Is now the perfect time to buy property in Egypt?

May 15, 2014 1:59 pm

SODIC is one of the largest real estate development companies listed on the Egyptian Stock Exchange, launching projects targeting strata that earn above-average income.

A pair of deals made last week by the American firm Ripplewood to buy large stakes in Development and Investment (SODIC), 2.3% and 9.4% respectively, has helped boost optimism regarding near term Egyptian real estate sector growth.

“American companies do not invest in any particular market or activity unless in depth studies demonstrate an expectation of solid returns from those investments,” said Mohammed Abdallah, chairman of Coldwell Banker Egypt Real Estate.

“The American companys investment in two real estate firms is a strong indicator of the sectors capability for growth in the near future,” Abdallah added. “The current moment is very suitable for investment as Egypt is expected to draw closer to stability after electing a president in the coming days.”

Alongside expectations for an increase in accordable and social housing which will increase real estate sector growth, Abdallah said there is demand for all types of housing in Egypt, and that this demand applies to luxury housing. There is a shortage of available units, he admitted, but said this type of foreign company searches for sectors that make a profit. This will likely not be achieved through housing projects for low-income populations, he noted.

Despite this, Abdallah expects that the two companies will begin targeting these categories by establishing projects for this type of housing across various regions, or by setting up small sized units in larger plans.

“The smooth transfer of power following presidential elections and completing implementation of the road map will motivate many foreign companies to invest in Egypt,” Abdallah said.

Stock market analysts said that Ripplewood is hoping to take advantage of low share prices following the economic decline that result from the 2011 revolution, alongside expectations for stability to return and prices to rise after presidential elections take place.

“The presence of American companies demonstrates the sectors strength as well as confidence in Egyptian companies,” said Ahmed Badrawi, managing director of SODIC.

He said that the company would benefit from Ripplewood technically and financially by supporting the companies future plans.

Ripplewood played an important role in developing Commercial International Bank (CIB), when it bought 20% of its shares before ceding them completely in 2009.

Badrawi said that the company is continuing conversations with the Urban Communities Authority in order to obtain the land at lower prices, adding that they “would not hesitate” to carry out projects suitable for B and C categories if they are able to find affordable land.

 

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