440 million pounds in the company’s financing since the beginning of the year… and 700 million pounds added by purchasing real estate portfolios from developers
Low and middle income earners account for about 90% of the company’s cumulative financing portfolio
Al-Oula seeks to change its strategy, diversify targeted income segments, and provide financing to individual clients
Al-Tameer Real Estate Finance Company aims to grant financing worth 1.1 billion pounds, by the end of this year, of which it has achieved so far, about 440 million pounds, and seeks to add another 700 million by purchasing real estate portfolios from developers.
Ayman Abdel Hamid said, Managing Director And Vice-Chairman of the Board of Directors of Al-Tameer Real Estate Finance Company “Al-Awwal”, that low- and middle-income Prime Time Zone account for about 90% of the company’s cumulative financing portfolio.
Abdel Hamid added in an interview with “Al Borsa” that the “Al-Oula” company has been focusing on low and middle-income Prime Time Zone since the start of the national housing project in 2005, and it continued to fund that segment with the launch of the social housing project.
He explained that the company seeks to develop its strategy during the coming period, add new income segments, and provide financing to individual customers who want to buy villas or large apartments, for example, while continuing to finance low and middle incomes.
He pointed out that the company’s plan depends on the “new distribution of the portfolio” because the customer in the regular financing can be equivalent to the size of his financing about 100 customers of low income. Granting financing to any client who needs real estate financing without regard to the level of his income as long as the client is in need of financing.”
Opening new branches depends on the volume of demand..and we aim to be in the new administrative capital and Alamein
Abdel Hamid said that the “Al-Oula” company seeks, during the coming period, to reduce the time period for studying customer files and granting funds within 5 working days only, which in some other funding agencies reaches months.
He added that the development plan includes providing real estate financing services “online”, so that the client submits the application and uploads the documents electronically, and after studying them, he comes to the company to sign contracts only.
He explained that Al-Tameer Real Estate Finance “Al-Awwal” owns 4 branches for collection and customer service in 6th of October, Mohandessin, 10th of Ramadan and Nasr City, and the sales service will be added to become the main activity of the branch in addition to other services.
He pointed out that the opening of new branches depends on the volume of demand in the targeted places.. “For example, if a developer implements a project in Alexandria, employees can be sent to provide services to customers for a certain period of time during the sale period, instead of bearing the cost of establishing an entire branch.”
Abdel Hamid said that the main purpose of technological development is to provide the company with a high financial cost, in addition to the cost borne by the client in completing the procedures and documents, and the company seeks to complete the development plan during the near next stage according to the rates of preparing the information environment necessary for implementation.
He added that the volume of Al-Oula’s financing amounted to 3.9 billion pounds, and the existing debts of clients amounted to 2.1 billion pounds, and real estate developers’ portfolios account for 13% of the clients’ debts portfolio.
He explained that the number of the company’s clients amounted to 33,000, and about 11,000 clients finished repaying their loans, bringing the number of current clients to 22,000, including 20,000 of low and middle income earners.
3.9 billion pounds, the volume of “Al-Oula” financing, and 2.1 billion outstanding debts, distributed over 22 thousand clients
He pointed out that the volume of the “Oula” company’s finances within the previous real estate financing initiative amounted to about 880 million pounds, distributed among about 8,000 clients.
Abdel Hamid said that the company aims to grant financing worth 1.1 billion pounds by the end of this year, of which it has so far achieved about 440 million pounds, and is seeking to add another 700 million by purchasing real estate portfolios from developers.
He added that the company is currently negotiating with 3 real estate development companies to buy portfolios with a total value of close to one billion pounds..but negotiations are underway and it is not possible to determine the final value of the portfolio or the number of companies that will be finalized with it.
He explained that the “first” aims to grant real estate financing worth one billion pounds during 2022, about 100 million pounds less than the target during the current year.
Abdel Hamid said: “The volume of financing will decrease next year due to the company’s reliance on purchasing real estate portfolios from developers in 2021.. But in 2022 we will work to increase financing for individual clients after forming a team of finance experts as agents to deal with clients and increasing the volume of funds outside the initiatives. “.
The managing director of the company added that the volume of credit facilities with “Al-Oula for Real Estate Finance” currently amounts to about 3 billion pounds, as the company cooperates with 10 banks.
He explained that the repayment periods in the real estate financing programs offered by the company are up to 15 years, and the maximum financing amount is 150 million pounds, which is equivalent to 15% of the company’s equity, which amounted to one billion pounds, and 80% of the unit value is financed, with a fixed installment provided, and the rate of return. Variable according to the interest rates of the central bank.
3 billion pounds, the size of the company’s credit facilities… and we cooperate with 10 banks
Abdel Hamid said that Al-Oula will introduce new payment programs related to helping the customer pay according to the income he receives, whether fixed monthly income or linked to certain periods or annual profits and dues.
He added that the company can open new branches in the administrative capital and the new city of El Alamein, according to the volume of demand for real estate financing programs. He continued: “If 1,000 clients toured the capital, we would create a branch. If 10 clients, we would not open. This will be determined at the beginning of the delivery of the project.”
Abdel Hamid explained that “Oula for Real Estate Finance” is cooperating with 3 insurance companies, providing life insurance for the borrower, insurance for the unit against fire, and insurance against non-payment risks for some products.
He pointed out that the company’s default rate ranges from 2.5% to 3% of the total number of customers, and legal measures are taken, whether withdrawing the unit or negotiating with customers to schedule the overdue receivables.
Abdel Hamid said that the competition between banks and real estate finance companies does not focus on the number of customers or repayment periods because they are settled in favor of the banks, but the companies are distinguished in the time period for implementing the loan.
He added: “Banks have a large number of branches and the cost of financing is lower, but companies are distinguished by their specialization in real estate financing only, because the bank deals with it as a product from the individual sector, but we specialize and build long-term relationships with clients for periods of up to 20 years.. We have 150 employees in the company who read The real estate finance law and they understood it well and studied all cases.. and real real estate financing begins after granting the loan, but the bank finishes its procedures when financing.. Also, the rate of return does not differ between banks and companies, and the difference between the highest and the lowest does not exceed 0.5% only.”
The managing director of Al-Oula believes that the demand for real estate finance continues and is growing due to the number of marriages that reach at least about 500,000 marriages annually, and that the population growth in Egypt creates a permanent need for obtaining real estate finance.
He said that real estate finance “had a bad reputation” in previous periods due to the successive shocks in the economy, and he continued: “The real estate finance law was issued in 2001, and the first company was Al-Taameer for Real Estate Finance (the first) in February 2004 and in 2008 the global financial crisis occurred due to real estate financing in The United States affected the whole world, the 2011 revolution came, the flotation in 2016, then the Corona pandemic in 2020, and all these shocks affected the possibility of the customer entering into a long-term financing relationship.
Abdel Hamid added that the economic shocks represent an incentive to borrow for the family sector, but they impede real estate financing in some cases, and this caused reliance on government initiatives to support the sector and the purchase of real estate portfolios from developers, not financing the real category targeted by companies, which is the ordinary customer.
Negotiations with 3 real estate development companies to buy portfolios with a total value close to one billion pounds
He explained that a large number of obstacles no longer exist, especially the requirement to register the unit, for example, 90% of the financing of individual customers in new cities, which can not be registered at the present time because the project land is not registered until after the completion of its development completely, but after the amendment of the real estate finance law The company owns the unit and sells it by way of murabaha or rent ending with ownership, especially since the volume of real estate registered in Egypt ranges from 2 to 3%, and in the residential sector, the percentage is much lower.
He pointed out that the company can deal on any real estate as long as there is no violation, and the units that will be reconciled within the Reconciliation Law in Building Violations will provide an offer of housing units that companies can finance and deal with after completing the reconciliation procedures with the state and obtaining an amendment to the license or a benefit. The validity of the building construction and ensuring the safety of the funded unit.
Abdel Hamid said that the number of real estate finance clients increased, whether due to government initiatives or outside, as the number of clients with companies increased from 35,000 clients during the period from 2004 to 2014, reaching about 400,000 clients now, and with the new initiative, the number could reach more than 800 thousand clients over the next three years.
The article, the managing director of “Al Borsa”: “Al Oula” aims to grant real estate financing worth 1.1 billion pounds by the end of the year, was written in Al Borsa newspaper.