Egyptians buy into real estate to escape currency dive

Two years of upheaval have devastated much of Egypt’s economy. The pound has lost about 14 percent of its value, while the central bank’s dollar reserves have fallen to critically low levels, hampering the government’s ability to buy essential imports such as fuel and wheat.
But for the real estate industry, especially the upmarket part of it which caters to people with large amounts of savings, the weak pound is actually fairly good news.
“We have a better market now,” said Hisham Shoukri, chairman of Rooya Group, one of the largest property investment firms.
“I don’t say it is an excellent market, but a lot of people want to save the value of their money by buying real estate assets,” he told last week’s Cityscape property industry conference in Cairo, which saw a 25 percent rise in participants compared to 2012.
In addition to Egyptians, the weaker currency makes Egypt more attractive for investors from other Arab countries trying to escape instability at home, especially Libya, Syria and Sudan.
Asking prices for apartments in the upmarket suburb of New Cairo rose 4 percent in the first quarter compared to the previous quarter, consultants Jones Lang LaSalle said in a report last week.
Some foreign developers want to get in on the action. Last October Al-Futtaim Group and Emaar Properties, two real estate developers from the United Arab Emirates, said they planned a 5 billion Egyptian pound tie-up to build a retail, entertainment and residential complex outside Cairo.
Ahmed Tawfik, general manager of Iqarat Misr, an Egyptian-Bahraini property investment firm, said sales for a new housing compound in a Cairo suburb were going well, but his Gulf partners had put on hold any new projects until they figured out where Egypt was heading.
SODIC plans to bring seven new residential projects online this year as it sees no let-up of demand.
“2012 was our best-ever year,” said Ayman Ismail, chief executive at Mountain View, another Cairo-based developer. “We had a dip of probably 20 percent in 2011 – towards the third quarter of 2012 the demand came back.”
Developers and real estate agents think prices for residential units may rise by as much as 20 percent this year, boosted by demand but also because the weak pound will raise the costs of imported construction materials such as steel.

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