Another shot in the arm for our real estate industry? Earlier this week, the Madbouly cabinet discussed the idea of allowing investors to trade real estate assets on the EGX, including via a separate exchange for buying and selling shares in properties. This is the latest in a string of moves from the government to spur real estate “exports” — ie foreigners purchasing real estate and land assets in Egypt — including pushing through amendments to allow foreigners to acquire Egyptian citizenship if they purchase state-owned or privately owned assets. The new proposal could unlock more liquidity in the real estate industry, allowing investors and real estate companies to trade shares in real estate assets and more easily invest in the industry.

Egypt’s real estate market, by the numbers: With a consistently high population growth rate, the real estate industry in Egypt has strong growth potential. A 2019 World Bank housing survey (pdf) found that some 76% of families in Egypt own residential units, marking one of the highest global rates of home ownership. Real estate and related industries are estimated to be contributing some 20% of the country’s GDP, Trade and Industry Minister Ahmed Samir said earlier this year. Private sector real estate developers and the government are both working on several new projects, with the government developing 22 new 4G cities that will house some 30 mn residents once complete, according to the 2052 national strategic urban development plan (pdf).

REMEMBER- The industry has been under pressure since the outbreak of the Russia-Ukraine war: Construction and infrastructure players, which rely heavily on building materials that have seen dramatic price increases, have been under pressure over the past several months as they cope with shortages, the devaluation of the EGP, and expensive financing. In 2022, some 10-20% of real estate developers reported halting their construction projects at some point during the year due to fiscal and logistical pressures, while some indicated they sold off projects before starting construction. Industry players have been lobbying the government for incentives and support measures, including the right to raise the prices of their contracts or units on sale.

What’s this real estate exchange about? The exchange is still in the proposal phase, government sources told Enterprise. Several stakeholders, including the EGX, the Financial Regulatory Authority, and the Justice Ministry have been working together to put together a legislative and regulatory framework for a potential market or exchange akin to the bourse that would be specialized for real estate assets, our source said.

There are challenges ahead: The team that’s currently working on the proposed exchange is looking at ways to address snags such as the real estate registry process, and setting minimum requirements for real estate assets to be eligible for trading on the exchange. These requirements would include, among other things, issuing proof of registry, according to our source. The concept still needs some time to iron out these challenges and study similar applications in other markets, such as in Saudi Arabia, to come up with a feasible structure that works for the local industry, our source said.

The idea in itself is being welcomed by industry players Enterprise spoke with. Setting up a real estate asset exchange could provide a means of support for real estate developers, particularly those who play by the rules and meet the regulatory requirements, said Mohamed El Bostany, chairman of El Bostany Real Estate Development and head of the New Cairo Developers Association. Since the exchange would be open for local, regional, and international investors alike, it could bring in significant liquidity to the sector, El Bostany said.

It could also help solve the longstanding issue of unsold real estate units, which could be sold more easily on an exchange, suggested Beta Egypt Chairman and Managing Director Alaa Fikry. Real estate prices rose some 20% y-o-y this year, Fikry estimates, so setting some sort of regulated pricing mechanism and offering up these units for sale and purchase on an exchange could help real estate developers reel in much-needed liquidity.

Your top infrastructure stories for the week:

  • El Dekheila dry bulk terminal to be offered to companies: Alexandria Port Authority will launch a tender in October for grain shipping and handling companies to take over management of a dry bulk terminal at El Dekheila Port.
  • New Chinese factory in SCZone: Chinese home appliances giant Midea Group launc hed its USD 25 mn washing machine factory in China’s TEDA industrial zone in Ain Sokhna last week.
  • Cyanide plant in the works: Oil Minister Tarek El Molla met the managing director of German cyanide producer CyPlus last week to discuss the company’s aspiration to build a sodium cyanide plant that would feed gold mining activity in the Eastern Desert.
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