MBG plans to direct EGP 500m investments in the Pukka project in the New Administrative Capital, according to Mahmoud Al Adl, chairperson of MBG.
Daily News Egypt interviewed Al Adl to talk about the development process of the company’s projects in the new capital, the transcript for which is below, lightly edited for clarity:
What are the updates regarding Pukka project?
The company has begun earth works of the project, after obtaining the ministerial approval for the project implementation, to begin construction works of the first phase in the beginning of the coming year. The contract with the Administrative Capital for Urban Development company (ACUD) obliges companies to develop at least 10% of the project within the first phase of the project, and 30% for the next 3 years, with completion of the project within 4 years.
The project’s investments are estimated at EGP 4bn and is it being developed on 50 feddan, 9 of them are specified for the roads, It is located in the heart of the Capital, close to at the new Nativity of Christ Cathedral. The construction area of the project represents 22.5% of the total project’s size, and the rest of the space, 77.5%, is allocated for green areas, landscape, squares, and a commercial mall. The project includes 50 buildings, comprised of 1,700 units with sizes ranging between 800 and 900 sqm consisting of eight floors.
What is the value of investments will be directed in the project in 2019?
The company plans to direct approximately EGP 500m in the project in the coming year.
What is value of the project’s targeted sales?
The company aims to achieve sales of EGP 2.5bn next year, compared to achieved sales of EGP 2bn within a year of its launch.
What is percentage of the project marketing so far?
The company has succeeded in marketing about 50% of the total units of the project.
What is the update regarding the mall inside the project?
The company will begin the implementation of the mall in the beginning of the coming year. Furthermore, the company has launched it for marketing a month ago and has marketed 15% of the commercial part of the mall. The mall will include commercial, administrative, and medical activities.
The mall spans over 18,000 sqm with net building area of 6,000 sqm, and comprises of three floors and the company has allocated 4,000 sqm for commercial activities, 1,000 sqm for medical activities, and another 1,000 sqm for administrative activities.
What is the source of the project funding?
The project is self-financed by the shareholders, who are investors, and also the project sales.
What is value of the project’s target revenues?
The project’s target revenues amounted to EGP 5bn, which the company aims to achieve based on the strength of Egypt’s real estate market, and the great demand by the customers, especially in the New Administrative Capital, as one of the new urban communities supported by national and investment interest.
What is the company’s expansion plan?
The company is negotiating two plots of land with a total area of 130 feddan in the North Coast and Ain Sokhna, as the company plans to get one of them to implement a residential tourist project in one of those areas. It is expected to agree on one plot of land before the end of this year, in preparation for the launch of the project next year. One of these two plots of land is located in the North Coast on an area of 100 feddan and the other on 30 feddan in Ain Sokhna. Moreover, the company plans to diversify in land portfolio in the Capital and coastal areas.
How do you see the role of the government in the sector?
I call upon the state to implement comprehensive development projects which not only focus on the real estate sector but also on implementing new projects in the agricultural and industrial sectors in order to achieve strong growth rates. Implementation of this great volume of real estate projects may adversely affect the operations of the real estate market.
Do you think that the market faces decreased sales?
The stability or the decline of purchasing power of customers during the previous period was associated with general economic difficulties, as a result of the economic reform procedures which were taken by the government, yet, will benefit citizens in the coming period. Therefore, the real estate market depends on improving the general economic situation in the country, and improving the customers’ financial ability.
Nevertheless, the real estate market has so far been able to meet challenges, and citizens continued to buy because of a real demand based on the increase in population. Noteworthy, purchase for investment purposes has recently declined since the launch of high-yield savings vessels.
I believe that real estate companies continue to innovate new marketing solutions to support customers to take decisions to buy property and maintain sales operations, especially with the continued absence of mortgage financing system—a role that should not take long to maintain cash liquidity for those real estate companies. Thus, the state is required to intervene to review the mortgage finance system as one of the sector’s development mechanisms.
I want to confirm the high volume of competition between companies in the New Administrative Capital, a pressuring all companies to imitate each other in payment systems, which may be a burden on them, but they are all obliged to do.
Do you think that the government’s offering for real estate projects in New Capital, New Mansoura and New Alamein will affect the company’s sales in these areas?
It is not a competition with real estate developers who implement units for the same residential segment in the same areas, because Egypt is a large market and can accommodate all real estate projects produced by all companies.
What are the distinct activities that the company will provide in its project in the New Administrative Capital?
What makes Pukka unique is the prime location, green areas, event lounge, swimming pools, clubhouse, solar system panels, pet care service, premium mall, health club, spa, and a food court.
What other projects is the company developing?
We are developing several residential villages in the cities of Damietta, Mansoura, and Ras El Bar. In Ras El Bar, we have three villas: Sunset Festival, Sunset El Nakheel, and Sunset Gardens. In Mansoura, we have Al Oula City on 27,000 sqm and a World Trade Centre on an area of 20,000 sqm, in addition to the International Medical Centre on an area of 10,000 sqm consisting of specialised medical centres on the Nile in Mansoura city.
What is the company’s expansion plan?
I believe that the future of real estate investment is in the New Administrative Capital. From my experience, I see that all investors and clients have an eye on the Capital, and I think investment in the Capital will last for over 100 years.
What is the engineering consultant office?
Since we contracted with the Administrative Capital for Urban Development company, we planned to be unique in our designs, then, we contracted with one of the most famous offices in this sector. We assigned Raafat Miller Consulting to design the project.
What is the company’s plan to participate in foreign real estate exhibitions?
Participating in real estate exhibitions is very important to promote companies’ sales and to allow developers to expand, as well as boost hard currency in the country.
Therefore, the company plans to participate in several foreign real estate exhibitions to promote sales for foreigners, mainly real estate exhibition in Melanoma, Italy.The company targets about 15% of the project’s sales to foreigners.
How do you view the competition between developers within the New Administrative Capital?
There are too many developers in the Capital who launched their projects which led to fragmentation of purchasing power of the customers. Besides, the state offering for a group of projects in different places at the same time contributed to the fragmentation and weakening of purchasing power.