In an interview with Daily News Egypt, Ayman Sami, Head of Jones Lang La Salle (JLL) in Egypt, talked about his company’s expectations for the real estate market and rental prices.
How do you evaluate Egyptian real estate prices, and do you expect a price increase in the coming period?
The prices vary dependant on the economic situation, as the rental prices sometimes decline and increase. The tourism real estate sector was the most affected in the last period. The rental prices increased during the last period, with an increase rate of 15% to 20% for commercial and administrative buildings, with rental prices of EGP 32,000 per annum. The performance of residential units is always strong, especially regarding selling prices, which increased to approximately 29%. The administrative building demand is high in New Cairo, especially for multinational and international companies and malls. 6th of October City and Tagamoa are the most attractive areas for malls, with new malls being built there.
What challenges does the real estate sector face?
The challenges faced by the sector are in the land prices and their increase, financing for customers, and non-registered lands. The stakeholders should sit together to agree on procedures to solve these issues, and I hope the new real estate regulation and other laws help in developing the sector. According to the tourism real estate sector, there are a lot of challenges represented in the security issues, and launching new services projects such as the Suez Canal project and logistics services attracts the attention of investors more than the tourism real estate sector.
What is the rental growth in the real estate market?
We measure the rental growth every three months, and according to our recent report, the prices increased by 20% for administrative building.
How many residential units are needed in the next period to fill the gap between the demand and supply?
60% of the population – the middle-income tranche – who cannot spend more than 30% of their income, which ranges between EGP 5,000 and EGP 12,000, has no product [suitable for their needs] in the market.
Despite the developments in Egypt’s real estate sector, the housing crisis still exists – can you explain this gap?
We need to amend the law related to old leases in the new lease law, because it is the cause of the gap pushing people to buy new residential units.
What is your perception of the Cairo Capital project?
The extension of New Cairo is very close to the Cairo Capital, as land in New Cairo is depleted and developers started to buy land in Mostakbal City, which is very close to the new administrative capital. Therefore, the project will be developed through a normal extension [adding more land on which to expand current lands] on which the developers can build their projects, but it takes time and needs planning, because there is a problem of non-facilitated lands in this city.
Do you think the partnership between the public and private sectors in developing middle-income housing will succeed?
The partnership itself is good, but what is needed is for the two parties to understand each other’s needs and form a partnership for the strategies. In addition to this, there are efforts exerted by the government to solve real estate investor disputes.
How do you view the Cityscape conference this year during this exceptional period as we have an interim government?
The private sector witnessed difficult circumstances, but they adapted and continued but may be it slowed but they continue. In the exhibition this year, there are new companies, and they will offer new products and the expo will witness competitive prices due to the increase of these products. I think the metre price for residential units, which will be offered at the expo, has reached EGP 7,000 in compounds.
Do you think there will be new social housing projects developed by the private sector?
I hope to see that through the government, local private sector and foreign investors and that may be carried out through phasing the project upon availability of finance.
How do you explain the fact that Arab and local investments in the real estate sector are more than foreign investments?
The Arab investments in this sector have been present for a long time, and they know the market well and have the ability to handle the issues and make profits from this sector. Nevertheless, foreigners don’t know the market well and fear the sector’s risks and the political situation, but I think they will have investments in this sector in the coming period.