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Mr. Mohamed Mounir, Chairman of Future Homes chit chat with MEO reporter Amira Elhamy, about the real estate sector in Egypt, its promises, challenges untapped chances that can make a big difference within the Egyptian market.
Can you tell us more about future homes company?
Future homes is a real estate company that started operating in the Egyptian market 15 years ago; we have almost 600 loyal customers, we were able to sell 60 residential buildings and currently operating for almost another 20 buildings.
It is crucial to note that future homes company, mainly operates to serve the middle class, B and B+ and C+, which in fact represent the majority of the Egyptian population.
The specifications of the residential units we present for the middle class starts from studios 65 meters up to 170 meters, starting 400,000 EGP up to 1 M 300,000 EGP; before the devaluation, prices were almost half yet with the actual costs increase prices have increased to these levels which remains with a proper payment scheme an affordable option for the wider population.
Currently, we are presenting to clients better, installment facilities, up to 10 years to compensate for the price increase, however delivery date is pushed up to 4 years.
What is the competitive advantage of Future Homes?
Well, we chose to take over an important segment of the Egyptian society and we know that not many companies operate for this segment, most real estate companies serve the A class and give considerable attention to the new administrative capital, projects in the north coast or the Red sea. In fact the deficiency of supply is for the B+ and B class, this is why we chose to operate over this segment which we regards as a sustainable sector. We operate mainly, in El-Hadaba El-Wosta, Mokatam, Tagamo3, Madinet Nasr, and Zahra El-Maadi.
Our future plan is to expand in more areas, as long as we are able to make the best use of land and build over it several residential units with good quality and services then we can expand for sure. In contrary to the selling strategies of big compounds, which is less units more greenery with high pricing for the unit, our target is to expand vertically, build more units with less pricing which is our competitive edge in the market.
In your opinion, what is the successful trend in real estate in the present time?
Well in my opinion establishing partnerships between the public and the private sector is the most successful trend within the real estate sector.
This step took place several times for various projects, for mountain view for instance it was very successful. However, let me clarify that this trend happened more for the A class segment of the market, for the B class it happened less.
This partnership is very useful for the developers.
Speaking about Futures Homes, we already took this step and it proved major success, we established partnership with Nirco company, which is a public sector company. Let me add that one of the advantages of dealing with the public sector is the spacious land size they offer. On the other hand the advantage of the private sector is the efficient marketing and sales skills along with the architectural taste, which makes partnership between the private and the public sectors a successful trend to be rooted in the real estate business.
In your opinion, what are the challenges that faces the real estate sector?
Although the expansion in infrastructure and real estate over the past years has been unprecedented, bureaucracy remains a first challenge to confront, the government must make governmental procedures easier for developers and investors. Some projects deliver their units late because the company took time to get certain governmental permits, approvals and licenses, this process needs to be expedited within a set time frame to adapt with the growth of the sector all over Egypt.
Second, high bank rates negatively impact many segments, including the real estate. Bank rates must decrease in order for the production cycle to go faster. On the other hand, many restrictions that are present within the banking system related to financing real estate companies. Some projects are left pending due to these harsh restrictions. A good recommendation would be directed to the central bank of Egypt to ease the governmental financing procedures related to the real estate sector, and for sure good decision makers who are able to take risks would help a lot to overcome the above mentioned challenges.
We know that you have talked several times before, about your own ideas related to slum areas in Egypt, can you please tell us more?
I believe that the government is already doing a very good job, related to this matter several steps were taken, like Maspero triangle, and many other moves.
My recommendation, is rebuilding the slum area with better planning in order to have services operating within the new plans in order to grasp more residents.
Making a better use of the lands, in order to have more units, available for the residents is the target. For example, if we take a slum area that used to grasp 500 residents for instance, my suggested idea would be build units for 1,000 residents and let the 500 residents come back to stay again; as for the remaining 500 empty units, they will be sold and their money would cover the building expenses spent. This also gives a chance for the residents to feel at ease by not leaving the area they lived in. This would be a good step if considered.
How would you evaluate the current state of the real estate sector in Egypt?
Well let me first clarify that the real estate sector, suffered a lot following the devaluation of the Egyptian pound that took place a couple of years ago, which resulted in high inflation rates; also lifting the subsidy was though and essential step had a negative impact on clients to buy units. Yet, I would say, that a state of balance will happen soon within the coming years as market is moving towards stability.
Finally, and as I have previously stated I believe the future is in Middle Class Housing in Egypt, as Egypt’s population grows annually at a rate that requires growth of this sector.