With the devaluation of the Egyptian pound and increases in the cost of building materials, the real estate sector in Egypt faces real challenges.

1. HOW EGYPT CAN CONFRONT THE
ECONOMIC CRISIS OF ITS REAL ESTATE
MARKET

2. • The real estate sector in Egypt faces a number of challenges at the
moment, from increases in the prices of building materials to an overall
shortage of raw materials due to importation problems. As a result,
construction has been declining for more than two years. Beyond this,
the industry is facing some new challenges. One of the biggest issues
that has arisen has to do with decreasing financial liquidity which, when
combined with the high costs of construction, could jeopardize the
ability of developers to finish projects that they have already sold to
their clients. While the sector has a bright future with the development
of projects like the new administrative capital, it is becoming
increasingly important that the Egyptian government take steps to
safeguard the industry and protect it from these financial challenges.

3. ADDRESSING THE PROBLEMS WITH
LAND SALES IN EGYPT
• One suggestion that has been made is making land more available to
developers. Currently, land accounts for about 40 percent of total
construction costs, which is about double the usual percentage. Making land
more affordable would relieve a lot of the financial pressure currently felt by
developers in Egypt. In addition to lowering costs, the Egyptian government
could also consider extending payment periods to make the costs more
manageable, especially during a period of financial crisis. To help with the
cost of land, there are opportunities for stronger partnerships between
development companies and banks. For example, in other countries,
development companies write feasibility studies and present them to banks
to partner with them in financing from the very beginning of the
development, which provides more financial stability. Such partnerships
would also make land more affordable for developers and reduce the burden
of paying for it upfront.

4. CREATING A TRUE MORTGAGE SYSTEM FOR
THE EGYPTIAN PEOPLE
• The other benefit of building stronger partnerships between
development companies and banks is the creation of more financing
options for customers. After all, if families and investors are unable to
afford property, then the market will collapse. This is especially
important now considering that real estate prices are likely to increase in
the near future. With higher costs of construction and materials, the only
way for development companies to stay afloat is to increase the price of
construction. Egypt has already witnessed a price increase between 15
percent and 30 percent due to an increase in the price of raw materials
of about 20 percent. While the market has remained robust, the fact that
some developers have stopped selling altogether or postponed new
phases of projects has caused some alarm.

5. CREATING A TRUE MORTGAGE SYSTEM FOR
THE EGYPTIAN PEOPLE
• Many people are now calling for the creation of a complete mortgage
financing system within Egypt as the only real solution for the current
crisis. This is because Egypt is projected to need 30 million new housing
units in the coming 30 years. Unfortunately, the cost of building and
selling these units is simply not consistent with income levels within
Egyptian society. In other words, Egyptians simply will not be able to
afford the housing they need with the current and likely future surges in
prices. Moreover, the purchasing power of the Egyptian pound has fallen
dramatically, which further reduces what people can afford. An
institutionalized mortgage system would make it possible for Egyptians
to buy property without saving for a lifetime and government backing
would drive faith in such a system.

6. ATTRACTING GREATER FOREIGN
INVESTMENT IN EGYPTIAN REAL ESTATE
• Another suggestion to support the real estate segment in Egypt involves
selling property to Egyptians living abroad in markets that pay more,
allowing them to afford the higher prices. In particular, there is now a
push to attract more Egyptians living in European and Gulf countries to
the domestic real estate market to drive property sales. Increasing sales
would funnel new money into development companies and provide
more fuel for them to continue expanding on and completing projects.
To attract more investment from Egyptians living abroad, developers
need to think of creative and attractive incentives, such as allowing
people to lock into lower prices today while delaying payments until a
certain point down the road. This would encourage investors to act
immediately.

7. ATTRACTING GREATER
FOREIGN INVESTMENT IN EGYPTIAN
REAL ESTATE
• In addition, there has also been a call for more real estate exhibitions as
a way of attracting foreign investment in Egypt. The major benefit of
these exhibitions is that sales are completed on the spot, which means
that Egypt gets an immediate infusion of currency after the event. These
events are a great way to highlight the incentives being offered by
development companies while showing people the exciting new projects
under development. With a lot of excitement around new opportunities
and great deals to make them affordable, more properties get sold. In
the near future, there may be many more of these exhibitions
throughout Europe and the Gulf region to bring capital into Egypt.