Al Ahly Sabbour Developments intends to inject investments worth EGP 3bn this year across its projects in the east and west of Cairo, as well as the North Coast, according to CEO, Ahmed Sabbour.
Daily News Egypt interviewed Sabbour to learn more about the company’s strategy and its expansion plans in the Egyptian real estate market, the transcript below was lightly edited for clarity:
What are the updates regarding the company’s projects in Mostakbal City?
Al Ahly Sabbour is developing around 3.5m square metres (SQM) in Mostakbal City that comprises 4 projects; Green Square, L’Avenir, Aria and the City of Odyssia. As for Green Square, it will be developed over 80 acres of land in partnership with the Saudi Dar Al Maali with EGP 1bn in construction investments. The project, which is currently 75% complete, includes 1,027 units to be delivered in 2020. By the time of delivery, we will announce the name of the project management company that will handle the services and infrastructure alongside Mostakbal City, to provide owners with the utmost facility management services.
We have also completed construction of 60% of L’Avenir, which we will start delivering by the beginning of 2021. The project comprises of 2,300 units on 420K SQM of land. The project’s total investments account for EGP 2.8bn and it is expected to achieve sales worth EGP 3.2bn.
Furthermore, we partnered with the Kuwaiti Manazel in our third project in Mostakbal City, ARIA, which will be developed over 453K SQM land, with a total investment of EGP 2.25bn, to offer 2,200 units. Aria is foreseen to achieve sales estimated by EGP 3.8bn and we have already sold 50% of the project’s total units.
Last but not least, the City of Odyssia, which is in partnership with Mostakbal Urban Developments, with expected investments of EGP 25bn.
This comprehensive project introduces the concept of the city inside the Mostakbal City, as it will be divided into seven compounds over 528 acres, including Alaire and The Ridge. The City of Odyssia includes a vast central business district, stretching over 50 acres, with EGP 3.5bn of investments. We have also contracted one of the best multinational services providers to support the execution of our master plan and operation.
Moreover, we partnered with Hill International to provide their first-rate integrated facility management services, while one of global design and the world best architecture firms Gensler will handle the masterplan and urban planning. This project offers 15,000 direct and indirect job opportunities for Egyptians across a myriad of specialities.
What is the company’s total investments allocated for projects in the current year?
Al Ahly Sabbour intends to inject constructions worth EGP 3bn this year across its projects in the east and west of Cairo, as well as the North Coast. We are also expecting sales of EGP 6bn for the current year only.
What is the company’s expansion strategy in the coming period?
We are looking into some opportunities now and focusing on Upper Egypt, especially after studying the market there and realising that there is a great demand that needs to be supplied by developers. We are still in negotiations with the Minya governorate to obtain 3 land plots. Additionally, Al Ahly Sabbour also aims to expand to Delta, especially Mansoura and Tanta, and hence we are looking for the adequate land plot to proceed.
What’s the company’s delivery plans?
As I mentioned earlier, we are working now on the current projects in Mostakbal City, which will be delivered within a short period. The closest project for delivery is Green Square in Mostakbal City, which is set for 2020. L’Avenir, on the other hand, will be delivered by the first quarter of 2021(1Q 2021), while City of Odyssia’s first phase will start delivering by the end of 2023.
As for our projects in the North Coast, we are expecting to begin the delivery of GAIA during the 2Q 2023, while the fourth phase of Amwaj is planned to be delivered 3Q 2020 and 4Q 2020. Lastly, we have successfully inaugurated the first phase of Rivette which is designed as a commercial-use project to serve the owners of Amwaj, as well as the visitors and residents of the North Coast.
When does the company begin construction in the Sheikh Zayed project?
We have a project in 6th of October city, which we recently managed to obtain its licenses from the Ministry of Housing. The project’s total investments are worth EGP 5.5bn and it is designed to be an integrated urban project on an area of 144 acres, in partnership with the New Urban Communities Authority (NUCA). The land size can accommodate up to 2,000 units, but we plan to establish about 1,000 units only.
Can you tell us latest updates regarding GAIA in North Coast?
GAIA is an upscale resort, with an investment of EGP 9bn, enveloped by the vibrant community of the North Coast, located at km 194 of the Alexandria-Matrouh road. GAIA is a destination for ultimate luxury within a beach resort covering a vast area of 279 acres boasting a 550-meter beach-front view, 50,000 meters of swimmable water lagoons, with a total of 2,740 fully finished units with different areas, ranging from 120 m2 to 284 m2. The resort offers a variety of home styles that includes stand-alone villas, attached twin houses, duplexes, chalets, and cabanas. The project is master-planned by esteemed designers Chapman Taylor and RAY Design. The building permits for GAIA are obtained and construction started last month as we plan to commence the delivery of the first phase during the 2Q 2023.
What is the current operational situation in Amwaj?
At the moment we are working on the fourth phase of Amwaj, as we kicked off construction. Additionally, we have launched a new phase this summer, which includes 120 luxurious apartments with sea views. We completed the second phase of the commercial project, Rivette, this summer as well, it will provide retail, entertainment, and a variety of food and beverages options. This serves our plan to further develop Amwaj’s recreational activities; whether for the project’s residents or all the visitors to the north coast in general.
Coastal areas in Egypt are transforming into first homes and there is a great demand by Egyptians on these areas, especially the North Coast, Alamein, and Ain Sokhna. How do you see this market in the coming period?
Investing in buying a second or third home on the Egyptian Mediterranean coast is a rather pricey one. However, in recent years the North Coast has grown, as it has become a prominent -if not a must-go – summer destination; if not all year long, for the millennials. Instead of old school family-oriented summer vacations on the coast, the area has been completely changed within the last couple of years.
Accordingly, demand has skyrocketed with the pricing of units exponentially increasing in the last five years than it ever did in the last twenty years, more so than the normal housing market for any real estate in other locations within Egypt. In response, not only did real estate developers take notice, but also did the government. Developers and the government have started capitalising on this huge collective demand for acquiring second homes and commercial units in the North Coast. In addition to an abundance of new and developing projects lining the coast from Alexandria to Sidi Abdelrahman, the government’s newly announced plan of establishing the New Alamein City has also been critical for real estate in the area. New Alamein City will include an airport and a much-needed new road network to facilitate ease of transportation. The city is also meant to be a year-round destination for residential and commercial purposes. This will effectively turn the North Coast from a seasonal destination to a stable city with full facilities all year, in turn exponentially increasing the value of all real estate in its proximity all across the coast.
Do you expect real estate price hikes after increasing fuel prices?
There is an expected and normal increase estimated by 15% to 20% in real estate prices by the end of this current year. However, it won’t affect the demand since it has been foreseen with lifting subsidies off fuel prices that logically affects construction material prices. The flexibility shown by real estate developers in payment plans and diversity of real state products will contribute to overcoming this increase and hence supporting the demand and sales.
The surge in real estate prices are also driven by different market performance, not only the influences of fuel prices.
In your opinion, what are the real estate demand hotspots in Egypt?
East Cairo remains the main frontier of demand in Egypt’s real estate market, due to the development of the New Administrative Capital and Mostakbal City, which dominate the real estate scene right now.
As for West Cairo, the Egyptian government is currently implementing more projects in 6th October City that are specifically related to the road systems including nine pedestrian bridges, 15 full-scale bridges and two tunnels for EGP 3.9 bn. Additionally, EGP 1.6bn is allocated to the maintenance of internal roads in the suburban district. This will all contribute to a strong comeback for demand in West Cairo.
The North Coast undoubtedly still is an attraction for real estate investments. The area now exhibits a wide range of infrastructure and services that are part of Egypt’s comprehensive plan to develop the entire North Coast and transform it from a seasonal stop, into an all-year destination for first home buyers.
How does the government’s introduction of real estate projects affect Egypt’s economy?
The Egyptian real estate sector has historically proven resilient to economic and political challenges over the past decade and has been strongly supporting the economy. The sector employs 5% of the country’s labour force and has been growing tremendously since 2005. During years such as 2013, when the economy was slowing down, the sector thrived making up to 9% of the GDP.
In 2018, the sector represented 16.2% of the country’s GDP, which the Egyptian Centre for Economic Studies states as too high. Real estate companies listed on the Egyptian Stock Exchange witnessed double-digit growth in revenue, which has built their market capitalisations. The sector is currently growing at more than 20%, and real estate properties represent a third to half of the wealth for families in the middle and high-income segment, even more in lower-income classes. The real-estate sector’s activities rose by 952% between 2010 and 2017.
In February of 2016, with the launch of the Sustainable Development Strategy – Egypt’s Vision 2030, the Egyptian government set out national goals to develop the nation over the next 15 years. A top priority being a comprehensive urban development plan that expands and creates new megacities throughout Egypt to support a rapidly growing population. The government and its related entities are increasingly undertaking large-scale co-development with private developers. This will result in an increased supply of units on the market moving forward.
For decades, Egypt has planned and worked on building the necessary infrastructure for private and public entities to market real estate and commercial complexes that will bring life to these new cities. They are located all over Egypt with the biggest pushing to solve the overpopulation in Cairo and Alexandria.
How do you see developers’ participation in global exhibitions? And do you think that this strategy works in promoting Egypt’s property?
The export of real estate products and properties is one of the important streams of the success of any real estate market.
Despite the state’s ongoing efforts to support this issue, Egypt still has a long path ahead to compete with international countries that have come a long way to obtain solid grounds and presence in international forums and exhibitions. This requires frequent and enhanced participation in international real estate exhibitions and meticulous study of foreign clients and their needs to provide incentives that would encourage them to buy property in Egypt, whether for housing or investment purposes alike.
Al Ahly Sabbour plans to open offices in Saudi Arabia, Kuwait and some European countries, in line with the state’s direction to export real estate and contribute to attracting foreign currency to Egypt. The real estate in Egypt has become cheaper for Arabs and Egyptians working abroad after the devaluation of the pound. The Egyptian Export Council for Real Estate relentlessly cooperates with the developers as well as the state to boost real estate exports. Al Ahly Sabbour is actively involved in exporting real estate by participating in foreign exhibitions to export 15% of our projects abroad.