Local real estate firm Arabia Group for Development and Urban Progress plans to invest in a 1m square metre project to include a hotel and 2,000 touristic and residential units in Sinai, according to the group’s chairman, Tarek Shoukry.
The company will begin work on the “huge” tourism project in mid 2015, Shoukry said, by which time he expects the political situation to have improved.
So far, 80% of the project’s plans and approvals have been finalised, he added.
“We believe that the real estate market is heading to a notable increase in demand on property units,” he said. “Gradually during the past five or six months, consumers have become more assured about the market.”
Shoukry said he believes that the market is significantly stabilising and improving, a trend he expects to continue for the coming year. “Starting from now to 2016, we will witness two or two and a half years of growth,” he said.
“The market economic cycle lasts for seven years. The [demand] in the market experiences a two or three year increase, a one to two years of stability and then a decline, that is more likely in the case of any events,” Shouky said. “Those events are behind us and we’re now experiencing an increase in the market.”
Real estate investment and advisory firm Jones Lang LaSalle published a report in early April where it predicted that Egypt’s real estate market would remain “subdued” but gradually recover in late 2014 and 2015. The report added that the signs of economic recovery in Egypt have positively influenced the real estate market.
During the real estate exhibition CityScape, executive director of real estate brokerage firm Coldwell Banker Khalid Bahig said that the prices of property units will increase by 15% in 2014. Shoukry meanwhile said that prices of land, construction materials and working labour have increased, which will consequently increase the price of the property units by around 25%.
“During the past three months, the prices of construction materials increased – most importantly, cement,” the chairman said. “Cement prices alone surged by 80%.”
In January, the Egyptian Natural Gas Holding Company (EGAS) cut the supply to cement factories by 50%, which resulted in a notable decrease in the factories’ production. The cabinet said on 10 March that the cut in production led to a wave of spiked prices. The interim government recently approved the use of coal as an energy source to help resolve the energy challenges that production facilities met.
Arabia Group’s chairman said that during 2011, the market demand slowed down by 50 or 60%, while in 2012, the market witnessed some improvements, fluctuating between 10% to 20% increases and decreases. Shoukry indicated that investors, who were hesitant during the past three years, are now more willing to make purchasing decisions.
“To Arabia Group, there was a boom after 30 June,” Shoukry said, adding that the company’s decision to go through with the construction in its projects helped “stabilise the company’s reputation in the market”