There are no accurate or proven expectations about the real estate market’s performance for 2020, at least this is what all the real estate experts agreed on. The known fact is that Egypt’s real estate market in 2019 wasn’t the best. Things are changing every minute due to the presence of initiations and interventions from the governmental and private sectors.
After the actual movements by the government and the Central Bank, it is expected that Egypt’s property market will flourish, but the sales will remain low till the end of the first quarter of the ongoing year. This is due to the inequality of the percentage between what is offered and the citizen’s purchasing power. In addition, the prices in the real estate market in Egypt are not stable yet.
To know more about what the real market is going through nowadays and the supply and demand analysis of the real estate market in Egypt, we asked a number of questions to Mohamed Hammad, Managing Director at Property Finder. He answers in full transparency showing us the company’s status during the current situation and the attempts to restore the balance in the real estate market generally.
Now let’s have a look at those questions respectively for a complete and clear image about the current situation.
1. What Were the Primary Expectations for 2020? And What Is the Current Situation?
Regarding the primary expectations, Mohamed Hammad says, “Before the spread of the pandemic it was expected that the real estate market will witness a rebound in 2020. Real estate experts expected 2020 to be the recovery for Egypt’s real estate market sales which have decreased in 2019. Palm Hills and Emaar, the two leading and top-ranking real estate companies in the market, had their sales decrease in the past year compared to 2018.”
He continues, “2020 was expected to be the light at the end of the tunnel but with the current situation it turned out to be the opposite, because of the Coronavirus pandemic and the freeze of work at many companies. Moreover, working from home became a must and everyone is staying home. The real estate market has slowed down in the current time and what’s next is still vague.”
Hammad added, “In this unstable period, most of the companies have a defect in the wages and expenses paying systems, in addition to everything that is related to the monthly payments consequently influencing the cash flow. This may lead to the closure of these companies and it will be a must, since 90% of the companies worldwide may find the decrease of the cash flow a reason to stop ongoing business.”
2. Lately, Different Markets Have Been Affected by the Spread of the Corona Pandemic and the Precautions Taken by the Government, Have This Also Affected the Real Estate Market in Egypt?
Hammad confirmed saying, “Sure this has deeply influenced the real estate industry in Egypt negatively, especially after limiting the sales activities for most of the companies. The purchasing cycle became harder than before, starting from meeting up with the clients to taking them to preview the available units whether for buying or renting.”
Then he followed saying, “What has newly happened is that the government has requested from the contracting companies to proceed with work actively. Consequently, it’s expected that the situation will get better gradually in the upcoming period. Since we mentioned before that the real estate market has just slowed down, not completely paralyzed, this led to an increase in the demand on the resale units in terms of prices, features, and conditions.”
“Lastly, when things go back to normal, it’s expected that a huge breakthrough will happen to the real estate market as what was supposed to happen in 2020. The Central Bank has issued a 3% decrease in interest which has encouraged people to invest in the real estate market lately.”
3. Have the Government’s Recent Decisions Like Decreasing the Interest Percentage in the Banks Affected the Real Estate Market and How?
Responding to the effect of the interest percentage decision in the banks, Hammad says, “We can’t deny the effect of this decision, but it had a weak impact due to its issuing time. Once the interest decreased, directly afterwards Al Ahly Bank and Banque Misr launched Certificates of Investment with 15% revenue. After this decision, many people started to withdraw their money and deposit it at banks that offer the certificate. We can say that 40 Billion EGP has been withdrawn in nearly 10 days, and of course, due to the movement of this huge amount of money between the deposits this has undoubtedly affected the real estate market and especially resale.”
4. We Witnessed the Cancellation of the Biggest Real Estate Fairs and One of Them Is Cityscape, How Has This Affected the Real Estate Development Companies and the Consumers?
Hammad expressed his opinion in this regard saying, “Cityscape is considered the start of the real estate season in the beginning of the year; it has been delayed in 2020 because of the Coronavirus. This has negatively influenced the sales target of real estate companies because the majority of the companies find Cityscape a great opportunity to show their special offers. At the top of these companies is “Palm Hills” who were planning to introduce the 10-year installment with zero interest payment plan.”
“Concerning the consumers, they lost their chance to take advantage of many attractive offers which are gathered in one place, as a result, the digital platforms became the consumer’s plan B to search for special offers.”
5. Has the Real Estate Sector Witnessed Any New Initiatives to Face the Current Crisis in Egypt?
In the light of what the market has witnessed, there weren’t many effective initiations from the real estate sector; Hammad has confirmed this saying, “Actually, the real estate sector didn’t make initiations; on the contrary, some companies have asked for postponing the land’s installments but the government refused.”
6. What Are the Real Estate Companies That Survived and Haven’t Been Affected by the Current Situation in the Country?
We all expect an economic disruption during the crisis; Hammad has emphasized on this by saying, “Unfortunately, we can’t say that there are companies secured against the crisis as we always see companies with different positions in the market negatively affected. In addition, the crisis is still ongoing so we can’t determine the losses.”
7. What Is the Decision That the Central Bank Took to Lessen the Burden on Real Estate Companies?
From all the issued decisions in the meantime, there’s a decision that Hammad clarifies, “The Central Bank has omitted some companies from the blacklist of the credit query; thus, it is easy to apply for a loan nowadays. Previously, they used to keep an eye on every detail of information and statistical data.”
8. What Are the Measures That Property Finder Has Taken to Support Its Clients?
Property Finder has taken a number of measures that include three main offers:
- 50% discount on the subscription of the first three months
- 30% discount for those who pay the subscription value in advance
- Lastly, April is for free.
According to the measures that Property Finder has taken, Hammad says, “As the company mainly depends on real estate marketing and development companies, we decided to support those companies by offering them April for free for all the clients.”
9. What Are the Companies That Will Be More Affected or Have Been Affected due to the Coronavirus Crisis?
The Coronavirus crisis affected many companies in different fields, Hammad says, “Undoubtedly, the most affected companies are the real estate developers because their profits depend on commission. This means that the profits are recorded only after signing the contracts with their clients; that is why a large percentage of the company’s capital is in the market most of the time obviously.”
10. In Order to Present a Complete Vision of the Market’s Directions, Is It Possible to Monitor the User’s Behavior During the Current Situation?
According to the search rates, most of the people who want to buy are looking for open places: houses with a garden and swimming pools or with roofs and spacious areas overlooking the outside view. In addition, customers’ needs are unpredictable, as in the meantime none will buy except those who aim to have their own unit.
When we monitored users’ behaviour during the past four months on Property Finder’s website, we found that the rates of demand on the apartments with sizes from 160 to 200 meter square are increasing. This proves the theory of expanding to create enough space so they can take advantage of it during this time.
However, apartments are always on the top of the search but the searching engines of Property Finder have found an increase in the search rates of villas with about 18%.
11. With the increase of the crisis, Will the Company Have a Special Way Through the Digital Platforms to Reach the Consumer?
Hammad says, “Yes and most of the digital marketing platforms have reflected an increase in customers and website users. Most of the real estate customers tend to surf through digital platforms which will surely reflect on the market. They use them to preview and choose the units online instead of doing this on the ground, as this may cause an infection with Coronavirus. Therefore, those who offer good content to the user win the current competition.”
12. What Is the Message That We Want to Deliver to our Clients in the Current Time?
Property Finder has shown its clients a positive side as they are its partners in success. Hammad expressed his message to the clients saying, “Although we know how difficult the crisis is, especially as it’s happening for the first time for everyone, we are extremely optimistic. Property Finder will keep supporting its clients whether in the current time or in the future, because we believe that better days are coming and the light at the end of the tunnel is real; not just that, we will also pass this crisis safely”
Finally, Property Finder will always be supporting its customers; we are aware that achieving success isn’t possible by one side only but through the cooperation of all sides.