Egyptian Officials Brainstorm How to Support Real Estate Growth

With the creation of the New Administrative Capital and efforts to expand existing cities, the real estate market in Egypt is currently in a state of rapid expansion. Because of the COVID-19 pandemic and the Russian invasion of Ukraine, Egypt has faced several economic setbacks during this period of expansion.  

Determined not to let these setbacks threaten the growth of the market, the Egyptian government has been exploring many options for boosting real estate in the country. Recently, Prime Minister Mostafa Madbouly met with the Real Estate Development Chamber and Minister of Housing, Utilities, and Urban Communities Assem El Gazzar to discuss some of the proposals that have been made for revitalizing the property market.  

Making Egyptian Real Estate More Attractive to Foreign Investors 

After the meeting, Tarek Shoukry, the chairperson of the Real Estate Development Chamber, reported that 10 measures had been proposed for increasing sales and driving the growth of the real estate market. Many of the proposals relate to attracting more foreign investment in the market. Given the economic hardship currently faced by Egypt, increasing the foreign money available in the country is a great solution.  

Egypt has faced a shortage of hard currency and a valuation that fluctuates constantly. Both of these issues can be addressed by bringing foreign currency into the country. Among the proposals to attract more foreign investment were suggestions to allow foreigners to own an unlimited number of units and to establish a special unit for processing residency, citizenship, and ownership paperwork.  

According to current Egyptian laws, foreigners can apply for Egyptian citizenship once they invest $300,000 into local real estate. However, stipulations such as nationality and limits to how many units foreigners can own can make gaining Egyptian citizenship tricky. By removing these stipulations, foreigners interested in investing more in the country, whether for citizenship purposes or not, have the ability to do so.  

At the same time, administrative burden can also be a major hurdle. The creation of a special unit to process these requests would allow Egypt to guarantee a specific turnaround time and thus make people feel more secure in the process. Such a unit also sends a message to foreign investors that they are truly welcome, and that the government is ready to help them in the process.  

Making Egyptian Real Estate More Affordable for Citizens 

Of course, attracting foreign investors does not entirely address how to grow the real estate market. Part of creating the New Administrative Capital and drawing people out of Cairo while expanding the housing pool relates to a desire to convert more Egyptians into homeowners. Doing this will improve the overall economic condition of the country. Given the current economic restraints, making real estate more affordable translates into providing more accessible options for financing. To that end, another of the Real Estate Development Chamber’s proposed measures was to offer a 10 percent mortgage rate for the coming two years, which would make a mortgage more accessible to Egyptian nationals who are unable to afford the current rates. 

The other side of making real estate more affordable concerns reducing the costs associated with land. The group of officials also proposed cutting the cost of land loan installments by half for the coming two years. Reducing the bottom line cost of real estate also expands the pool of people who can make a purchase.  

Another proposal involves rethinking the price of industrial lands. Encouraging more businesses to make roots in Egypt can help steel the larger economy while potentially providing a degree of diversification. No additional details were released about how the pricing might change at this time.  

Making Egyptian Real Estate More Affordable to Build and Develop 

Another point to consider in bolstering the Egyptian real estate market is making development more affordable and approachable. Because of supply chain issues caused by both COVID and the war in Ukraine, construction costs are at an all-time high, which increases the cost of real estate while reducing the number of companies that can afford to continue given the massive overhead. To that end, several proposals dealt with ways to reduce construction costs. For example, the Real Estate Development Chamber proposed doing away with dumping fees and increasing built-up area by 10 percent without additional fees. 

Furthermore, the group discussed allowing for both horizontal and vertical expansion, which increases options for developers and creates new ways of generating revenue from existing projects. The other proposals were to expand the amount of time allotted for development, which can give developers time to work in a strained environment and even strike better deals with their suppliers since they have greater flexibility. The hope is that this increases the gross amount of development happening while minimizing costs.