One of the biggest facts unanimously agreed by real estate sector experts is that there are no proven expectations about the performance of the real estate market in Egypt for the year 2020, as things are in the process of permanent change according to the emergence of initiatives and interventions, whether by the government sector or the private sector.
Based on these actual moves - on the part of the government and the central bank - the real estate market is expected to recover a little while maintaining a calm percentage of sales until the end of the first half of this year, especially after the percentage of what is on offer of units is not equal with the purchasing power of the citizen. .
To find out more about what the real estate market is going through in Egypt at the moment, we asked many questions to Mohamed Hammad, the regional director of Property Finder, who answered us with utmost transparency to reveal how events are proceeding with regard to the company in particular, and attempts to restore balance in the real estate market in Egypt generally.
Now, let's go through these questions in order; Let us shed light on the state of anticipation that hangs over the atmosphere, while making sure to present a complete picture of the truth.
1- What were the initial expectations of the real estate market in Egypt for the year 2020? And what is the current situation?
On the initial expectations, Mohamed Hammad said: “Before the spread of the global epidemic, a strong boom was expected in the real estate market, as many experienced people in the real estate field expected to compensate for the lack of sales that occurred in the Egyptian market during 2019, such as what happened to the two companies, Emaar and Palm. Hills - and they are one of the real estate companies with a long history in the market - a decrease in their sales was recorded last year compared to 2018."
Then he added, commenting on the current situation: “Contrary to what is happening at the present time, 2020 was a year of breakthrough within the realm of expectations, but due to the new epidemic of Corona and the disruption of work in several companies with the necessity and inevitability of working from home; There has been a severe slowdown in real estate in the current period, as it is not possible to determine what the situation may lead to later.”
He continues: “In light of the lack of knowledge, most companies face a defect in the salary and rent payment systems and everything related to the periodic expenses of commercial activities, which may be reflected on the total cash flow, which in turn may also lead to the inevitability of closing these companies; Because 90% of companies around the world can consider the lack of cash flow as a valid reason for the end of the current business.”
2- Recently, various areas have been affected by the spread of the Corona epidemic by the precautionary measures taken by the state. Did this also have an impact on the real estate market in Egypt?
Hammad affirmed, “Of course, it had a great impact on the Egyptian real estate market, especially after the reduction of the sales activities of most companies; It was difficult to complete the purchase process as we used to, from the first meeting with customers until taking them to inspect the units offered, whether for sale or rent.”
Then he continued: “The thing that has happened regarding this trend is that the government has asked the contracting companies to start their work again in the most complete manner and with the utmost vigor and vitality; Therefore, the situation is expected to gradually improve in the coming days. As we mentioned before, what happened in the real estate market is a slowdown, not a process of total paralysis, which led to an increase in demand for units that come in the second stage (resale) in terms of price, ingredients, and conditions.
Finally, when things return to normal, it is expected that there will be a major breakthrough in the real estate market - to complement the initial expectations for the year 2020 - because the Central Bank issued a decision to reduce interest by 3%; This has attracted a lot of people towards real estate investment recently.”
3- Have the recent state decisions such as: reducing the interest rates in banks have an impact on the real estate market in Egypt and how?
Commenting on the impact of the decision to reduce interest rates in banks, Hammad added: “We cannot deny the impact of this decision, but it was a weak effect due to the timing of its issuance; Interests were reduced, and immediately after that, the National Bank, Banque Misr and Banque du Caire issued investment certificates with a return of 15%. After that decision, a large segment of people began withdrawing their money and depositing it in banks that have investment certificates. We can say that about 40 billion Egyptian pounds were withdrawn in about 10 days, and of course because of the movement of this huge amount of money inside deposits; This affected - without a doubt - the movement of the real estate market, and the resale market had the lion's share of these changes.”
4- We witnessed the stopping of the largest real estate exhibitions, the most important of which is Cityscape? How did this affect real estate developers and consumers?
Hammad expressed his opinion in this regard, saying: “Cityscape is considered the beginning of the start of the real estate season in the New Year, and of course it was postponed this year due to the Corona virus. Postponing the exhibition had a negative impact on the performance of real estate companies in terms of sales to be achieved; Because most real estate companies consider Cityscape as a platform for their special offers, on top of them is “Palm Hills”, which was expected to offer an installment system over 10 years without interest. As for the consumer, he lost the opportunity to get many attractive offers under one roof, which prompted him to resort to electronic platforms in order to search for similar offers.”
5- Has the real estate sector witnessed any new initiatives in order to confront the current crisis in Egypt?
In light of what the scene witnessed, there were not many effective initiatives on the part of the real estate sector, and Hammad confirmed this, saying: “In fact, there were no initiatives by the real estate sector. before the government.”
6- What are the real estate companies that have withstood and were not affected by the current situation in the country?
6- What are the real estate companies that have withstood and were not affected by the current situation in the country?
7- What is the decision taken by the Central Bank to ease the burdens on real estate companies?
Among all the decisions issued at the present time, there is a decision that Hammad expressed, saying: “The Central Bank has removed some companies from the negative lists of the credit inquiry; Therefore, it has become easy to apply for loans in light of the current situation, unlike what was happening in the past from the scrutiny of information and statistical data.”
9- Which companies are most vulnerable to, and indeed affected by, the coronavirus crisis?
Hammad said: “There is no doubt that the most affected companies are real estate development companies, because these companies depend in their profits on the principle of “commission”, meaning that profits are recorded only when contracts with clients are completed; Therefore, most of the capital is circulating outside these companies for the longest possible period, of course.”
10- In order to convey a comprehensive view of market trends, is it possible to monitor the movement of users during the current situation?
According to the search rates, most of those wishing to buy have resorted to searching for open spaces, i.e. houses with attached gardens and swimming pools, or with roofs and vast areas overlooking the outside, and potential customers are no longer possible, as they will not accept the purchase - specifically in This time - except for those who claim to own their own unit.
When we monitored the traffic of users on Property Finder over the past four months, we found that demand rates are higher for apartments ranging in size from 160 to 200 meters; Which proves the validity of the expansion theory to create enough space, which can be used in the present time.
Although apartments always come first in search, Property Finder's search engines have proven high search rates for villas by about 18%.
١١- مع تصاعد الأزمة، هل سيكون هناك توجه خاص للشركة عبر المنصات الإلكترونية فى الوصول للمستهلك؟
Hammad said, “Yes, and most e-marketing platforms at the present time have achieved a clear rate of increase in the number of consumers and surfers. This general behavior will, of course, be reflected in the real estate market; As most real estate buyers resort to browsing through electronic platforms to preview and select units, instead of doing so in reality, due to the fear that they are vulnerable to infection with the Corona virus. In the end, whoever delivers better content to the user will be the one who will lead the current race.”
12- What is the message we want to deliver to our customers at the moment?
Property Finder has shown a positive side to its clients because they are partners in its success; Which cannot be hidden because success does not come from nowhere. Muhammad Hammad expressed his message to clients, saying: “Although we appreciate the difficulty of the crisis, especially because it is the first of its kind in human history, we are still very optimistic. Property Finder will remain supportive of its customers, both now and in the future; Believing that there is a great breakthrough coming, and we will cross this crisis in peace.”