Arabia Holding aims to achieve contractual sales worth EGP 6.25bn of its two projects, Sun Capital in West Cairo and Galleria in New Cairo this year, including EGP 5bn in total sales expected from the Sun Capital and the rest from the Galleria project, according to Tarek Shoukry, the chairperson of the company.
Shoukry said that about 1,200 units were marketed in Sun Capital last year with contractual sales of EGP 3.8bn. The company plans to offer the same number of units this year.
Daily News Egypt interviewed Shoukry to identify the company’s strategy during the current year, the transcript for which is below, lightly edited for clarity:
What is the value of targeted sales of the company’s projects?
The company plans to achieve contractual sales worth EGP 6.250bn of the Sun Capital and Galleria projects this year, including EGP 5bn in total sales expected from the Sun Capital and the rest from the Galleria project.
What is the value of sales in the Sun Capital project?
The Sun Capital is a new city located at the siteof the great Pyramids stretched over 575 feddan in the heart of the world’s greatest civilisations. The Sun Capital is the world’s latest addition of a complete metropolitan city named the New Touristic Capital of Egypt, where life, business, and entertainment are combined.
Additionally, the company has marketed about 1,200 units in the Sun Capital last year, with contractual sales of EGP 3.8bn. The company plans to launch the same number of units this year. We also aim to complete the marketing of the entire project over six years.
What is the value of investments to be directed in the Sun Capital and the Galleria projects this year?
The company plans to invest EGP 1.5bn in the Sun Capital and the Galleria projects this year. The value of the investments whichhave been injected into the Sun Capital project since its inception six months ago is worth EGP 500m.
What is the operational situation of the Sun Capital project?
The company has obtained the first building license about six months ago. Currently, we have obtained 200 licenses for the Sun Capital. Moreover, the company has also applied for 95 new licenses expected to be received by the end of this month. In addition, 120 buildings and 120 villas are currently under construction, and by the end of this year, we plan to complete their construction work. Additionally, the company is seeking to implement an integrated city to be a complete model for customers.
The company pays great attention to the development of the project implementation and increasing the construction rates in all sold residential buildings.
What are recent contracts and MoUs signed to develop the Sun Capital project?
The company is in a process of contracting with a large international sports club to become part of the project which would be a great addition to the Egyptian market and the Sun Capital project and we will announce the details in April.
Moreover, we have announced an international competition for the design of the Fairmont Hotel, which is scheduled to be in the project. We have been surprised by the great interest of the most important international design offices as we received 14 offers by global consultant offices in design.
The company has assigned a jury committee which includes professors from the Faculty of Engineering to evaluate the relative standard of the technical level of the offices, prices and the previous work of each office, which is done with the participation of Fairmont International, as we contracted with the latter to provide technical support throughoutall the phases–from the start of the selection of the office responsible for the design of the project.
The next step involves announcing the winner within a month to design the hotel, which takes approximately 6 months. Three designs will be launched including interior design, facade design, and landscaping, in order to begin the hotel development by early next year.
What are the updates regarding the Galleria project?
The implementation rate in second phase of the Galleria project is high, which is ahead of the schedule by about 15 months, where the implementation rate of the phase reached 95%, and the implementation rate in the fourth and sixth phases reaches 58%. Moreover, it is expected that the second phase will be fully implemented by the end of this year.
What is the value of investments which will be injected in the Galleria project in 2019?
The company plans to direct investments ranging between EGP 250m and EGP 300m in the project during the current year, targeting EGP1.25bn in value of contractual sales of the remaining part of the project during 2019.
What is the update regarding the Bungalows North Coast project?
The licenses of the hotel part in the project are being finalised, which includes a 300-room hotel run by the Mövenpick brand.
What is the size of the company’s land bank?
The company’s land bank reaches 4.5m sqm, and we are not currently planning to increase it because we are focusing on achieving significant implementation rates of the Sun Capital project. However, investing in Upper Egypt will be put on the company’s expansion plan later.
Does the company plan to list its shares in Egyptian Exchange (EGX)?
The company is planning to list a portion of its shares on the EGX at a rate of not more than 25%, but the timing of the offering is the main determinant based on two factors. First is the implementation of large rates of the Sun Capital project as one of the elements of the company’s assessment, and the second is evaluating the preparation of the market for our company’s initial public offering (IPO). I think we will prepare the company’s IPO file during the current year and wait for the appropriate time.
What is the company’s plan to export property?
Exporting property is one of the most important issues that the state is currently focusing on and is exertingall required efforts to succeed in reaching foreign clients and investment funds. Therefore, the expansion of this is based on three axes: the law of residency in return for property purchase, in addition to solving some of obstacles facing exports, such as solving the problem of property registration, and third granting tax incentives to foreign investment funds.
Furthermore, our company plans to participate in external exhibitions in Saudi Arabia, Kuwait and the UAE to market the Sun Capital project.
How do you see the real estate market in the current year? Additionally, what areyour expectations toward the price hikes in the sector?
This year, the market is witnessing the largest test in terms of rates and execution volume as well as compliance within deadlines for delivery. Strong companies with a clear plan, experience and strong financial solvency are able to meet their commitments toward customers and speed up execution rates, as non-serious companies cannot implement many phases of their projects. The current year is filtering out serious and non-serious developerswithin thetoughmarketcompetition.
The real estate sector directly contributes 18% to the GDP and 24% directly and indirectly, which reveals the importance of this sector.
Regarding prices spikes, I expect a price increases ranging between 10 to 15% in the real estate market during the current year, considering the increase in fuel prices, which will be in the middle of this year, where the contribution of fuel in implementation cost reached about 3% and 5%.
How do you see the urban development in west Cairo and the completion between east and west Cairo?
The size of the development and implementation rates in the west Cairo area achieves some balance with the size of development in east Cairo. Greater Cairo is divided into two regions. Moreover, since the inauguration of the Sun Capital project, it contributed toward enriching the west Cairo area, where unit prices increased by about 20%.
As a head of Real Estate Development Chamber at the Federation of Egyptian Industries, the chamber has participated in pushing the draft law of the real estate developers federation. When will the law be issued?
A formula for the draft law has been reached which is optimal. The formula includes initiating a federation for developers to manage the affairs of the private real estate sector and through which the classification of developers will be conducted.
Several meetings have been held with several parties to discuss issues related to the launch of the law and enforcing it. The executive regulations of the law will discuss the details of the federation, which are expected to be issued quickly, upon the directives of the President Abdel Fattah Al-Sisi.