Minister of Housing, Utilities, and Urban Communities Mostafa Madbouly said that the government is offering land for investors at reasonable prices, highlighting that the high interest rate environment is denting investment in Egypt’s real estate sector.
Madbouly, who was speaking on the sidelines of the Akhbar Al Youm economic conference, added that the government will stick to its pricing policy, expecting foreign investors to pump more cash in the few coming months.
Egypt is now becoming a tempting destination for investment in the real estate sector, and “we are expecting a lot more interest from foreigners looking to buy real estate in the country.”
Egypt’s real-estate sector was the fastest growing sector in the Egyptian economy during the first three quarters of 2017, growing by 10.8% over the nine-month period, Madbouly noted.
He said the Egyptian real-estate sector comprises 18.5% of the overall investments in Egypt since the start of 2017.
Madbouly added that Egyptian real estate faces fierce competition from foreign markets, with various countries seeking to provide an environment that attracts developers.
Madbouly also said that the high interest rate environment is harming investment in the real estate sector.
“Now, we are discussing the matter with the central bank and the Ministry of Finance. We are in need of more solutions to overcome this problem, which negatively affected investment in the real estate sector,” Madbouly explained.
Egypt has raised interest rates following floating its currency by almost 7%.
A recent report issued by Oxford business group has expected Egypt’s real estate sector to boom in the coming period.
“A number of other mixed-use projects are expected to be announced in the near future, alongside larger developments, such as the New Administrative Capital, a 700-sq-km city to be built east of Cairo with the potential to house 5m people,” the report said.
Meanwhile, Minister of Investment Sahar Nasr said that the real estate and construction sectors grew 10.8 percent in fiscal year (FY) 2016/17 and shaped 18.5 percent of total investments in the first nine months of the same FY.
Nasr said that mortgage finance contracts hiked 77% in the first half (H1) of 2017 at a value of EGP 956m, compared to EGP 540m in H1 2016.
Mortgage finance assets offered by companies amounted to EGP 3.5bn in H1 2017, 27 percent more than the same period in 2016, according to Nasr.
“The real estate and construction sectors are among the fields strongly supported by the New Investment Law,” Nasr said, adding that the Ministry of Investment is responsible for the non-banking financial sector, including mortgage finance and financial leasing, which she said encourages investment in the sectors.