Tarek Elzanaty, General Manager of Corporate Banking at Banque Misr, recognises that while banks perceive the real estate sector as a long-term, high-risk investment, they also acknowledge its vital role in economic development and job creation.
During a recent press conference, Elzanaty emphasised that Banque Misr, along with other local banks, comprehends the risks associated with real estate and remains flexible in its approach. These banks are ready to provide essential support to real estate development companies.
Despite global economic fluctuations, including the impact of the COVID-19 pandemic and the Russia-Ukraine conflict, banks have expanded their real estate financing efforts. Notably, real estate investment funds, such as the one offered by Banque Misr, present significant opportunities. Additionally, banks are collaborating with various institutions to create a new product that combines investment and banking finance to further support the sector.
Abdallah Sallam, Chairperson and CEO of Madinet Masr, emphasizes that mortgage financing serves as a tool for economic growth rather than merely supporting low-income individuals. He clarifies that real estate, being a high-value product, requires mortgage financing rather than direct support. Despite past concerns related to the mortgage crisis in the United States, corrective measures have allowed mortgage financing to resume without interruption.
Sallam highlights the persistent gap between real estate sales volume and demand in the Egyptian market due to population density. While mortgage financing initiatives play a crucial role, they are not the sole foundation of this vast industry. Ensuring mortgage financing availability across different residential segments is essential for economic growth.
Furthermore, Sallam acknowledges the importance of state and private sector support, enabling affordable housing ownership through various methods—a national and humanitarian duty for all.
Meanwhile, Managing Director at Al Ahli Mortgage Finance Company Hatem Amer stated that financing is one of the most prominent problems facing the mortgage sector. However, the real estate developer is partly responsible for this issue, as they operate in both development and client financing. This dual role places a burden on them to offer long-term instalment plans to enable clients to purchase units.
Amer added that the solution to the financing problem, as well as bearing inflation and the increased cost of building materials, lies in shifting real estate development companies towards “construction-phase financing” instead of delivering fully finished units. This type of financing allows clients to pay instalments throughout the construction period, and by the time they finish their payments, the unit is ready for delivery.
He pointed out that the mortgage financing law in Egypt allows for the financing of units under construction, with no restrictions preventing it. He explained that the Prime Minister’s decision in 2022 regarding regulations for selling units in various projects by real estate developers is one of the most beneficial decisions for the real estate development process, as it helps ensure the rights of all parties, including mortgage financiers and clients.
Amer predicted that units under construction would witness unprecedented demand in the upcoming period because they simplify payment for clients, making it easier for them to manage instalments or lump-sum payments. This approach is also one of the best methods suitable for both real estate development companies and clients.
He emphasized the need to shift towards selling units under construction to avoid overburdening real estate developers, especially amidst inflation and rising costs of building materials. Financing units under construction helps address these issues, ensuring the client’s satisfaction and the developer’s sustainability.
Head of Large TaxPayer Center at the Egyptian Tax Authority Ashraf El Zayat stated that the authority has recently implemented many new updates to address tax-related issues. He explained that the authority has adopted a significant reform approach to resolve or reduce tax disputes between taxpayers and the authority.
El Zayat added that the new system consolidates many activities of a single taxpayer in one place, helping to prevent the duplication that previously caused many issues. He noted that this system is already in use.
He pointed out that the new system helps ensure that each taxpayer’s file is in one location, which prevents the duplication that led to numerous disputes between the authority and taxpayers. He clarified that the real estate financing sector receives special attention from the Tax Authority, as evidenced by its exemption from some decisions applicable to taxpayers in other sectors.
He concluded that the real estate development sector is one of the key sectors for the national economy. He explained that the authority is particularly focused on solving the problems of this sector. This is demonstrated by the existence of a permanent committee between the Tax Authority and the Egyptian Federation for Construction and Building Contractors, which holds regular meetings to address and solve the sector’s issues.
