Jamal: The price increase will not exceed 8% to compensate companies for extending payment periods
Real estate marketers believe that the repercussions of the “Corona” crisis will cast a shadow over the real estate market until the end of the first half of this year, expecting sales to recover in the second half of the year due to deferred purchasing desires and directing developers to launch new projects coinciding with the opening of national projects, including the Administrative Capital and Al Alam El Jadida and the Grand Egyptian Museum.
Mohamed Gamal, Director of Investments at Era Egypt Real Estate Marketing, said that the sales movement in the real estate market will witness a state of calm during the first half of 2020, as a result of the postponement of many purchasing desires of citizens due to the repercussions of the Corona crisis.
He added that the biggest market crises during the current year is the lack of liquidity for citizens and companies, because it is one of the sectors that need great liquidity, which may lead to postponing the launch of new projects, and only introducing stages within existing projects.
Gamal explained that the real estate sector is in a state of anticipation for the second half of 2021, and most developers tend to postpone the launch of projects for several reasons, including the repercussions of the Corona epidemic and the lack of liquidity, and wait to benefit from the market movement with the opening of national projects in next June, which will lead to higher prices.
He said that the preliminary indicators of supply and demand, according to the data of “IRA IHIBT”, reveal that developers have made significant offers and reductions in the prices of residential and commercial units in the Administrative Capital.
He added that real estate prices will not decrease, but the facilities provided by companies such as reducing reservation advances and extending payment periods constitute a reduction in prices.
He explained that competition among developers pushed them to provide more facilities, to stimulate the market, and many large companies that were sticking to payment periods of no more than 6 years, headed for periods of up to 10 years.
He expected real estate prices to witness a slight increase of not more than 8%, as compensation to companies for the extension of payment periods, in addition to the revival of sales movement, starting from next July.
He said that the operation of national projects and the relocation of ministries and government agencies to the new administrative capital will lead to a revival of sales movement, with the beginning of the second half of the year.
He added that the biggest challenge facing the real estate market is the ability of real estate development companies to remain steadfast and the extent to which their financial solvency will endure the calm of sales during the first half of 2021.
And Gamal added, “It is possible that small entities will enter into alliances or leave some of them as a result of the lack of liquidity, and large entities will withstand the crisis.”
He explained that real estate marketing companies can benefit from the current situation as a result of providing more facilities and offers to customers, most notably the “cash back” system.
He expected that the sales movement in coastal cities would witness a big boom after the completion of the towers of the new city of El Alamein, especially with the state’s intention to establish a new apparatus for the northwestern coast, which would contribute to eliminating many of the problems that were facing real estate developers in developing new projects.
Jamal added that 2022 will be the year of the North Coast, because it is a promising region and has great investment opportunities.
Khaled Nasser, Chairman and Regional Director of Remax Real Estate Marketing in Egypt and the Emirates, said that the real estate market will not suffer a contraction during 2021, and it will witness an increase in sales compared to last year, but the sales movement will not improve until after Eid Al-Fitr, as a result of continuing Corona pandemic and the month of Ramadan, in addition to the fact that January and February each year witness a state of calm.
He added that the sales movement is recovering in the summer season, and the year 2020 witnessed a good sales movement despite the repercussions of the “Corona” crisis.
Nasser: The market will not suffer a contraction and an expected increase in sales compared to 2020
Nasser explained that the post-crisis and holiday periods always witness major sales booms, as a result of the existence of deferred purchasing desires, and the market will witness a strong rise with the epidemic.
He pointed out that real estate prices are likely to witness a steady state as a result of the current crisis, and if there is an increase, it will be very slight.
He said that the current crisis and intense competition among developers has led to customers obtaining unprecedented offers and payment facilities in recent years, and lowering prices harms the developer, so companies have turned to more facilities as an alternative to lowering prices.
He added that the state’s insistence on completing national projects such as the administrative capital, the new Alamein and the Grand Egyptian Museum, would lead to a state of boom in the real estate market.
He explained that a group of the largest real estate development companies is studying the development of several projects within the Administrative Capital during 2021, especially with the success of the project and the approaching opening of the first phase, and the state’s intention to complete the strategic plan for the second phase, which is built on an area of 47 thousand feddans during the current year.
He pointed out that organizing the lands of the northwestern coast and legalizing the status of all parties will maximize the state’s resources in the real estate sector and enhance the direction of developers to develop new projects in the region during 2021.
He said that the cities of western Cairo will continue to enjoy good demand due to the increasing demand for housing, unlike the projects of the Administrative Capital, which enjoy investment demand, especially with the provision of good services and infrastructure.
He added that the Administrative Capital will acquire the largest volume of demand during the current year, followed by the Fifth Settlement in New Cairo, then 6th of October City and Sheikh Zayed City.
Nasser explained that the demand for coastal projects is a seasonal demand, which limits its size compared to other residential and commercial products.
Riyad Al-Adly, managing director of “Google Real Estate” group, said that the sales movement in the real estate sector will witness growth with the beginning of the second quarter with this year, to compensate for the decline resulting from the “Corona” crisis.
He added that the second quarter will witness a double demand and a significant increase in the implementation of sales operations as a result of the existence of deferred purchasing desires from last year.
Al-Adly expected that real estate prices would increase by 15%, but after the end of the first quarter of 2021.
He pointed out that real estate development companies will provide more facilities and different payment methods, besides offers and discounts on cash in light of the strong competition for the projects offered, especially in the Administrative Capital.
He said that some companies are studying introducing new products that are in line with the available demand, including reducing unit areas, and implementing units that include 3 bedrooms with areas not exceeding 120 meters, in order to facilitate sales operations, and meet the different purchasing needs and capabilities of customers.
He added that the Administrative Capital will acquire the largest sales operations during 2021, followed by the city of Galala and the North Coast region, in light of the state’s interest in organizing contracts with developers and establishing a body for the northwestern coast.
He explained that the opening of some national projects during 2021, including the administrative capital, will lead to a revival of sales in the real estate market, and the new capital will witness the largest sales operations in the Middle East region during the coming period, especially in light of the presence of a diversified selling stock in addition to the developers offering new projects.
He pointed out that western Cairo cities such as 6th of October and Sheikh Zayed will witness a growth in sales during the second half of 2021 with the opening of the Grand Egyptian Museum.
He added that the new cities, which represent noon for each city, such as New Mansoura, New Assiut and New Sohag, will witness a great turnout as a result of their enjoyment of demand and purchasing capabilities in light of the state’s provision of lands for individuals and investors at reasonable prices, in addition to providing services and infrastructure, which are attractive points for customers.
Mohab Hassouna, Chairman of the Board of Directors of Seven Figures Real Estate Marketing, said that the real estate market witnessed a major movement during 2020, despite the Corona crisis, and the sales movement increased in the Administrative Capital, the cities of Galala, 6 October and New Cairo.
He added that the pandemic has driven sales, and many sales operations occurred, due to discounts, offers and long payment periods that companies provided to customers, but it also led to reduced profit margins for developers.
He expected a lull in the sales movement during the first quarter of this year, until the country starts vaccinating against the epidemic, but it will rise again with the offers and discounts that will be provided by companies, especially for customers who are looking for good opportunities.
Hassouna: Corona and increased competition are pushing developers to provide more facilities
He explained that the intensity of competition and the decline in the purchasing power of citizens will push developers to provide more facilities and offers during 2021, and Hassouna indicated that real estate prices could rise during the current year by between 10 and 15%.
He said that the most prominent problems of the sector during the current year are the shortage of workers as a result of precautionary measures for the Corona epidemic, and customers prefer to carry out sales by themselves, and electronic marketing is still limited in implementation processes.
He added that the current year will witness the exit of entities from the real estate market as a result of the ill-considered policies that they followed in marketing their projects, which led to some of them being defaulted, and either they leave the market or enter into alliances.
He explained that the national openings in 2021 will represent a vital shift in the real estate market, and the next 3 years will be the harvest years for real estate market sales, as a result of operating the new cities, including the administrative capital, new workers, and the new projects and stages will market themselves.
The article The real estate market awaits national project openings to stimulate sales was written in the Al-Borsa newspaper.