Sales of real estate companies in areas of 6th of October and the Fifth Settlement fell by 30% to 40% in the first quarter (Q1) 2017 compared to the Q1 2016, according to Mohamed Salama Amlak Finance- Egypt.
Salama said that the decline in sales is accompanied by a financing gap.
Salama attributed that the emerging of a funding gap within the real estate companies, which became very large even after many companies and developers took three mechanisms to motivate their customers to buy. First is a reduction in booking down payment and extend payment periods, some of which reached 12 years. As well as raising the discount on the cash to 32%.
“Due to the successive increases in the prices of building materials, many companies offer few numbers of units for sale to avoid the stabilization of prices that are likely to increase at any moment, along with other indirect costs also witnessed increases such as salaries of workers and electricity prices. Therefore, companies could not fix the price of units and resort to offer few less,” added Salama. “Although the mentioned facilitations the financial gap is still increasing due to the decline in sales.”
Aqarmap index showed a decline in demand for property during the month of August by 4%, noting that this decline is normal and expected, especially with the coincide Eid Al-Adha holiday in August.
However, the Aqarmap index registered an increase in demand for property by 5% by the end of September, which reflects growing demand for real estate in general, and acceleration in the offering and launching new real estate projects considering the increase in demand despite the continued high prices resulting from the floating of the pound.
Meanwhile, Mohamed Hammad, the executive manager of Propertyfinder said that demand for New Cairo and the Fifth Settlement increased by 28.76% in September 2017 compared to August of the same year.
Furthermore, Abdallah Hassan, Senior Property Consultant at Coldwell Banker Commercial said that the demand on real estate products is increasing and continuous.
Hassan explained that the demand is much higher than supply, because the real estate companies are offering few units currently to grantee achieving the profit margin and avoid changing in prices.
He noted that that the demand is always high on Ain Sokhna in September and October, however, in North Coast the demand is higher in May and June. Besides, the demand is continued on the whole year.