The Magazine Cityscape August 2012

EGYPT SPECIAL
INVESTOR EDITION

In-depth real estate sector overview
Hot investment opportunities
Interior design, retail & more

A Middle East perspective on global real estate

AUGUST 2012

Licensed by
International Media Production Zone
Nicholas Publishing International FZ LLC

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Discov lam
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Hassa rties’
Prope xury
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INVESTING IN EGYPT

Regaining political stability, the
country on the Nile offers ample
investment opportunities

FROM DUST TO DAWN

Tourist arrivals are increasing
as Egypt repositions itself on
the global tourism map

RETAIL ON THE RISE

Strong market fundamentals
make Egypt the region’s most
promising retail opportunity

Actual Site photos:

Rivoli Apartments

Separate Villa

Attached Villa

Hyde Park Properties for Development is one of the leading real estate developers in Egypt. Existing
in the Egyptian market for the last 10 years, the company succeeded in facing all challenges and
overcoming obstacles of the real estate industry.
The company’s main objective is to support the real
estate sector and offer high-end housing units to meet
the increasing demands of customers for luxurious
accommodation. Located in New Cairo, approximately 40
km from the center of Cairo, Garden Heights embraces
the largest private landscape park in Egypt, across 6
million sqm. The project’s offers; Hyde Park, Centre Ville
and Park Avenue, will include more than 1,400 Villas,
28,700 apartments, 1,500 shops and the biggest public
park area.

Separate Villas

Park Avenue Shopping Mall

So far, Hyde Park is constructing 1365 villas,
apartments and commercial units. The company
is also ready to deliver about 800 units by
the end of 2012. As described by Hyde Park’s
CEO, Alaa Ayoub Hyde Park is designed to be
the preferred destination for elite residential
communities, global business parks, designer
shopping arcades, world-class entertainment
and recreation centres. Hyde Park offers a touch
of Paris with fine living fondly-inspired by the
1920’s downtown Cairo.
Separate Villa

Hyde Park, a City in the Making

AUGUST 2012

A MIDDLE EAST PERSPECTIVE ON GLOBAL REAL ESTATE

SPINE

City

scape m

agazine

Actual Site photos:

Rivoli Apartments

Separate Villa

Attached Villa

Hyde Park Properties for Development is one of the leading real estate developers in Egypt. Existing
in the Egyptian market for the last 10 years, the company succeeded in facing all challenges and
overcoming obstacles of the real estate industry.
The company’s main objective is to support the real
estate sector and offer high-end housing units to meet
the increasing demands of customers for luxurious
accommodation. Located in New Cairo, approximately 40
km from the center of Cairo, Garden Heights embraces
the largest private landscape park in Egypt, across 6
million sqm. The project’s offers; Hyde Park, Centre Ville
and Park Avenue, will include more than 1,400 Villas,
28,700 apartments, 1,500 shops and the biggest public
park area.

Separate Villas

Park Avenue Shopping Mall

So far, Hyde Park is constructing 1365 villas,
apartments and commercial units. The company
is also ready to deliver about 800 units by
the end of 2012. As described by Hyde Park’s
CEO, Alaa Ayoub Hyde Park is designed to be
the preferred destination for elite residential
communities, global business parks, designer
shopping arcades, world-class entertainment
and recreation centres. Hyde Park offers a touch
of Paris with fine living fondly-inspired by the
1920’s downtown Cairo.
Separate Villa

Hyde Park, a City in the Making

AUGUST 2012 I CITYSCAPE I 1

EDITOR’S LETTER

D

uring the past 18
months, there
was hardly a day when
international media did
not report on news from
Egypt. After the ousting of
President Hosni Mubarak
in February 2011, these
reports revolved primarily
around political turmoil,
economic setbacks
and street protests of
thousands of young
Egyptians who fought for
political change and improved living conditions in their country.
News coverage that metaphorically describes the Arab Spring
as having turned into an Arab Winter fails to recognise two
essential elements which are present in the minds and hearts
of many citizens: optimism and hope. Although views over the
country’s political direction and future remain divided, many
Egyptians also regard the present as a chance, a chance to change.
This optimism is shared by both Egyptian real estate industry
professionals and international investors alike. Just as any sector
of the country’s economy, real estate suffered in the aftermath
of the revolution as investor confidence was shaken and projects
were placed on hold. Eighteen months on, the overall market
sentiment is still marked by caution, however experts believe in
Egypt’s strong market fundamentals and predict a bright future
for the industry.
This special edition of the Cityscape magazine is dedicated to
Egypt’s growing real estate market. Our mission is to bring further
transparency to the local market and support long term growth
for this important economic sector.
In this issue, we feature an overview of the current dynamics of
the different real estate sectors in Egypt while highlighting their
respective investment opportunities. With a large and extremely
young population, a growing middle class and increasing
consumer demand, retail has emerged without doubt as the
country’s most promising sector. More quality retail space will

soon enter the market with the opening of Cairo Festival City mid
next year and the Mall of Egypt, scheduled to open in 2014, both
of which are expected to attract more international brands and
retailers into the country.
Looking at the residential market, over the past few years there
has been a shift of focus from accommodation in central Cairo to
gated communities in the capital’s new satellite cities such as New
Cairo and 6th of October City. Here, Egypt’s biggest developers
are competing for recognition with massive mixed-use projects
that are designed to form fully integrated communities with retail,
medical, educational and entertainment facilities.
Last year’s revolution also brought the issue of a substantial
lack of affordable housing to the foreground, as a response to
which the Egyptian government has announced the construction
of one million affordable homes over the next five years. We also
look at the status of the current mortgage law in Egypt as access
to home financing is seen as a crucial element in increasing the
availability of housing for low to middle income earners.
In addition, we investigate how 2011 has affected tourism in the
country and illustrate some of the major touristic developments
currently underway in both the popular Red Sea region as well as
on Egypt’s Mediterranean North Coast, an area which increasingly
attracts attention from both local and international travellers.
Lastly, we feature a review of the inaugural and highly
successful Cityscape Egypt 2012 exhibition, held in association
with our partner Next Move in Cairo in February this year, which
attracted over 10,000 participants. Looking at the year ahead, we
are excited to host this event once again in February 2013 which
will bring together regional and international investors, architects
and designers, real estate developers, government authorities,
key industry stakeholder and private individuals alike.

Anna Amin
Editor

Project Director Simon Cole

Editor Anna Amin

Design Davis Mathai

Advertising Adam Fox

Contributors Anna Amin, Simon Cole, Rohan Marwaha
Although every effort is made to ensure the accuracy of information contained in this magazine is correct,
Cityscape cannot be held responsible for any errors or inaccuracies contained within the publication.
All information contained in the magazine is under copyright to Cityscape and cannot be reproduced or
transmitted in any form without first obtaining written permission from the publisher.
Partnership Enquiries:
Advertising Enquiries:
Editorial Enquiries:

Simon Cole Tel: +971 (0) 4407 2640
Adam Fox Tel: +971 (0) 4407 2801
Anna Amin Tel: +971 (0) 4408 2898

Email: simon.cole@informa.com
Email: adam.fox@informa.com
Email: anna.amin@informa.com

Cityscape Media, Informa Exhibitions, P.O. Box 28943, Dubai, UAE


CONTENTS

9

Editor’s letter

52

LATEST NEWS
Regional
12 • Dubai property market turns the corner
13 • Abu Dhabi tenants choose quality

• Qatari Diar builds leisure projects in Oman
14 • Elaf Group opens new hotels in KSA

• Transparency up in Lebanese market
15 • Drake & Skull win Oman projects

• Alpha1 Estates and Cotton & Company to

share expertise in MENA markets
16 • Saudi mortgage law to aid housing

• UAE in top 5 countries for rental return
INTERNATIONAL
18 • Broadway Malyan’s new Brazilian city

• Poland’s investment market looking

positive

54

34

38

ASIA
24 • Fast growth for Ahmedabad

• Bangkok office rents up 5%

Retail on the rise
Strong market fundamentals coupled with
the development of more quality retail
space make Egypt one of the region’s
most promising retail opportunities.

34 North Coast

With major large scale developments

underway, Egypt’s Mediterranean

coast is receiving increased interest

from both Egyptians as well as international
travellers.

20 • Eurozone crisis impacts commercial

property

• Christchurch’s private property rents soar
22 • London going global since 1973

6th of October & Sheikh Zayed City
West of Cairo is a vibrant mix of different
residential type compounds, businesses,
universities and some of Egypt’s largest
shopping malls.

54

30

A million homes are not enough
Egypt currently faces a substantial
shortage of affordable housing units.
Government and developers are looking
for solutions.

58

CityLight Alexandria
Home to Alexandria’s largest mall,
CityLight will be the first integrated urban
development project of its kind in Egypt’s
second largest city.

59

40

25 • Luxury fashion dominates Singapore retail

scene

EGYPT INSIGHT

26
40

26

Investing in Egypt
Showing healthy signs of recovery, the real
estate market offers highly attractive long-
term investment opportunities.

30

From dust to dawn
Tourist arrivals to Egypt are increasing while
the government is undertaking several
steps to boost the tourism sector.

10 I CITYSCAPE I AUGUST 2012

Home sweet home?
Despite attempts to revise the current
mortgage law, Egypt still has a long way to
go before its home financing market can
fully take off.

44

Return of foreign investors crucial
In an effort to revive Egypt’s economy, the
government is implementing several
reforms to attract FDI into the country.

49

Rising from the desert
On Cairo’s eastern outskirts, New Cairo is
a planned urban settlement providing a
new residence for the people and
businesses of Egypt’s capital city.

59

Revolution in Egypt’s home design scene
The country’s first online furniture portal
allows users to view the best the world of
home design has to offer from the comfort
of the couch.

EVENTS
62 Cityscape Egypt 2012

A review of the inaugural event
63 Cityscape Egypt 2013

A preview to Egypt’s largest real estate

investment and development event

REGULAR
64 In the next edition

A snapshot of our October edition’s

editorial highlights

REGIONAL NEWS

Dubai residential property market turns the corner

Q

uality residential developments in Dubai bounced back during
Q2 2012 after a stable first quarter, with average rent increases
of 6% for apartments and 9% for villas, a recent report by UAE property
management company Asteco shows. Sales prices recorded double-digit
increases in three developments, with rises of 6-8% elsewhere, Asteco
observed.
“After three years of declining rates and limited sales activity, the
real estate market is on the way to recovery, with established quality
communities showing increases in values and higher transaction volumes,”
said Elaine Jones, CEO at Asteco.
Rental rates for apartments were relatively stable through Q1 with minor
declines in low quality/ poorly managed buildings in certain areas. Towards
the end of H1 2012 rates in established quality communities achieved
average increases of 6%.
Apartments in Dubai Marina and Downtown Dubai were the most sought
after witnessing a 10% increase, with a two-bedroom apartment fetching
between AED 90,000 and AED 120,000 per annum.
“Tenants are relocating in search of value-for-money, one- and twobedroom apartments as well as three- and four-bedroom villas are the
preferred unit types. In terms of rates, quality well managed developments,
will continue to set the pace,” commented Elaine Jones.
Leasing rates for villas followed a similar trend, stable throughout Q1
2012 with an average increase of 9% through the latter part of Q2 2012.
Mirdiff showed the largest increase with rent for a three-bedroom house
increasing to AED 90,000 per annum, a 13% jump from Q1 2012. Doubledigit (11%) growth was also recorded in Arabian Ranches, with a
three-bedroom villa now costing AED 140,000 per annum.
On the sales front, prices for one-, two- and threebedroom apartments in Downtown Dubai, Dubai Marina,
and Palm Jumeirah retained their popularity and
witnessed price increases of 9%, 8% and 8%
respectively during H1 2012. Apartment prices
elsewhere in Dubai remained relatively
stable, with apartments in JBR seeing a


3% increase.
Sales price increases for villas were dominated by Arabian Ranches
(16% price increase), The Springs (14% price increase) and Jumeirah Islands
(11% increase). For all other developments in the report, prices increased by
6% to 8% with the exception of Jumeirah Village where prices were stable.
Prices per square metre now vary substantially highlighting the contrast in
quality, facilities and infrastructure.
Villas on Palm Jumeirah are now the most expensive in Dubai at AED
17,200 per square metre, followed by Jumeirah Islands and the Meadows
priced at AED 10,750 and AED 10,250 respectively. The lowest prices can
be found in Jumeirah Village at AED 5,400 per square metre.
“Looking ahead to the 2012 year end, sales prices will continue to rise for
quality developments, especially villas. The number of owner-occupiers
rose steadily in line with improved financed options offered by banks, which
we expect to continue. Further demand will also be evident from overseas
buyers escaping economic woes in the Eurozone and political instability in
other parts of the region,” said Elaine Jones.
It was a different picture for commercial space which, despite an increase
in leasing enquiries in H1 2012 as the regional situation improved, creating
renewed interest in Dubai as a hub for business, was hampered by
oversupply and tenant-dictated contract terms. Rental rates declined 6%
to 8% in areas such as Tecom, Bur Dubai and Business Bay. However, rates
still vary between AED 2,370 per square metre per annum in DIFC and AED
430 per square metre per annum in Dubai Investment Park.
“In terms of commercial sales, 2012 started off with minimal transactions
for small units although Asteco has seen some purchases from local and
international firms that have been successful in Dubai in the medium term,
and sales prices have remained relatively stable as more supply entered
the market,” said Jones.
Some demand has been seen for 100 to 400 square metre units in
Business Bay, JLT and DIFC but investment in the office market is likely
to remain flat throughout H2 2012, according to Asteco. Average rates
vary between AED 18,300 per square metre in DIFC to AED 5,400 per
square metre in Dubai Silicon Oasis l

REGIONAL NEWS

New property supply triggers Abu Dhabi tenants’
flight to quality

T

enants living in Abu Dhabi took full advantage of increased real estate
market supply by upgrading from their existing accommodation
and maximising their housing allowances as better quality became more
affordable through market supply and demand dynamics, according to the
H1 2012 report from UAE property management company Asteco.
“A total of 7,400 apartments and 1,675 villas were added to the city’s
rapidly expanding real estate sector in the first half of the year, triggering
a wave of internal movement as existing residents sought to upgrade to
better quality and value for money accommodation,” said Elaine Jones,
CEO of Asteco.
Major new areas of supply include Marina Square and Raha Beach, with
a combined 3,638 new homes and a number of landmark developments
such as Rihan Heights also coming on stream. The flight to quality has
led to clear segmentation, with older areas and buildings that previously
commanded high rental rates and occupancies – such as the Tourist Club,
Khalifa City A&B and Mussafah - falling out of favour, with rates dropping
between 3% and 14% since Q1.

Demand for premium quality developments with mixed-use facilities
also grew substantially, with a high level of leasing activity for top tier
product including Etihad Towers, topping out at AED 150,000 for a onebedroom apartment and St. Regis Residences achieving AED 261,000 for
a three-bedroom unit. Pre-leasing activity for Nation Towers was also
strong, showing high levels of interest for premium waterfront product.
Rates for Nation Towers reached up to AED 100,000 for one bedroom and
AED 300,000 for a three-bedroom loft unit.
“Tenants are willing to pay for high quality finishes and amenities and this
particular trio of developments is representative of the new Abu Dhabi
lifestyle, with waterfront living in a mixed-use setting, and the appeal of
new community-focused developments,” said Jones.
Asteco expects the leasing market to remain extremely active in the
second half of the year with demand being driven by continued internal
movement filtering through to all sub-sectors of the residential market
and leading to further rental adjustments as an additional 7,000 new
apartments and 4,560 villas ready for release in the next six months l

Qatari Diar to build 3 mixed-use leisure projects in Oman

Q

atari Diar, the property arm of Qatar’s sovereign wealth fund, last
month signed a memorandum of understanding with Oman’s
Ministry of Tourism for the development of three world-class leisure
destinations in the sultanate.
The memorandum, which outlines Qatari Diar’s investment in Oman’s
tourism sector, aims to create three mixed-use developments throughout
the sultanate. It also establishes a 70:30 partnership between Qatari Diar
and the Ministry of Tourism on the three projects.
“We are extremely thrilled with the signing of this [memorandum], which
signifies our commitment to investing in the tourism sector of Oman. It is
an important country to us, and one full of promise,” said Eng Mohammed
bin Ali al Hedfa, CEO of Qatari Diar Group.
The Ras Al Hadd development in the Sur district, which forms part of the
latest agreement, will feature a five-star hotel and spa, residential villas,

apartments, souks, a marina and villa plots, while the second of the three
developments will have a five-star luxury resort hotel and spa as well as
residential villas and apartments.
The third project will bring to life a yacht club and marina, a sports
academy, and three boutique hotels.
Oman’s Ministry of Tourism has launched several campaigns
over the course of the year in an effort to boost travel within
the country and to promote Oman as an exclusive luxury
destination all-year round.
Qatari Diar is currently developing or planning 49
projects in 29 countries around the world and
has a worldwide portfolio valued at over
$39billion l


REGIONAL NEWS

ELAF GROUP OPENS TWO NEW HOTELS IN KSA TO
ADDRESS HIGH DEMAND FOR ROOMS DURING PEAK
PILGRIMAGE SEASON

T

he Kingdom of Saudi Arabia’s accommodation and
hospitality sector is reportedly witnessing significant
growth with occupancy rates already seeing a 130 per cent
increase. Industry experts have revealed that the numbers
are expected to rise as both the Hajj and Ummrah seasons
are fast approaching. In addition, the sector’s vibrant growth
can be widely attributed to the healthy competition posed
by leading international hotels present in the Kingdom, who
have all expressed readiness in welcoming tourists visiting the
country, particularly those going on holy pilgrimage to Makkah
and Madina. The expected influx of more tourists and visitors
are complemented by the high numbers of confirmed bookings
that were made through electronic services.
Aiming to meet the demand for more rooms, the Elaf Group of
Companies, has revealed the opening of the ‘Al Bustan’ and the
‘Al Nakheel,’ the company’s two new hotels, consisting of a total
of 279 rooms, located in Al Madina Al Munawara.
Ziyad Bin Mahfouz, President of Elaf Group of Companies, said:
“The opening of these two new hotels could not have come at a
better time as these new facilities are expected to help address
the demand for more hotel rooms in Al Madina, especially
now that the peak season for pilgrimage is fast approaching.
In addition, the strategic locations of both the ‘Al Bustan’ and
the ‘Al Nakheel,’ combined with their distinctive features and
offerings, will help cater to the various needs of those visiting Al
Madina. The launching of these new hotels also complements
the government’s continuing initiative to promote tourism
diversification and parallel development across all levels,
including tourism for religious purposes ” l

Lebanese real estate market shows increased
transparency

L

ebanon’s real estate sector has registered more progress in terms of
transparency than any other MENA country, the recently released
2012 Global Transparency Index report by Jones Lang LaSalle showed.
According to the report, Lebanon scored 3.75, ranking 66th worldwide
and fifth regionally.
The index, which is issued every two years, measures national real
estate transparency across the globe and is used to compare and contrast
transparency conditions across markets.
In 2010, Lebanon had also ranked in the 66th place but was in 10th
place among 15 regional markets included in the survey with a
score of 3.78.
The report highlighted that Lebanon made the ninth
highest progress in the world, classifying it as ‘semitransparent’ up from the ‘low-transparency’
category it had occupied in 2010.
According to JLL, the Lebanese real estate
market has experienced a very strong
run in the last few years, causing


massive increases in land value in Beirut.
“As a result, the market is gaining more structure and attracting attention
from more institutional players,” the global real estate services firm said.
The report said the Central Bank of Lebanon played an important role
in improving Lebanon’s ranking after it recognised the importance of
the real estate sector to the overall economy by imposing more rigorous
regulations on real estate lending.
“The newly formed Real Estate Association of Lebanon (REAL) is
implementing other improvements in transparency by better regulating
the previously chaotic brokerage industry,” the report said.
However, despite an improvement in transparency, Lebanon’s real estate
sector remains challenged by political instability and tensions, which have
racked Lebanon for the past 30 years, the report added.
Overall, “the pace of improvement in the Middle East and North Africa
(MENA) has been slower than in other regions since 2010. Dubai remains
the region’s most transparent market, but the most significant progress
has been in Lebanon, where the market is gaining transparency and
attracting more institutional players,” the report concluded l

REGIONAL NEWS

Multiple Project Wins for Drake & Scull in Oman

D

rake & Scull International PJSC (DSI), a regional market leader in the
integrated design, engineering and construction disciplines of Civil
Contracting, Mechanical, Electrical and Plumbing (MEP), Water and Power, Rail
and Oil and Gas has been awarded in Oman a series of MEP Contracts across
several sectors collectively worth AED 96 million.
Under the terms of the contracts, DSI will oversee the complete MEP works –
including design, supply, installation, testing and commissioning.
In 2012, Oman has set forth significant plans to upgrade its housing and
infrastructure over the next 10 years, turning it into the region’s most promising
construction markets. The sultanate’s construction sector on the whole is
expected to be worth USD 3.8 billion in 2012 and has the potential to grow to
USD 5.4 billion by 2016. The industry shows particular potential in energy
and utilities – two areas where DSI is currently expanding its presence at the
international level.
“The future developments in Oman represent an ideal opportunity for DSI to
use its proven engineering technologies and regional experience – particularly
in the MEP and Water and Power domains – to help expedite the growth of
Oman’s construction industry. Our latest set of contracts reflects our ability to
serve multiple sectors and we are eyeing more ventures as Oman rolls out its
development plans for the coming years,” said Khaldoun Tabari, CEO of Drake &
Scull International.
Drake & Scull International has been fortifying its presence in key GCC markets
while further extending its operational reach into Africa and Asia. DSI also plans
to engage in more work for railway and oil and gas developments l

Khaldoun Tabari, CEO Drake & Skull

Alpha1Estates signs MoU with Cotton & Company

G

lobal real estate advisory firm Alpha1Estates International said last month, during
the holy month of Ramadan, that it has signed a Memorandum of Understanding
(MoU) with leading US real estate advisory firm Cotton & Company to share expertise and
experience in their respective markets.
Alpha1Estates was the first company to market Saudi Arabian real estate globally,
launching the US $2 billion Abraj al-Bait project in Makkah – the largest building in the world.
“Alpha1Estates International and Cotton & Company have signed the MoU with the
purpose of entering new and exciting markets as well as sharing their world-class
experience and expertise to best serve their distinguished clients,” said Mr Malik Al-Alawi,
Chairman of Alpha1Estates International.
The MoU was signed between Mr al-Alawi and Mr Stephann Cotton, Founder and
President of Cotton & Company and Laurie Andrews, Chief Operating Officer.
The collaboration will allow the two companies to jointly share their vast expertise with
clients in the rapidly maturing real estate markets of the Middle East, North Africa and
South Asia region (MENASA) as well as allow for greater real estate investments between
the MENASA region, represented by Alpha1Estates, and the Americas, where Cotton &
Company predominates.
“With today’s technology, a global market has opened for real estate throughout the
world,” said Stephann Cotton. “Digital marketing strategies provide innovative solutions
for reaching the international sector, and we are on the forefront of utilising these new
mediums to sell residential real estate.”
Alpha1Estates was recently recognised for its achievements in the real estate
sector in the Middle East, with global television channel Al-Jazeera referring
to it as a “globally-recognised brand”. In January this year, the company
stated that new real estate, regulatory, immigration, business and
finance legislation was required for the real estate sector in Saudi
Arabia to reach its full potential. The Government of Saudi Arabia
on July 2 announced it had approved a mortgage law in the
Kingdom, one of the five key recommendations made by
Alpha1Estates l


REGIONAL NEWS

Saudi Mortgage Law Will Aid Housing, Stability and Banks

T

he recently announced introduction of the mortgage law in Saudi
Arabia will improve the housing supply and social stability as well as
provide diversification of the banking sector, says global rating agency
Fitch Ratings. However these benefits will not be instant because banks will
approach the new market with caution.
Saudi Arabia will issue regulations and licenses for mortgages based on
the Islamic lease financing model this month.
Mortgage demand is expected to be strong because a growing young
population has faced rising rents over the last four years. This has led to
a drop in living standards among the lower-income population. To date,
mortgage lending is a mere 2% of GDP and home ownership is only 30% of
the population.
The jump in demand to buy houses now that mortgages will be available
may trigger house-price inflation. The rise in house prices will be tempered
by planned property developments that will help meet demand. Tight
regulation on mortgages as well as a cautious approach by the banks will
also help to dampen price rises.
The government is already undertaking an extensive house building
programme. Fitch expects private-sector property development to

increase now that there will be financing available for young Saudis. The
government’s Real Estate Development Fund offers subsidised mortgages
to purchasers of affordable housing.
What’s more, tight credit limits for personal loans by the Saudi Arabia
Monetary Agency show the regulator is unlikely to allow a housing boom to
get out of control. Rules for personal loans - including credit cards - cap total
monthly payments at one-third of net monthly income. Loan maturities
cannot exceed five years.
Most banks are also likely to be cautious in their approach to mortgages
because it is unclear exactly how the foreclosure process will work.
Furthermore, they are funded through short-term deposits, which limit
the amount of long-term lending they will want to undertake. Nonetheless,
some banks have already built up their presence in the housing loan market
over the last 18 months.
The funding mismatch is not an immediate problem because short-term
deposits tend to stay at banks for long periods. But banks are likely to
search out longer term funding before building up large mortgage portfolios.
The new regulation allows for the development of a securitisation market,
which could provide much of the financing - if it takes off. (Fitch Ratings) l

The UAE in ‘Top 5’ Countries for Rental Returns

D

ubai luxury developer DAMAC Properties has welcomed a report by
Global Property Guide which has revealed that the UAE is among the
top 5 countries in the MENA region in terms of rental yields.
The study compared the rental yields of apartments, all about 120sqm in
size, across various countries. With gross rental yields of 6.89% per annum,
the UAE ranks slightly behind Jordan, but is ahead of Egypt, Morocco and
Lebanon.
“The UAE has higher rental returns than some of the most popular
locations for property investment in the world. With yields at 6.89%, the
UAE offers much higher rental returns than for example the UK and more
than double the rental yield of Hong Kong” said Niall Mc Loughlin, Senior
Vice President of DAMAC Properties.
Another important factor for investors to consider is the favorable tax
environment in the UAE. Rental income is tax free, and there are no capital
gains taxes levied on the sale of properties.
“The property market in the UAE is changing remarkably; three years ago
it was dominated by investors pursuing capital growth, and now that prices
have stabilised, it’s characterised by investors seeking continually high
rental yields. While the returns aren’t as lucrative, they are still relatively
high and most importantly they are consistent,” commented Mc Loughlin.
According to the research, Jordan offers the highest rental returns in the
MENA region, with gross yields of 10%. While gross yields in the UAE are
slightly lower, they are still the second highest in the Arab world.
“Rental yields are extraordinarily high in the UAE, compared to most
other countries around the world. Now that prices have stabilised
in premium locations, the high yields make investing in the UAE
property market an attractive proposition for any global
investor,” said Mc Loughlin.
The positive sentiment is shared by real estate
advisory firm Cluttons, which predicts good
quality, well-established developments will
continue to do well at the expense of newer
residential areas. The firm also anticipates
the residential market will continue
to gain from increasingly available


Niall Mc Loughlin, Senior Vice President, DAMAC

mortgage finance options at competitive rates.
DAMAC Properties is experiencing the strongest demand in three years
across its range of premium developments at Dubai Marina, Downtown
Dubai and the DIFC. There is a strong flight to quality in both Dubai and Abu
Dhabi, as existing residents seek to upgrade and new buyers aim to take
advantage of market conditions which currently offer extraordinary value
for money l

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Liniger, RE/MAX’s global organisation today supports over 90,000 sales
associates worldwide in more than 85 countries. Earlier this year,
RE/MAX Egypt was launched with a mission to develop the largest real
estate brokerage network in the country.
Khaled Nasser, Regional Director, RE/MAX Egypt

What is RE/MAX and what makes it unique
compared to other real estate brokers, both
in the region and worldwide?

What is the reason behind your success
and the outstanding performance of your
business affiliates?

RE/MAX is the number 1 brand in the real estate brokerage business
worldwide. The competitive edge of RE/MAX is that it was founded by top
agents only for the top agents. The RE/MAX model allows the real estate
agents to earn the highest allowable compensation for their work.
RE/MAX Egypt provides the agents with the best cutting edge
technology in the industry as well as second to none real estate education
and training programs. As a result, the average performance of the
RE/MAX agent is the highest in the real estate brokerage industry
globally.
RE/MAX is the only real estate company in the industry that provides true
international affiliation while offering and managing the best international
referral system available. Due to its extensive global presence, RE/MAX
allows agents to provide exceptional real estate services anywhere in the
world to their clients.

At RE/MAX Egypt, we strongly believe that the success of our business
is founded on the global affiliation, the size of our local network of agents,
and the highest allowable compensation to our agents. For us, the agent is
the most important figure within our organisation and we build and invest
in our agents’ career paths with second to none real estate education and
training programs.
RE/MAX agents function as independent business owners making our
network built on entrepreneurs rather than on managers and staff. Our
philosophy is to offer the best possible service in the industry to help
buyers and sellers make the right decision with regards to one of the most
important decisions in life. We also plan to expand rapidly over the next 5
years in Egypt to have presence in Cairo, Alexandria, North Coast, Delta,
Sinai, Red Sea and in Upper Egypt.

What was the driver behind launching RE/MAX in
Egypt and how does it impact on the local market?

What are the benefits of RE/MAX’s franchise
opportunities?

Despite the political and economic challenges in Egypt, RE/MAX Egypt
was launched during the first quarter of 2012 based on our confidence in
the strength and stability of Egypt’s real estate industry.
RE/MAX Egypt’s vision is to be the gateway to financial freedom for
Egypt’s entrepreneurs and to achieve the highest level of customer
satisfaction through its affiliates’ most qualified and skilled Real Estate
Brokerage and Consultancy Services. Our mission is to position RE/MAX
as the leading real estate brand and to develop the largest brokerage
network in Egypt as well as to maximise business opportunities for our
affiliates. By providing robust support, RE/MAX Egypt paves the way
towards successful business and career development with maximum
economic growth.
RE/MAX Egypt strongly believes in the potential of Egypt’s youth,
offering them the golden opportunity for owning their own business while
breaking loose of the limitations of fixed income.

RE/MAX Egypt’s expansion revolves around franchised offices to
qualified entrepreneurs and investors. We provide and support our
franchisee network with:
• The power of the world’s No. 1 brand in the real estate industry
• RE/MAX University, offering the best real estate in-class and online
training programs for both owners and agents
• Agents recruitment and retention support programs
• RE/MAX technology; the “iConnect” system which routes thousands
of leads from REMAX.COM.EG straight to offices and agents. The RE/
MAX intranet site and REMAX.COM.EG offer countless marketing
tools for agents and offices, allowing direct referrals between nearly
90,000 affiliates in more than 85 countries. All properties are displayed
on REMAX.COM.EG and on GLOBAL.REMAX.COM, which are
translated into over 32 languages and more than 30 currencies
• Global network offering limitless business opportunities and global referrals
• RE/MAX international conferences and conventions; exposure
to worldwide markets and exchange of international experiences

Each office is independently owned and operated
Head office:
22 Kamal Eldin Hussein Street, Sheraton Heliopolis, Cairo, Egypt, Tel.: +202 22692004, E-mail: info@remax.com.eg
6th of October: RE/MAX Ventures West: Arkan Center-Suite 142 Sheikh Zayed 2 6th October District, Giza, Egypt. Tel.: +201001881166
Heliopolis:
RE/MAX Almohager: # 12, El-Shaheid Mohamed Abd El-Hady St., Ard Al-Golf, Heliopolis, Cairo, Egypt.

Tel.:(+202) 24183424, (+202)22907186
New Cairo City: RE/MAX Almohager: Villa # 141, 90Th. St., New Cairo City, Egypt. Tel.: (+202) 26178741
Ain Sokhna:
RE/MAX Almohager: Stella De Mari, Negma Mall.Tel.: +201000960062


INTERNATIONAL NEWS

Broadway Malyan’s vision for new Brazilian city
launched by Moura Dubeux

T

he masterplan vision for Convida Suape, a new city in north eastern
Brazil, designed by global architecture, urbanism and design practice
Broadway Malyan, has been officially launched by the practice’s client, Moura
Dubeux Engineering and Cone S/A earlier this year.
Convida Suape is a sustainable urban extension of the city of Cabo de
Santo Agostinho near Recife, the capital city of the State of Pernambuco,
and will result in the transformation of a 470 hectare area to accommodate
up to 100,000 inhabitants.
The practice’s design was delivered by an integrated team of
masterplanners, urban designers, architects, landscape architects and
branding specialists based in its São Paulo, Lisbon and London offices.
The development promotes a compact urban model for walkability and
sustainable access to learning, healthcare and employment. It features green
buildings and new building typologies with integrated utility provision, will
enhance the natural landscape and river corridors, and includes a substantial

on-going habitat-restoration programme.
The city will be built in four phases with ten distinct neighbourhoods
providing 25,000 new homes set in 154 hectares of open space, as well
as substantial provision for new businesses, health, education and leisure
activities.
“Convida Suape will set a benchmark for strategic urban development and
city expansion projects in north eastern Brazil, now one of the fastest growth
areas in the world. The launch is testament to the integrated work of our
world-class team of design experts delivering on our client’s ambitions in
partnership with its stakeholders,” said Practice Director Margarida Caldeira.
Since the practice opened its São Paulo office in 2011 it has secured a series
of projects in South America, including masterplanning and major mixeduse projects in Brazil for clients such as Moura Dubeux which it is supporting
on several schemes, and it is now actively targeting countries including
Argentina, Chile, Colombia and Mexico l

Positive Outlook for Poland’s investment market

I

n the first quarter of 2012, the level of activity in Poland’s real estate
market confirmed strong interest by foreign investors, the Q1 2012
Poland Investment market report by Savills showed.
The total volume of commercial property investment transactions
exceeded $880 million in the first quarter of 2012, reflecting a 21% growth
quarter-on-quarter and a 9% growth year-on-year, the report said.
Retail properties dominated in Q1 2012, accounting for approximately
80% of total investment volume. “Recent investment activity in the retail
sector confirms that investors are still interested in prime retail assets
in both major regional and smaller cities across the whole country. Key
investment criteria include central location with good car accessibility and
significant pedestrian flow as well as good covenant strength comprising
a mix of well known international and domestic retailers,” the report said.
According to Savills, rising employment and strong consumer confidence
are the main drivers for retail sales’ growth, which is supportive for both


the retail and warehousing markets.
The largest investment transaction in the retail sector in Q1 2012 was
the sale of ING’s share in the holding company which owned a 77% stake
in Zlote Tarasy. Zlote Tarasy is a mixed-use complex comprising 66,200
square metres of retail and 47,300 square metres of office space.
According to the report, activity in the commercial market is highly
dominated by foreign investors, with Austrian, German and US investors
having been the most active in Q1 2012.
“There is also stable interest from investors in the industrial market
and we expect even more activity in this sector in 2012 as a result of an
improving occupational market,” Savills said.
With regards to Poland’s future outlook, Savills commented:
“Investment sentiment is expected to remain positive, supported by
higher GDP growth than in most European countries, rising employment
and increasing retail sales.” l

INTERNATIONAL NEWS

Eurozone crisis impacts commercial property prime
rents and yields

A

newly released Summer 2012 ‘European Market Indicators’ quarterly
report by global real estate consultancy Knight Frank shows that the
recent deepening of the crisis in the Eurozone has had a negative impact
on prime rents and yields in European commercial property markets.
Although values were stable in the majority of European cities during the
last quarter, a small number of markets saw rents fall or yields soften.
Knight Frank’s weighted average European prime office rent, calculated
from the cities covered by the report, declined for the first time in over two
years, falling by -0.5% in the three months to June. Prime office rents were
revised downwards in Brussels (-6.8%), Barcelona (-5.9%), Milan (-1.0%)
and Dublin (-0.6%).
Prime rents were largely stable elsewhere, indicating that there has been
a pause in the rental growth that has been seen over the last year in cities
such as Paris, Warsaw, Stockholm and Moscow.
While recent rental increases in these markets have in any case been
modest, they now appear to have completely ground to a halt, with
landlords and tenants adopting a ‘wait and see’ strategy as events in the
Eurozone play out.
In the investment market, Knight Frank’s weighted average European
prime office yield moved outwards slightly for the second successive
quarter, rising by four basis points to 5.62%. This was a result of a 25 bps
softening of yields in both Milan and Madrid.
Prime office yields remained unchanged in all other markets, but
investment market sentiment appears to be weakening and a more
widespread correction of prime office yields may follow in the coming
quarters.
The fading of investor confidence has been reflected in reduced
investment volumes in the year-to-date, particularly in southern Europe.
Matthew Colbourne, senior international research analyst, said: “The
limited rental growth that has been recorded in European office markets
over the last twelve months now appears to have almost entirely ended,
as businesses cautiously assess the impact of recent developments in the
Eurozone. With no quick solution to Europe’s problems in sight, we may be
reaching a tipping point when occupier sentiment takes a more decisive
turn for the worse and a greater number of markets may see rents start to
fall over the rest of the year.”

Andrew Sim, head of European investment, commented: “The current
uncertainty in the Eurozone is clearly having an impact on investor
confidence and transaction volumes, particularly in secondary markets.
However, there remains a strong appetite for prime property in the most
stable and liquid cities, coming from super high net worth individuals as well
as sovereign wealth funds and institutions from the Middle East and Asia.
As a result, prime yields for the best property in Europe are holding firm.” l

Private property rents soar in Christchurch
as demand exceeds supply

I

n New Zealand’s largest city on the South Island, private property rents
are up as demand considerably exceeds supply, figures from the latest
price report from Trade Me Property show. Listings of houses for rent in
Christchurch are down 34% but demand is up 47%.
Rents in Christchurch have increased some 26% in the last 12 months, well
above the national average property rental rises of 4%.
“The news for prospective Christchurch tenants is still grim,” said Brendon
Skipper, head of Trade Me Property.
“We’ve seen the number of properties available for rent in these three
suburbs plummet more than 40% compared with a year ago and, on the
flipside, the properties that do get listed are attracting huge volumes of
enquiry,” he said.
While shortages of houses to rent in the Auckland rental market have hit
the headlines in the past, Trade Me found listings are up 20% while demand


is down 18%.
“Autumn has wound down and the winter hibernation period sees
tenants hunker down so we often see listing numbers swell and demand
taper off,” Skipper said.
He pointed out that one surprise is the increase in listings and reduced
demand in central Auckland hasn’t led to lower asking rents, with average
rents in Auckland city remaining flat.
According to Skipper, one reason demand has softened in Auckland is
that tenants are looking to become home owners. “Over the quarter, we’ve
seen a 16% increase in enquiries from potential buyers compared to the
same time in 2011 but they’ll be finding the market challenging too,” he said.
“Listings are flat and there’s plenty of healthy competition in Auckland
in particular. Of course, that means it’s a good time to list your property if
you’re thinking of selling,” he concluded l

INTERNATIONAL NEWS

LONDON: GOING GLOBAL SINCE 1973

L

ondon’s influence as a global city has been growing for the past five decades, during which time the area known as ‘prime’ has expanded significantly,
driven in large part by international buyers who have remained a constant presence, says international real estate advisor Savills.

Key findings of Savills’ ‘World in London’ report:

•
•
•
•
•
•

International buyers account for 34% of all sales in prime London, up from 27% in 2007
Two-thirds of new development buyers are international, a reflection of strong overseas marketing campaigns
Chinese and Pacific Asian buyers a significant buying group in the new build sector with 31% market share vs 5% in the resales market
Western Europeans (particularly French and Italians) have the biggest market share after UK buyers; 15% of resale, 8% of new build sales
Eastern European and CIS (ex Soviet Union) are top spenders; average USD 8.9m in resale market, USD 11.3m in new build
International buyers outnumber sellers by 2:1, with Russian, French, Italian and Chinese the biggest net investors

London, where 35 per cent of residents were born overseas, ranks as
one of the world’s most cosmopolitan cities and the globalisation of the
city’s prime London residential market continues to grow and evolve as its
population becomes ever more diverse.
The value of prime London residential stock rose by USD 33 billion in the
year to the end of June 2012, although at a slower rate than in previous
quarters, as international home buyer and safe haven investor confidence
in the UK capital continued.

Homes – not just safe deposits
Latest estimates from Savills research put the net inflow of international
cash into prime London at over USD 28 billion since 2007. In the past 18
months international buyers have increased their spending, accounting for
34 per cent of sales in volume terms and 49 per cent by value, up from 24
per cent and 37 per cent respectively in 2007.
“There are perceptions that international buyers have turned swathes of
prime London into dormitory areas, but our research explodes this myth,”
says Yolande Barnes, head of Savills residential research. “The majority of
overseas buyers are seeking homes rather than pure investments. Twothirds of international buyers in the resales market live and work in London
and are acquiring their primary residence. In prime central London the
figure is just under half (46%), in prime south west London 83 per cent and
prime north London 79 per cent.”
Overseas buyers are especially important to the (relatively small) new
development market. They now account for 65 per cent of new build sales


across prime London, rising to 70 per cent in prime central locations and
78 per cent for new build properties over USD 7.8 million. “This buying
provides much-needed certainty on funding for new schemes and often
supplies new rental stock in all price brackets as 53 per cent of buyers are
landlords. In short, this means that the majority of properties acquired are
occupied full time by tenants,” says Barnes.

International owners are buying more than they sell
The result is that international buyers have become net investors, with
international buyers outnumbering international sellers by a factor of
nearly two to one. Russians, Italians and French are the top three net
investors, while Chinese buyers stand out as a growing group, now the 4th
largest net purchasing group but almost entirely concentrated in new build
properties. (See report for full nationality listing.)
UK buyers were the largest net sellers by volume, with 1.2 UK sellers
for every UK buyer in the past 18 months, while Irish, Swedish and
North American owners are the top international net sellers. This in part
reflects the maturity of these national groups in the London market, and
occupiers from these countries are well established and regularly sell as
well as buy.
“The globalisation of London is not a new phenomenon,” says Yolande
Barnes, head of Savills residential research. “We expect the proportion of
prime overseas buyers to continue to fluctuate between 25 per cent and
40 per cent according to market, currency and global conditions, but they
will without any doubt remain an important market force.” l

ASIA NEWS

Fast Track Growth For Ahmedabad, India

A

recent report by Jones Lang LaSalle India analyses the evolution of
the real estate market of Ahmedabad - the largest city of Gujarat
– over the last four years. JLL says its decision to enter the city in 2009
was “based on its unmatched promise as a potential real estate investment
destination, which factored in the city’s healthy local demand, as well as its
outstanding industrial story.”
“The fact is that Ahmedabad has grown tremendously over the past
decade, thanks to ultra-progressive policies and intelligent development
governance. The city is providing extraordinary and unprecedented
returns on the real estate front, and is one of the most exciting investment
destinations in India today. With developers and investors from all over
the country beating a straight path to Ahmedabad, the move to launch
operations in 2009 has been timely and fully vindicated,” said Anuj Puri,
Chairman and Country Head, Jones Lang LaSalle India.
Office space investments have shown strong growth, with capital values
for commercial properties rising by as much as 20-30% in areas such
as Prahladnagar, S.G. Highway, Ashram Road and some parts of East
Ahmedabad. Approximately 3.5 million square feet of commercial space
has come up in the city over the last four years. Another 1.1 million square
feet is currently under construction and another 2.5 million square feet will
come up in next 2-3 years. The quality and services of the existing office
spaces have risen remarkably in recent times too, JLL reports.
Residential property appreciation in Ahmedabad has been to the tune of
50% over the last three years. The areas currently commanding the highest
demand for residential space are South Bopal, Bodakdev, Vastrapur, Nicol,

Nava Naroda and New Ranip. Approximately 16 million square feet of builtup residential space has been built in Ahmedabad over the last four years
alone. Another 23 million square feet is currently under construction, and
a further 30 million is proposed in various parts of the city. This amounts
to approx. 70 million square feet of residential real estate, out of which
the western part of the city will account for 47%, followed by 19% in the
southern part and 17% each in northern and eastern parts of Ahmedabad.
This is a significant supply, and yet residential prices in Ahmedabad market
have not softened. This makes Ahmedabad a unique and high-potential
market by any standards.
The report also observed a rapidly growing demand for office and
industrial real estate in the region. JLL says this demand comes from an
exciting bouquet of Indian and international players who are eager to open
operations in the industrial areas of Sanand and DMIC. “The prime interest
drivers for these players continue to be Gujarat’s admirably progressive
stance towards infrastructure and investment flow enablement, and its
pro-people orientation to real estate growth,” Puri said.
“With Sanand as a stellar upcoming industrial area and prospects of
Maruti locating its operations near Bechraji, we see a lot of scope for
further development. Hero Motocorp Ltd. has also shown interest for
setting up a large manufacturing plant near Halol. To top it off, plans for
high-speed rail connectivity between Ahmedabad, Mumbai and Pune are
now being discussed, along with the Vadodara-Mumbai Expressway. This
holds the promise of even faster growth in industrial strength, as well as in
all other real estate verticals,” he concluded l

Bangkok office market looking positive,
with rents up almost 5% year-on-year

T

he average rental rate of Grade A office space in Bangkok’s central
business district in Q1 2012 increased by 4.9% year-on-year, the
latest figures from CBRE Thailand show.
The highest rents were recorded at the Park Ventures Ecoplex, an office
building on Wireless Road, where the asking price was USD 28 per square
metre per month.
Average Grade A rents rose to USD 23 per square meter month, a rise of
1.6% from last year’s fourth quarter.
The total office supply in Bangkok increased to 8.14 million square meters,
up by 2% year-on-year.
The supply grew by about 32,000 square meters in the quarter, but no
new Grade A offices were added in central business district locations. Net


new take up of office space in Bangkok was 35,000 square meters, while
the overall occupancy rate improved slightly to 86.1%.
“The office market continues to improve steadily, with an increase in
the net take up and a higher occupancy rate. Provided there are no major
external economic shocks or domestic political events, the outlook for
the Bangkok office market is positive,” said Nithipat Tongpun, Executive
Director and head of office services at CBRE Thailand.
Tongpun also added that due to the little new space being completed
in Bangkok this year, tenants who wish to upgrade or expand will have
limited choice, especially if they require large spaces. Rents are rising in the
highest-quality and best located buildings and it is strongly recommended
that tenants plan well in advance of lease expiry dates, he concluded l

ASIA NEWS

Luxury fashion dominates Singapore’s retail scene

L

uxury and high-street fashion continued to dominate Singapore’s
local retail scene, a recent research report by global real estate
services provider Savills showed.
According to the July 2012 Singapore Retail Sector Briefing, April’s retail
sales index (excluding motor vehicles) edged up 2.9% year-on-year. Watch
and jewellery, as well as telecommunication apparatus and computer
sales were up 3.7% and 9.4% year-on-year respectively, indicating that
discretionary spending is still strong, the report said.
More international retailers set-up a presence in Singapore with luxury
and high-street fashion continuing to dominate the retail scene. Maiden
store openings in Q2 2012 included Alexander Wang in the Hilton Singapore,
J. Lindeberg in Mandarin Gallery, Tory Burch in Wisma Atria and Vince
Camuto in Ngee Ann City. Some, such as Shana and TALL WEiJL, chose
Y
to launch their first stores in suburban malls, usually in regional centres or
locations with an affluent demographic profile, the report added.
According to Savills, the central business district (CBD) is fast becoming
one of Singapore’s trendiest lifestyle and entertainment hotspots. Its
affluent live-in population is estimated to increase from the current 17,000
to 23,300 over the next five years.
“Not only has the integrated resort transformed the area into a posh
business and residential address, but the injection of a greater live-in
population from several residential and hotel projects completed in recent
years has been pivotal in breathing life into the CBD after office hours,” the
report said.
Retail rents in the CBD range from single digits for conservation
shophouses to over USD 16 per square foot per month for street-level
units in Grade AAA office buildings.
“International retailers often view Singapore as an avenue to create brand
awareness in Southeast Asia. As long as the Southeast Asian economies
sustain their growth momentum, Singapore will remain a key market for
international retailers in their global growth strategies,” concluded Alan
Cheong, Director of Savills Research in Singapore l

Thailand’s land and property tax bill to be redrafted

T

he long delayed land and property tax bill for Thailand is to be redrafted
to take into effect changes since the last general election, a report
from global property news service Propertywire shows.
Finance Minister Kittiratt Na-Ranong said that he generally supports
the main thrust of the bill but thinks it should not be imposed nationwide.
He has suggested that the legislation should apply only to land plots that
have been appraised by the Treasury Department since it has so far been
able to evaluate land prices for only about six million of 30 million land plots
nationwide.
It is also proposed that the ceiling on tax rates that are based on appraisal
prices will be increased to make the bill flexible. The rates proposed by the
previous government were 0.05% on farmland, 0.1% on residential plots
and 0.5% for commercial land. Unused land would be subject to a 0.5% rate,
with the rate doubling every three years. The ceiling rates are quite low
compared with rates imposed by other countries, according to Somchai
Sujjapongse, Director General of the Fiscal Policy Office.
This does not mean that local governments will adopt maximum rates,
but that effective rates would be much lower, he explained. Another change
urged by Kittiratt relates to tax allowances. The current draft offers tax
breaks for both small and low value land plots but the new draft would

offer tax breaks based solely on value. The tax exemption would be given
to farmers and residential land owners. Kittiratt also wants a proposal
to create a Land Bank scrapped. According to Sujjapongse, the central
government should not take local governments revenue. The previous
government proposed setting up the Land Bank, which would buy land
from people and then redistribute it to landless people, with the funding
coming from property taxes. Relevant parties in the real estate industry
now have a chance to put forward their views under a consultation process
and a public hearing is likely to be held before the proposals are forwarded
to Kittiratt.
Tax officials and economists have pushed for the changes for many
decades without success. Political support for the bill has been weak, as
most politicians are large land owners. The previous government’s finance
minister, Korn Chatikavanij, got the Cabinet to approve the bill, arguing that
Thailand should tax wealth to create a more just system. The current tax
system is said to be unfair to wage earners, as their wages are taxed, while
the financial assets, land and other wealth of the rich are hardly taxed.
The land and property tax would be collected by local governments and
is expected to help them get more revenue for community development
(Propertywire) l


REAL ESTATE

Why invest in real
estate in Egypt?
Heavily shaken by political turmoil and economic instability that followed the revolution
of 2011, Egypt’s once strong real estate market is now showing healthy signs of
recovery. Over the long term, the country could emerge as an even more attractive
place to do business than before the revolution, experts believe.


REAL ESTATE

A

year prior to Egypt’s revolution of February 2011 which marked the
end of President Hosni Mubarak’s 30-year rule, Cairo was one of
the fastest growing real estate markets in the MENA region. According to
the April 2011 Jones Lang LaSalle report ‘Revolution and Real Estate: Cairo,’
in 2010, stable economic growth, relatively low debt levels, a young and
growing population as well as a favourable geographic location with control
of the Suez Canal, solidified interest from real estate occupiers, developers
and investors from the MENA region and beyond.
In January 2011, the overthrow of Tunisia’s President Zine El Abidine
Ben Ali triggered initial street protests in Cairo, sparking Egypt’s 18-day
revolution. This had a far-reaching impact on the country’s economy which
practically came to a standstill with temporary closure of the banking and
financial systems as well as many businesses. Consequently, investor
confidence, tourism and foreign direct investment were also affected.
Although the revolution affected investor confidence and 2011
demonstrated a period of uncertainty, analysts believe in Egypt’s
fundamentals. These include a large, young and fast growing population, a
large number of marriages, a diversified economy, shortage of quality real
estate and cost advantages over other regional or European countries.
Ayman Sami, JLL’s Country Head for Egypt, is optimistic about Egypt’s
real estate future:
“The Egyptian market fundamentals have not changed. The growth
of new households, as illustrated by the large numbers of marriage still
taking place, indicates that local demand will remain a strong demand
driver supporting real estate growth. Over the long term, Egypt could
emerge as an even more attractive place for business than it was before
the revolution,” he said.
Although Cairo’s real estate market remained characterised by
uncertainty during the first quarter of 2012, clarity returned to the market
with increased activity in a number of sectors, the Jones Lang LaSalle Cairo
Real Estate Market Overview Q1, 2012 found.
According to the report, there are several indicators that this year should
see a potential improvement in the Cairo real estate market. Some real

estate projects will continue towards completion, including Cairo Festival
City which is due to deliver its first office phase; Damac is also looking to
open its retail and office project opposite Dandy Mall before the end of
the year. In addition to this, construction has recommenced on a number
of previously suspended projects such as Qatari Diar’s major mixed use
development on the Nile Corniche.

Residential sector
In 2011, residential sales transaction volumes declined sharply, “primarily
driven by uncertainty resulting from new legal measures introduced
to control corruption and improve financial accountability between
developers and the previous administration,” said Sami. The protests also
highlighted Egypt’s acute shortage of affordable housing, estimated to
stand at 1.5 million units.
Looking at the residential sector in Q1 2012, JLL observed increased sales
activity. “SODIC’s West Town project has sold out its first three phases
off plan and many large developers such as Emaar and Amer Group have
extended their payment plans which has stimulated further demand. As a
direct response to the protests of 2011, the government has also continued
with the construction and supply of the one million affordable homes
programme,” the report said.
Over the past two years, there has been a major shift to apartments
aimed at middle income earners within gated compounds, led by major
developers such as SODIC (6th of October Development and Investment
Company) and Palm Hills Development (PHD).
Due to the trend of relocation to Cairo’s new satellite cities, central Cairo
has seen practically no new large developments enter the market with
exception of Emaar Misr’s Uptown Cairo project. However, reflecting
increased confidence in the residential market, Amer Group has launched
six new projects across Egypt with three of them being in Greater Cairo,
the report added.
With regards to investing in the sector, Sami said that while the middle
income sector offers very strong investment opportunities, housing aimed
at low income earners plays an equally important role.


REAL ESTATE

“One cannot ignore the demand for affordable housing, however, in order
to make affordable housing attractive, the government needs to play a
major role to support the developers,” he said.
Looking at performance, in Q1 2012, the average price per square
metre in New Cairo is estimated at around $1,780 for villas and $1,040 for
apartments. In 6th of October, the price is $1,246 for villas and $916 for
apartments.
Average rent for a 3 bedroom villa in New Cairo lies at $3,100 per month
while 2 bedroom apartment rentals average almost $1,000 per month. In
6th of October City, 3 bedroom villa rental is around $2,800 per month
while 2 bedroom apartments sit at $850 per month.

Office sector
While in 2011 some companies had postponed their plans, others were
actively seeking to implement their market entrance or expansion plan
established prior to the revolution, JLL said. The firm also mentioned that
due to disturbances in central Cairo, the city’s peripheral commercial areas
in New Cairo and 6th of October City are likely to benefit through offering
higher quality new buildings, more car parking, lower rents and accessibility
to the new and growing residential areas.
Indeed, Q1 2012 saw active demand for up to 10,000 sqm of office space
from a number of international occupiers. Currently, there is a stock of
about 729,000 sqm of Grade A office supply across the Cairo metropolitan
area with the vast majority of this space being in the new urban cities such


as New Cairo and 6th of October City. A further 61,000 sqm is expected
to complete over the remainder of the year with major projects including
Cairo Festival City and Mivida by Emaar Misr, resulting in an improved
standard of available space and greater choice. Average office rents in
Central Cairo peaked in 2010 at $55 per sqm/month for prime Grade A
space but declined by 20% during 2011 to $45 per sqm/month. Rentals for
Grade A space in New Cairo and West Cairo stood at $20 - $25 in Q1 2012.
Major existing office projects in greater Cairo include Smart Village, 6th
of October and Sheikh Zayed City, Citystars, Nile City Towers and Maadi.
Major future office projects include Cairo Festival City, Citadel Plaza and
Mivida.
Looking at investment in the office sector, Sami says that the
petrochemicals sector still provides attractive opportunities. According
to Egypt’s General Authority for investment (GAFI), in 2010, the sector
represented approximately 12% of Egypt’s total industrial production and
holds a great deal of promise in terms of future growth. Egypt ranks eighth
in the Middle Eastern Petrochemicals Business Environment Rankings
matrix ahead of Turkey and top gas producer Algeria. (GAFI)

Retail sector
During 2011, Egypt experienced a temporary reduction in retail spending
due to strikes and business closures during January and February,
however shortly, trading returned to pre-crisis levels in most shopping
centers. Egypt’s strong long-term fundamentals such as a large and young

REAL ESTATE

population with increasing purchasing power make the country’s retail
market one of the most promising markets in the region, experts believe.
JLL said that in 2012, retailers continued to open new stores with recent
examples including Go Sport, which signed a contract for their first store in
Egypt at Dandy Mall. At the end of 2011, total mall based retail space was
approximately 761,000 sqm, which is very low for a city of Cairo’s size.
Despite delays, a possible 318,000 sqm of new retail space could enter the
market during 2013, with the major completion likely to be Cairo Festival
City with a GLA of 160,000 sqm. Other retail developments, including a
number of mixed use schemes such as Emaar Square and Uptown Cairo,
are expected to enter the market, adding more high quality retail space.
Chris Jolly, CEO of UK real estate fund manager Cadena, commented: “As
of today, there are few quality malls in Egypt and this shortage presents
good opportunities to investors. Also, Egypt needs the expertise to
bring more international brands into the malls, and then to manage these
malls, which is where we come in.” In Egypt, Cadena focuses on asset
management and currently manages Dandy Mall in 6th of October City.
As Egypt’s retail sector is expected to grow significantly over the coming
years, the market offers several attractive investment opportunities.
“Within the retail sector we are looking at value retail i.e. hypermarkets,
supermarkets, and mid to low market fashion. The high end or luxury
market is still underperforming, but it could be a market that will eventually
grow as with all emerging markets,” Sami said.

Hospitality/tourism sector
The tourism/hotels sector, a crucial part of the Egyptian economy,
has experienced the most dramatic short term decline following the
2011 unrest. Tourist arrivals have dropped drastically; in February 2011,
official data showed a decline of 63% (month-on-month) in Cairo’s hotel
occupancy while occupancy was down 72% compared to the same month
in 2010.
“Tourism was hit very hard in the short term and new construction
projects were put on hold or delayed with uncertainties around long term
investment decisions,” Sami said. According to the Egyptian Ministry of
Tourism, revenues from tourism were $8.8 billion in 2011, down from $12.5
billion in 2010.
Good news for Q1, 2012: Tourist visitors to Egypt have increased by a
significant 40% compared to Q1 2011, providing a major boost to the Cairo

hospitality sector, the JLL report said. Hotel occupancy rates increased
from 35% in early 2011 to 45% in March 2012. According to the Egyptian
Hotel Association, there were 28 hotels offering 8,920 rooms under
construction in Cairo early this year.
Most current major tourist developments are concentrated around
Egypt’s popular Red Sea resorts as well as its Mediterranean North Coast,
an area gaining increasing international recognition as a tourist destination.
“The Red Sea has always been an attractive destination for European
tourists and will remain so because it has sunny and warm beach weather
almost all year round. Luxor and Aswan in the south of Egypt is also a
very attractive destination for tourists who are interested in historical and
archaeological sites,” Sami said.
“Egypt had reached a peak of 14 million tourists prior to the revolution
and the current government is pro growing this sector; there are still areas
that haven’t been tapped into for tourism such as parts of the Red Sea
further south of Hurghada like Marsa Alam,” he concluded.

Future real estate investment
However, despite increased activity and clarity returning to the real estate
market, Sami commented that Egypt’s future prospects largely depend
on the country’s ability to address its political issues and that continued
certainty was a basic requirement for the economy to fully rebound.
“With the formation of the new government […] we believe that these
challenges [will] be slowly resolved,” said Sami while adding that in order to
support the orderly growth of the real estate sector, government spending
on infrastructure needed to be revised as it has seen heavy cuts recently.
“For the longer term investor, Egypt will always be an attractive market
with considerable potential. There is opportunity in the many challenges
that need to be addressed, such as more affordable housing, but the sector
needs stability to be able to do this,” Sami said.
Jolly agrees, saying that Cadena is determined to set up a shopping mall
investment fund in Egypt, but is waiting for the right time to do so.
“The key challenge is political stability and the ability of the new president
to work with the military. Also, the economy needs to be well managed and
stimulated. The sooner investors can get clarity and confidence about the
situation, the sooner they will return,” he said.
“Investing in Egypt is not a question of if, but a question of when and how
much,” Jolly concluded l


TOURISM

From Dust to Dawn
Having witnessed a significant increase in tourist arrivals in the first half of 2012,
Egypt is working at rebuilding itself as a leading global tourist destination with the dust
settling on recent political turmoil.

P

olitical instability following the revolution of early 2011 which resulted
in the ousting of President Hosni Mubarak had a devastating effect
on Egypt’s once thriving tourism industry. Today, confidence is high that
the industry will soon bounce back and Egypt can reclaim its strong
position as a global tourist destination.
As one of the country’s most important sectors, tourism will play a
central role in strengthening the economy. In 2010, tourism accounted
for $11.5 billion of the country’s $500 billion GDP. According to Tourism
Minister Mounir Abdel-Nour, revenues from Egypt’s tourism sector were


down over 33 per cent in 2011, accounting for a loss of about $3.8 billion.
On the upside however, tourist arrivals in Q1 2012 have increased 40 per
cent compared to last year, says the Jones Lang LaSalle Cairo Real Estate
Market Overview Q1 2012.
In his first public address on June 30, Mohamed Morsi, Egypt’s first
democratically elected president, promised to work to attract foreign
investment in all areas of the economy and to revive tourism. Already,
prior to Egypt’s landmark election of June 16 and 17, the interim military
government has taken several steps to boost tourism while major

TOURISM

than others.
“In Hurghada, Sharm El-Sheikh, Marsa Alam and the other tourist
hotspots along the Red Sea life during the past year continued as normal,
no hooded militias roaming the streets, no vigilantes, no soldiers toting
automatic weapons just happy peaceful people going about their daily
business,” said Peter Mitry, Managing Director of Egypt Real Property
Brokers based in Egypt’s Red Sea destination Hurghada.
As of May this year, Red Sea resorts were once again enjoying healthy
occupancy rates reaching up to 80 per cent in areas such as Hurghada
and are still attracting many tourists with year round sunshine and
beautiful beaches.
“In 2012 so far we had evidenced increased occupancies across the
main markets (Cairo, Hurghada and Sharm El-Sheikh) albeit at reduced
average room rates in an effort to attract additional travellers as the
political situation remained volatile. Recovery has been stronger for the
resort towns (Hurghada and Sharm El-Sheikh) compared to Cairo that
remained the epicentre of the demonstrations,” commented Panos
Loupasis, Senior Director of Development MEA at Wyndham Hotels two
weeks before the presidential elections in June.

Current developments

developments are nearing completion and construction on new projects
is resumed.

Signs of recovery
While tourist arrivals to Egypt dropped drastically in the aftermath
of the revolution and the hospitality sector experienced great losses,
experts also predicted that it would be the first sector to rebound quickly.
Depending on geographical location, some areas are recovering faster

Sharm El-Sheikh, the Red Sea’s most popular scuba diving and
snorkelling destination, has fast evolved from a small village to a thriving
tourism hotspot offering countless hotels, resorts, nightlife, shopping and
entertainment opportunities.
Citystars Sharm El-Sheikh of Citystars Properties is an impressive
7.5 million square metre luxury gated mixed-use community and will
be home to the largest Crystal Lagoon in the world. Engineer Yehia alMeteini, Chairman of Golden Coast, the project’s developer, commented:
“The record-breaking Lagoon will add a new dimension to the tourism and
real estate markets, not only in Egypt, but also in the Arab region at large.”
“Arab developers are quite capable of carrying out large-scale
developments, and compete with key global developers, in terms of
luxury and grandeur,” al-Meteini added. He also emphasised the fact
that the project will further promote the city of Sharm El- Sheikh as a
magnet to beach tourists while playing a pivotal role in bringing it back in
the spotlight.
The residential component of Citystars Sharm El-Sheikh will offer 1 and
2 bedroom apartments ranging from 65 to 150 square metres in addition
to 3 bedroom apartments as well as 3, 4 and 5 bedroom luxury villas. The
development also includes four resorts, a retail waterfront promenade,
an 18-hole signature golf course and a 9-hole desert course, a tennis
academy, spa and wellness centre, extensive meeting and conference
facilities as well as educational facilities. The project’s initial phase is


TOURISM

scheduled to be launched later this year.
In Hurghada, the Red Sea coast’s second largest city after Suez, a major
new project was launched last month with Virgin Island. A 5-star front
line beach apart-hotel, Virgin Island is set in the heart of Hurghada’s new
promenade and has a private beach with marina. “Design and facilities are
to the very best European standards and are sure to attract significant
interest from investors and lifestyle buyers alike,” Mitry said.
South of Hurghada, Citystars Red Sea Riviera will cover 10 million
square metres, with a 2 kilometre long beach front that contains a retail
centre, a sports centre, a marina, an 18-hole signature golf course, hotels
and resort residences.
In addition to the Red Sea region, Egypt’s Mediterranean North Coast
is also increasingly gaining recognition as a new target region for beach
tourism in the country. Several large developments aimed at attracting
international tourists as well as Egyptians are nearing completion, with

the major project being Emaar Misr’s Marassi development, a 6.5 million
square metre resort community including residential, hotel, retail, F&B
and entertainment projects.

Steps to boost tourism
In an effort to boost the industry, Egypt is concentrating on the BRICS
countries and Japan to hit its target of $25 billion in tourism revenue by
2017, Abdel-Nour explained. In May this year, the tourism minister told
Gulf News: “We’re diversifying our markets. We’re knocking on the doors
of BRICS, Japan is coming back. We’re opening a new airline link between
Cairo and Tokyo and the second between Cairo and Osaka.”
Additionally, the country is looking at incentivising low-cost carriers,
reducing airport fees and seeking to attract chartered operations to
further boost tourism. In April, the government has also decided to
resume the sailing of Nile cruises from Cairo to Aswan as of mid-May,

Citystars Sharm El-Sheikh

after a 15-year suspension.
Encouraging cultural tourism alongside beach tourism is also high on the
government’s agenda for the coming years. Part of the plan includes the
development of the new Grand Egyptian Museum, the largest museum
of Egyptology in the world. Expected to be completed by July 2015, the
Grand Museum will showcase approximately 100,000 ancient Egyptian
artefacts and will include a conference and learning centre to educate
visitors on ancient Egyptian history.

Prospects for the future
Looking at the future of Egypt’s tourism industry in the immediate


short term, Loupasis of Wyndham Hotels commented:
“The resort towns of Hurghada and Sharm El-Sheikh that typically
rely on the tour operator business will continue to enjoy increasing
occupancies hopefully with a gradual improvement of the average room
rate in the mid run. Within Cairo, areas away from the centre (primarily
the 6th of October followed by Heliopolis) will continue enjoying better
yields compared to the city centre hotels where the yields remain highly
sensitive to political events.”
According to Loupasis, the long term outlook for the country’s tourism
industry will be determined by its ability to maintain political stability:
“Security, and sense of security, will remain the single most important

TOURISM

Citystars Sharm El-Sheikh

factor driving the international traveller back to Egypt,” he said.
Peter Mitry believes that it won’t be long before the industry fully
recovers. “Egypt has always offered a blend of history and culture as well
as a near perfect climate for beach and diving holidays for visitors from
the Gulf, from Europe and from the Baltic states. Add to that, the 5-hour
flight time from most capital cities and it is easy to see the attraction,”
he said.
However, due to the high volume of all inclusive holidays organised by
tour operators, Egypt’s Red Sea region has created a low budget market
where dining and activities is centred primarily around the hotels. As a

result, many restaurants in Sharm El-Sheikh and Hurghada had to close
down after a while due to a lack of traffic, Mitry explained.
“In the future we need action to reduce flight prices to Egypt for ‘travel
only’ clients in order to provide encouragement for restaurant operators
to continually try new ideas; staff training will also be a key requirement for
the future as the many Egyptians working in the hotels and restaurants
have little or no international experience so they are ill equipped to fulfil
the needs of the more discerning overseas clients,” he said.
“With close attention in these areas, Egypt has the potential to become
a world-class destination within five years,” he concluded l

Virgin Island Hurghada


AREA FOCUS

North Coast
Renowned for its ideal summer weather and beautiful scenery, Egypt’s Mediterranean
North Coast is positioning itself on the international tourism map as it increasingly
receives interest from both local and foreign leisure travellers.

Marassi, Sidi Abdul Rahman

E

gypt’s North Coast is an area encompassing about 520 kilometres of
Mediterranean shoreline that stretches from the city of Alexandria
in the east to Sallum near the Libyan border in the west. Blessed with
beautiful beaches and an excellent climate, a number of tourist villages
have recently emerged along the northern coast, many of which primarily
cater to Egypt middle upper and upper classes. Although the area is
considered particularly attractive to Egyptians, it is increasingly becoming
more popular with foreign tourists due to its proximity to Alexandria and
has evolved into a premium leisure destination for both Egyptians and
foreign tourists.


While Egypt’s thriving tourism industry over the last decades has mainly
been concentrated around the Red Sea resorts of Sharm El-Sheikh and
Hurghada, today, the country’s Mediterranean coast is rapidly opening up
to international tourism. Developments aimed at targeting the international
market began only as recently as 2004, with the opening of Mövenpick’s
El Alamein Resort and Spa; the first modern offering for the international
5-star market. The same year, El Alamein International Airport opened
and made the coastal city available to European charter flights, followed by
Marsa Matrouh airport’s opening to international flights in 2005.
Older resorts along Egypt’s northern coastal strip, such as Agami, have

AREA FOCUS


already been popular with Cairenes and Alexandrians over the last few
decades, and a number of new villa developments have served the local
market in recent years. However, due to a lack of hotels in the resorts and
conservative dress codes on public beaches, the early North Coast resort
developments have proven rather unsuitable for the international market.
In 2006, the Egyptian government requested bids for a large scale
tourist resort development near El Alamein, about 110 kilometres west
of Alexandria along the Sidi Abdul Rahman Gulf. Emaar Misr, the wholly
owned subsidiary of global property developer Emaar ultimately won the
bid with Marassi, a 6.5 million square meter gated, master-planned, yearround resort.
Emaar Misr sees a bright future for the North Coast and believes the area
will become the ideal year round community and tourist destination; “a
perfect marriage of nature, luxury and healthy upscale living.”
Emaar’s objective with Marassi is to develop a world-class, multi-season
resort community targeted towards Europeans, Egyptians and Middle East
nationals.
“[Our] vision is of a small, self-serviced, ‘Mediterranean’ beach town with
a picturesque and active town centre along the inner harbour that can
become the focal point for shopping, socialising and entertainment in the
area,” the developer said.
“The quality of the services and the beauty of both the natural setting
and the design of the world class development itself will contribute to the
sense of contentment and wellbeing associated with visiting and living in
Marassi,” Emaar Misr added.
Marassi covers an impressive surface area of roughly 6.5 million square
meters and holds a total investment volume of around EGP 10 billion ($1.7
billion). The project includes hotels, a 6 kilometre private beach and an EGP
1.5 billion marina, expected to become the largest yacht marina on Egypt’s
Mediterranean coast.


Seven residential districts include the exclusive resort-style Armani
residences, featuring a combination of stacked villas and three- and fourbedroom villas, all facing the Mediterranean Sea, forming an integral part
of Marassi. Specifically designed by Italian luxury designer Armani, the
villa sizes range from 250 square metres to 500 square metres, with each
unit featuring a private pool. According to Emaar, the “Armani Residences,
Marassi blend the advantages of a spectacular location with the world’s
most elegant and refined home designs.”
In addition to the residences, the development has a number of other
residential units designed according to different architectural styles and sizes.
“The architectural character of the development’s districts is inspired by


AREA FOCUS

various Mediterranean architectural styles. Villages are defined by interior
loop roads, and are organised into integrated residential neighbourhoods,
where there are common area recreational elements, swimming pools,
community meeting areas, and children’s play areas,” Emaar said.
The project also includes a Marassi beach clubhouse, spas as well as an
18-hole golf course and a Golf Academy. To date, 248 apartments and 90
villas and townhouses in various districts have been handed over.
Known for its exceptionally beautiful beaches and great climate, the
area around El Alamein is attracting a significant amount of tourist
developments. Haciendabay, constructed by Palm Hills Developments,
is spread over nearly two and a half million square metres and includes
residential units, an 18-hole golf course, various lagoons, lush landscaping,
cabanas, several 5-star hotels, recreational facilities, food and beverage
outlets as well as wellness centres.
Residential options include sea front villas, chalets overlooking the golf
course as well as chalets at the exclusive Nikki Beach, an international
lifestyle concept bringing together posh living, dining, fashion and music.
Adjacent to Haciendabay and spread over 207,000 square metres lies
Hacienda White, Palm Hills’ newest addition to the North Coast. Hacienda
White is a luxurious residential development featuring various villas and
chalets, all offering unobstructed sea view. The project includes two large
lagoons with private seaside cabanas, a clubhouse, sea front lounges as
well as a boutique hotel and is located next to El Corte mall, a fashion, home
accessories and F&B retail outlet.
Citystars Properties is also developing a North Coast project in Egypt’s

new summer destination. Citystars North Coast will include an exclusive
residential complex, hotels, blue lagoons and recreational facilities. A wide
variety of residential choices will feature resort-style amenities while
international hotels will offer a range of rooms and suites. Strategically
distributed lagoons throughout the development will offer swimming,
boating and watersports facilities.
Another new development coming up in the Sidi Abdul Rahman area is
Amwaj, developed by Al Ahly for Real Estate Development. Amwaj will be
an integrated residential development with various facilities, targeted
specifically at young couples and families. Modern in architecture, the
development includes a 5-star hotel, an activity beach and recreation area.
Other smaller beach resorts targeted at international tourists in the area
include Amer Group’s Porto Marina, Golf Porto Marina, and Porto Marina
Residence, offering a mix of residential, tourist, retail, sports and leisure l



AFFORDABLE HOUSING

A MILLION HOMES ARE
NOT ENOUGH
An immature mortgage market, lacking interest from private developers and insufficient
government participation are the main reasons behind Egypt’s pressing affordable
housing issue. Despite the government’s announcement of the construction of a million
affordable homes over the next five years, much more needs to be done to resolve the
issue in the future, analysts say.

W

idespread demonstrations across the Middle East that began
in Tunisia in January 2011 have shown that Arab governments
can no longer ignore the needs of millions of low income citizens in their
countries. A major issue many low to middle income families in the MENA
region face is the lack of the availability of affordable housing. According to
the Jones Lang LaSalle 2011 report on Affordable Housing in MENA, Egypt
currently holds the record of the largest shortfall of affordable housing
units (1,500,000) in the region. With 85 million inhabitants, Egypt is the
Middle East’s most populous country while over 80 per cent of Egyptian
households are classified as belonging to the low income sector, with a
monthly income below EGP 2,000 (USD 340).
According to JLL, the MENA region is experiencing population growth
around twice the global average and has a young overall age profile; both of
these factors drive the demand for housing across the region substantially.

Challenges to the provision of affordable housing
In the case of Egypt, JLL identifies five key challenges the market faces
with regards to the provision of housing for the low income sector: An
immature mortgage market, limited maintenance of affordable housing
projects resulting in poor quality dwellings, insufficient interest from
private developers, lack of access to affordable land and little government
participation.
High land costs remain some of the major challenges potential developers
of affordable housing face. “Affordable housing is particularly susceptible to
land pricing, and land cost burdens have resulted in many projects being in
isolated or otherwise marginal locations. This works against the integration
of affordable housing projects into the wider community and can lead
to significant additional costs being incurred for utilities, transportation
infrastructure, social services and community amenities,” JLL said.
Access to housing finance poses another common problem in the
wider MENA region with few countries having an active private mortgage
market. In Egypt, the government has made several efforts in the past to
address this issue and made attempts to revise its current mortgage law.
In summer 2006, property registration fees were set to a maximum of EGP
2,000 (USD 330), prior to which fees were as high as 12 per cent of property
value. Extensive marketing campaigns were hoped to increase awareness
levels about the availability home financing options among the Egyptian
society. However, despite revisions, the current mortgage law No. 148, in
place since 2001, makes it difficult for most low income earners to qualify
for mortgage services. For example, the maximum monthly instalment for
low income earners must not exceed 25% of their monthly income, and


proof of land ownership must be given.
Attracting increasing interest from private developers is another
challenge the affordable housing market faces in Egypt. Traditionally, few
major developers have targeted the affordable sector due to the higher
returns available from the luxury sector. According to JLL however, “the
perception that ‘high end resulted in highest returns’ has been challenged
by the collapse of the investment market across the region since 2008”
and an increasingly oversupplied luxury market has resulted in a growing
recognition that the affordable sector can provide strong, financial returns.

Addressing the problem
In 2011, the interim military government has recognised the need for
affordable housing and the Ministry of Housing has announced plans
to construct one million new residential units across 22 different cities
throughout Egypt over the next five years, JLL reports. With an average
size of 63 square metres, these units are to be provided for those who
currently do not have access to the private housing market. “The proposal
is for the government to provide the land and for the private sector to
undertake the construction for an agreed price. The average construction
cost is estimated to be EGP 60,000 ($10,000) while the sales prices are
likely to range between EGP 70,000 and EGP 80,000 which is well below
the price of similar sized units in the private market,” JLL said.
In 2006, Orascom Development, a leading developer operating across
the Middle East, launched its budget housing subsidiary Orascom Housing
Communities (OHC). In 2007, OHC launched its flagship project Haram
City, Egypt’s first large scale affordable housing development. Spanning
roughly 8.4 million square meters of land, the fully integrated community
will hold approximately 70,000 housing units upon completion. Haram City
is located 20 kilometres west of Cairo, in 6th of October City and offers
diverse community facilities including schools, stores, clinics, a cinema,
houses of worship, as well as sporting facilities and will include retail and
commercial properties as well as office space. Today, Haram City is home
to over 30,000 people.
“The most important ingredient to create a sustainable town is ensuring
a community is established from the onset of the project’s development.
This entails providing the first residents with schools, clinics, retails stores,
sporting facilities, houses of worship etc... and ultimately paving the way
for job creation”, said Omar Elhitamy, OHC Managing Director during the
inaugural Cityscape Egypt earlier this year.
The company is also currently developing Haram City’s latest phase,

The Magazine Cityscape August 2012

The Magazine Cityscape August 2012

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