound to Egyptian expats as their salaries remain the same as they get paid in hard currency; and although the USD almost doubled, the price per square meter increased but did not double.

As a result, the appetite of expats for buying property in Egypt has increased “but the increase is neither significant nor clearly reflected in the market due to the surplus in supply of properties, as well as, the clients’ distrust of developers, fearing that they will not deliver on time.”

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the slogan of “explore properties on the go.”

“We decided that it’s time to launch an application so people can have an easy access to our services and, as they say, be at your fingertips,” he states.

One of Estabena’s competitive edges is that a team member pays a client’s property a visit, before getting listed on their platform, to take professional photography and measure the property.

“For each listing you’ll find high definition photos and floor plans...We also send an extensive portfolio to all property owners. We do not charge any commission as you’ll be dealing directly with the market, we only charge a flat fee for the service. Our packages vary depending on the property type and size,” Abou Samra adds.

As to dealing with competition from seasoned brokers and other platforms in the online real estate market, Abou Samra says “competition is an integral part of the business and it’s healthy to have someone other than yourself constantly challenging you.” “what we always try to do is position ourselves and try to identify our strength points, then work within that frame,” he adds.

As to any potential decline in the real estate sector following the pound’s floatation, Abu Samra believes that the sector is a broad field and “some parts of the sector might get affected.” However, he says that buying properties to live in “is a necessity, like food and clothes, it provides shelter.”

EGYPT’S ONLINE BROKERAGE MARKET:

He adds that trends might change but, in general, sales in real estate sector has to increase to match the population growth.

TRENDS AND COMPETITION

Diversifying Audience

BY PASSANT DARWISH

I

n a market overflowing with housing units and residential projects, some startups have utilized creative methods and platforms to attract buyers, while other seasoned property websites sought to further highlight the services they offer. Invest-Gate speaks to property-selling websites and applications on the current market trends, how they deal with competition and the services they provide.

Some already-established online brokerage platforms, such as OLX, are looking to increase the diversity of their audience and attract more clients.

OLX, an online classified platforms that operate in more than 40 countries including Egypt, launched earlier this year a premium property section alongside its already established classified properties section.

The website’s property section is already considered a success in the country, with a recorded 33 mn visits in the first half of 2017.

Strong Sales Team Aya Abo El-Saoud, the SEO and content manager of propertyfinder.com, tells Invest-Gate that her platform utilizes the “latest tools and techniques in marketing” to address their different audiences.

This is done, according to Abo El-Saoud, by a team “who understand the data and the principles of optimization.”

developing a 30-floor building in one of the key areas in Egypt.”

Inevitable Competition But in a market with plenty of residential units, some startups are attempting to create a name for

themselves and find their own niche.

One of these startups is Estabena, launched in 2012 as a website but due to the “progression in the tech world,” in the words of its Managing Director Karim Abou Samra, they also launched an application with

The website, which operate in seven Middle East markets since 2007, depends on a strong sales team to “to promote our platform either for the clients or the users.”

She adds that the website covers Greater Cairo and “respond to more than 60% of the user’s needs,” but adds that they are working on covering all Egypt and “satisfy the user’s needs 100%.”

As to the trends propertyfinder currently detects in the market, she says investments in property continue to be a “relatively stable prospects,” despite the Egyptian pound’s depreciation.

She also adds that “skyscrapers are expected to be seen soon in Cairo,” with some developers already “started 36 | INVEST.GATE | October 2017 - ISSUE 07

Momtaz Moussa, the country’s OLX’s general manager, describes their newest section, Storia, as a “focus on the premium areas in Egypt through an organized and more convenient platform to communicate and trade on,” a company statement reads.

Storia promotes itself as a feature that “supports property developers with more exclusive features and services in publishing listings, and providing a more specialized experience for users looking to purchase

premium property.”

An increasing interest in the real estate market, according to OLX, “has provided investors with confidence in listing more property online, and developed a more diversified set of options for buyers to choose from.”

As Egypt’s real estate sector continues to expand, especially with the developments of new cities, the

real estate online brokerage market will continue to seek ways to accommodate the different tastes and needs of its clients. The online market currently accommodates the needs of those who seek premium properties, or tailored services as a unit’s floor plans and exact measurements as well as those who seek to list their properties in popular platforms that will generate more views.

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VOICE OF THE PEOPLE

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What are the services you provide?

We started with providing architecture services, then we expanded our scheme to include urban planning and city comprehensive planning. We are the leaders in city and slum development in the region; we hold the lion’s share in designing what is known as the middle-income class housing in Egypt.

Landscaping, which is still a nascent field in Egypt, is one of our edges too; we are designing the landscape of Hurghada City. We also offer other services like supervising projects as well as quality maintenance through our qualified projects’ team, in addition to interior designing, master planning of regional areas and finally, and consultation. As part of our vision 2020, we intend to open a separate service for consultation as it is a must to teach others the insights we have gained after over 30 years of excellence.

ARCHPLAN: CREATING THE NATION’S CAPITAL

BY JULIAN NABIL

E

stablished in 1985 by Dean of the Faculty of Engineering at Ain Shams University Dr. Ayman Ashour, Archplan managed to stand out in the fields of architecture, urban design, and master planning. Looking for inspiring and aspiring business role models, Invest-Gate interviews Archplan Business Development Director Dina Ayman to know more about the How and when was Archplan conceived? Tell us your success story We started in 1985 with a team of only three engineers, led by Archplan’s owner, Dr Ayman Ashour, in a small office in Abbasiya district with one computer. Then we relocated to our current 3-story building at Sheraton Heliopolis after the team reached more than 85 engineers and admins, with expectations to reach around 100 employees by early 2018.

In 2000, Archplan established other offices [outside Egypt]. We have an office in Dubai as well as an office in Omani’s capital, Muscat, where we are responsible for the development of Dhofar business zones and many other economic developments.

We started to gain national reputation when we won the first place in a bid, published in Al-Ahram Newspaper, to design a building for Misr Insurance in 1993.

We earned an international reputation when we won two consecutive awards at the Organization of Islamic Capitals and Cities’ (OICC) seminars held in Turkey in 2008 and 2009. The first award was for the concept of Luxor City and its corniche, while the other was for the Souq of Luxor, which is known to tourists for gathering all shops with different souvenirs in one place. Known as geographical 38 | INVEST.GATE | October 2017 - ISSUE 07

company’s portfolio of successful projects including, but not limited to, the New Administrative Capital. Believing that success is not a matter of luck, as it requires hard work and perseverance, Ayman shares her company’s story, as well as, her views on Egypt’s current status and future prospects following the floatation of the Egyptian pound.

agglomeration like Oxford Street in United Kingdom’s London, the Souq is designed based on the Egyptian heritage and lighting.

What is your design and architecture philosophy that differentiates you from others?

Our conceptual philosophy is about creating a harmonious relationship between the environment, spaces and people. By working together creatively from a project’s inception to its final delivery, our team combines their knowledge to devise integrated, sustainable design solutions, thus ensuring consistency. Design process and practice are reviewed and supervised regularly through an efficient quality management system (QMS), which we are in the process of officially gaining its credit in 2020. We seek quality, detail, and “artistic sense” in each building we work on. As Archplaners, we integrate the location’s cultural taste and modern technological practice into our projects. This is reflected in our designs for all building types including civic, administrative, education, wellness, hospitality, cultural, commercial, residential, and industrial ones.

For private businesses, we get our customers involved in the whole process from setting the building concept to its handover. Having the motto of: “Quality with the least possible price,” we apply Leadership in Energy and Environmental Design (LEED) technology and adopt a green mentality.

We also study the light effects to create an interior

We also study the light effects to create an interior design of calmness and stillness, based on the Chinese Zen teachings and other secrets of our own.

You are part of 5+UDC, a consortium of five engineering companies, which won the competition in 2015 to plan the New Administrative Capital, tell us more about this experience?

It was not easy at all to win the New Administrative Capital project, as many competitors, “the sharks of Egypt on the corporation scale,” were competing with us. Thus, Dr. Ashour decided to establish a consortium on a massive scale with Cube Consultants, Ökoplan, and two other companies to compete on equal footing with other corporations, since we are a large business but not yet a corporation.

The founders of the consortium used to meet on a daily basis and work until after midnight with no days off even during Ramadan to design numerous models, on various scales, to fit right in with the new city’s vision.

Given our great determination to succeed, as well as, dedication to our work, quality and philosophy, we managed to win the contract and we are delighted with our success of beating great names in the engineering field in Egypt and the other international companies. The new capital is a diamond of an already existing crown, not the start at all.

How is the New Capital different from any other residential development project?

The capital will comprise a green valley called “Wedian,” with 12 sub-valleys, which have different personas and styles to cater to the low-, middle- and high-classes. However, all valleys will be constructed with high quality to maintain residents’ pride and dignity regardless of social status or income level and will be rooted in the concept of sustainability, with shrubbery and green landscapes everywhere as well as LED lighting. The 12 sub-valleys feature schools, hospitals, and wide

The capital will comprise a green valley called “Wedian,” with 12 sub-valleys, which have different personas and styles to cater to the low-, middle- and highclasses. greenery, including various amenities to provide a high quality of life for Egyptians.

The 12 sub-valleys are interlinked and connected with the recent updated infrastructure to facilitate moving from work to home, and vice versa. We further upgraded the complex connectivity of the infrastructure to help achieve work-life balance.

What are your most important projects apart from the New Capital? What do you have in the pipeline?

We are in the market for more than 30 years, so we have a long history of many projects. We designed various branches for CIB and HSBC Banks in Mohandeseen and Maadi, as well as, the Housing and Development Bank (HDB) with its green color symbolizing life. We also comprehensively developed Ismailia, Zefta, and the Digital City in

design of calmness and stillness, based on the Chinese Zen teachings and other secrets of our own.

When it comes to designing cities, we are always keen to preserve the nation’s identity as we did to the recent Nubian heritage village, by mixing the national originality with fine touches of modernity.

Our conceptual philosophy is about creating a harmonious relationship between the environment, spaces and people.

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VOICE OF THE PEOPLE Egypt, in addition to Duqm, Dhofar, and Wadi Adai in Oman.

We also worked on West Gulf Compound for ministers in New Cairo’s Fifth Settlement Neighbourhood, which won the first prize in a bid.

Moreover, we did the comprehensive planning of Hurghada and Luxor Cities, in addition to the mega project of designing Sheikh Zayed and 6 of October districts as one city, which won the first prize in a bid and this led us to gain a global reputation in the MENA region and the Gulf in particular.

We also designed October Oasis with its theme of sustainability, and many business and industrial zones such as Zizinia El Ashery.

Tell us more about your expansion outside Egypt? How is Egypt’s work environment different from that of other countries in terms of client’s demands and implementing projects?

We started to expand outside Egypt in 2000 through our first office abroad in Oman, which is considered a mega office over there, and we also have a small office in Dubai. We are working on having our own office in Saudi Arabia, although we are already working with the authorities over there.

Moreover, we are in the process of formally engaging in the quality ISO standards 9001- 2015.

When our work was inspected, there was not much technical work required to be done, so it is only a matter of time to become officially certified and have offices in Europe or the Far East starting 2020 onwards.

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The working environment in Egypt is the same as in all Arab countries with no much difference.

Most of the Arab region has the same mentality of oriental preferences. We are all very close and the differences are marginal and not to be counted.

However, some universities we designed in Saudi Arabia required setting locations for women and men at two different locations without any proximity whatsoever, a deeper divide than AlAzhar University buildings in Egypt. So we followed this requirement as a sort of respecting the culture norms of the people we are working with.

What are the major challenges you faced as a startup? and what challenges do you face now?

Financial difficulties are always the main threat anyone faces when growing, since we tend not to take any loans from banks. We need more mature financial institutions in Egypt such as venture capital to help us among others to grow. During the period of the 2011 Uprising till 2013, we were suffering financially. Dr. Ashour had to pay the salaries of his employees from his own personal account, rather than terminating their contracts as was the case in other businesses during that time. He chose a philanthropic approach towards Archplaners, which reminds me of Bill Gates’ altruism sense. Another problem is the lack of research centers in Egypt to provide credible data on the land use in all the areas across the country, including its population, culture, and other land characteristics. Such research will help the economy greatly. We conduct our own research and Dr. Ashour used to go by himself to

meet residents of Qurna city in Luxor to know the troubles they face. Research centers should save us by providing data for engineering companies, and if such centers are created, they will also provide more jobs for the youth.

How did the floatation of the Egyptian Pound affect your business?

If we set all emotional aspects aside, the currency float is the right decision to stop the bleeding wounds witnessed since 2011. During that time, we suffered as all Egyptians did especially by not raising our prices. We acted with pride not greed unlike others who took price hikes to their privilege.

When the currency was devalued in November 2016, we stopped dealing with the international consultants we used to work with before, and we now rely on Egyptian subcontractors only. Again, this devaluation is crucial for the betterment of our economy, so we have to endure as much as we can as the possibility that Egypt may join the BRICS will open a door for us.

the currency float is the right decision to stop the bleeding wounds witnessed since 2011

How do you strike a balance between quality and client’s budget?

We do not normally set high price margin to generate profits. We tend to go for the “break-even plus some” strategy and this helps us have more customers, instead of choosing “elite customer base” to cover the high priced-products as competitors do.

We are also filling a market gap in our price

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VOICE OF THE PEOPLE

strategy, so we have never lost any of our customers, which is a matter of pride. We usually sit with the customer before concluding the contract to know his own vision, then we suggest materials and their price; and finally, we work within this framework of expenses with “break-even plus some” strategy.

Customers, whether from the public or private sectors, are included in each and every step so they know the price we charge beforehand, and this helps build a trust relationship between the customer and Archplan.

Is there a demand for sustainable design and architecture in Egypt?

Yes, there is a demand for sustainability in Egypt since 2014, especially with the LEED industry dominating the market. Concepts of Go Green and sustainability related to climate change are starting to rise on the global horizon.

There are very few specialists in landscaping, a new trend of urban design in Egypt and we are one of them, but the market needs more expertise in such a specification, especially with the rise of new cities, which are yet to be developed.

How do you see the market nowadays?

The market is considerably better, more prominent, sound, and optimistic compared to the period from 2011 to 2013, which was the worst of all periods since 1967 as investment is directly proportional to security.

The mega national infrastructure projects that are being undertaken as part of Egypt’s 2030 vision makes me so much positive because this promotes investment in new projects. The new capital is 42 | INVEST.GATE | October 2017 - ISSUE 07

INVEST-GATE

a vivid example, and also the new compounds in El-Alamein, Ain Sokhna, and Marsa Matrouh, promising a great future for buyers and sellers.

Generally, architecture, urban design, and construction are amongst the thriving businesses in Egypt, in addition to steel industry and other directly and indirectly related services. We just need more confidence in our nation, and ourselves.

Are you hopeful about the future?

We should also abandon the cash usage and rely more on credit accounts. If we manage to limit the informal sector in Egypt, and make the 90 mn people have their money in banks, imagine how our financial asset will be! Thereby, we will be able join the G2O, not the BRICS, so we need awareness campaigns alongside the economy measurements.

What advice do you give architectural design startups and young talents?

I am very optimistic. Egypt started to have a welldocumented vision to be reached in 2030, with the visionary President Abdel-Fattah El-Sisi who, for the first time, led the country in the BRICS Summit held in China in September 2017. I have read in the Economist that Egypt now is the leading economy in Africa after Nigeria and South Africa, and our country is expected to join the BRICS soon, thanks to all the stringent economic measurements taken.

I learnt when I was studying abroad that you should work hard, save money, and spend less in your 20s and mid 30s until you have enough money in your late 30s and afterwards. Egypt is currently in its adulthood phase of 20s. We will be really booming economically if we achieve the vision 2030 set by the the Ministry of Planning Monitoring, and Administrative Reform. With a stricter fiscal policy, we shall achieve a mature economy. We need to market the government’s strategy of austerity and subsidy reduction to those who do not understand it. We need to trust more our officials as there is a problem of trust since the 1960s, which did not exist in the 1940s in regal Egypt.

Love what you are doing and give it your best, and do not do anything that you do not love.

Unfortunately, I recently met a number of administrators and engineers, who are not serious about their work and left their jobs with either no prior notice or after only three months. I tend to feel apprehensive if the upcoming generations work only to take a salary, while performing with minimal work and then leave.

Dr. Ashour works relentlessly over twelve hours and so does the executive director and some of the Archplan hard workers. I hope one day I see the Egyptian youth experience the Chinese and Japanese workaholic syndrome. To solve our problems, I think there should be a mega social project researching the reasons behind Egyptians not loving their work and prefer to eat and spend their time doing leisure activities. We are in the process of nation-building, so seriousness and professionalism are highly desired if we want better per capita GDP and quality of life in Egypt.

What do we lack to achieve a better work environment in Egypt?

For further information, check out Archplan website http://www.archplan-eg.com/Projects, to see other various projects that are divided by service, country, and type

We need a more mature banking and financial system to help youngsters open their businesses.

THE VOICE OF REAL ESTATE | 43

HOW TO

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Steps to Finding the Perfect Real Estate Agent

BY HAGER MAGDY

T

he real estate landscape in Egypt is continuously evolving as development projects are constantly underway to fulfill the demands of the country’s growing population. It can thus be quite difficult to purchase or sell property, especially if one is a novice in the real estate market.

Finding a capable real estate agent can be a lifesaver.

A realtor’s job is to facilitate the entire purchase or sale process and ensure that all predetermined requirements are satisfactorily met. With increasing demand

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for purchasing properties at the same time that prices are surging and the available options are rising, the right real estate agent can greatly aid in finding a new home.

Although a relationship with a real estate agent is a temporary one, the decision has a long lasting effect. Choosing the best real estate agent is an important process that can be divided into six steps.

THE VOICE OF REAL ESTATE | 45

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