{"id":589103,"date":"2023-06-21T00:00:00","date_gmt":"2023-06-21T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/the-real-estate-sector-wants-more-incentives\/"},"modified":"2023-06-21T00:00:00","modified_gmt":"2023-06-21T00:00:00","slug":"the-real-estate-sector-wants-more-incentives","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/the-real-estate-sector-wants-more-incentives\/","title":{"rendered":"The real estate sector wants more incentives"},"content":{"rendered":"

<\/span>Real estate players are angling for more incentives + gov\u2019t support:<\/span> Despite the<\/span> government rolling out a handful of incentives and support measures for the real estate sector earlier this year, industry players want to see yet more from the government to help them face economic headwinds. The measures were initially helpful, but aren\u2019t enough to keep many companies \u2014 especially medium and small-sized players \u2014 afloat, several sources told Enterprise. <\/span><\/p>\n

REFRESHER- What incentives has the government already offered?<\/span> In February, Cabinet<\/span>agreed to provide<\/a><\/span> real estate developers with a 20% deadline extension on their projects, and said the government will consider projects finished when they are 85% \u2014 rather than 90% \u2014 complete. This will enable developers to complete the remaining 15% of construction at their own pace, without being fined for late delivery. Developers were also granted a reduction in the interest rate they pay on installments for state-owned land, bringing the rate to 1% above the central bank lending rate, down from a prior 2%. The New Urban Communities Authority (NUCA) also decided to <\/span>widen these support measures<\/a><\/span> earlier this month, providing developers with another 20% deadline extension on their projects \u2014 even if they\u2019ve already been granted a 20% extension under the February measures, or previously paid to push back their deadlines. NUCA also further reduced the completion ratio requirement to 80%, from the previously-reduced 85%, and loosened various regulatory requirements, including on the maximum building density of projects and the split between buildings, utilities, and services. <\/span><\/p>\n

But industry players say this isn\u2019t really enough:<\/span> The government offering these support<\/span> measures is a testament to the importance of the real estate industry for the economy, \u201cbut these incentives are not enough to save everyone,\u201d deputy head of the Federation of Egyptian Chambers of Commerce\u2019s real estate division and chairman of El Bustani Group, Mohamed El Bustani, told Enterprise. Only large real estate developers will really reap the benefits of the incentives and be able to cut some losses, but medium and small-sized players \u2014 which actually account for the majority of the industry \u2014 are still at risk and need more support measures, El Bustani said. <\/span><\/p>\n

What would help the small guys?<\/span> Industry players want to see incentives that are catered to<\/span> support small players, El Bustani said, suggesting measures for companies working on the administrative towers in the new administrative capital as one example. Developers are pushing for the right to raise the prices of their contracts or units on sale by 10% as long as construction isn\u2019t complete and a unit hasn\u2019t been delivered, El Bustani said. This would allow companies to recoup a small portion of their losses, he said.<\/span><\/p>\n

There are more incentives in the pipeline:<\/span> While the government has already signed off on a<\/span> handful of measures, there are more currently under study, head of the Federation of Egyptian Industries\u2019 real estate developers division Tarek Shoukry told Enterprise. These incentives include changing the ratio that administrative and commercial services account for within real estate projects, which would make the projects more flexible and lucrative. The proposal currently on the table would see the range change to 5-15% of the total project, instead of 8-12%, according to Shoukry. Also being discussed is a review of how industrial lands are priced, as well as potentially granting some leeway on construction rules as long as deadlines are met and companies are serious in their implementation.<\/span><\/p>\n

We could also see a breakthrough with building material prices:<\/span> The industry is waiting on<\/span> a decision from the government to eliminate dumping duties on iron imports, which is currently being studied, said Daker Abdellah, a member of the Egyptian Federation of Construction and Building Contractors\u2019 board. Iron accounts for around 25% of the cost of most real estate projects, Abdellah said. Lawmakers <\/span>recently called for<\/a><\/span> the introduction of price controls on building materials amid a recent surge in prices, and urged the government to scrap dumping duties on imported steel and cement. <\/span><\/p>\n

And pushing forward on real estate \u201cexports\u201d could be a big helping hand:<\/span> The<\/span> government needs to move forward on new legislative amendments that would allow foreigners to acquire Egyptian citizenship if they purchase state-owned or privately owned assets, Real Estate Export Council Chairman Hisham Shoukry told us. President Abdel Fattah El Sisi ratified the amendments <\/span>at the end of last month<\/a><\/span>. Real estate developers are waiting on the government to begin implementing the new rules and expediting the necessary licenses and documents, Tarek Shoukry previously told us, saying that the new rules could unlock somewhere between USD 3-5 bn in inflows within the next year. <\/span><\/p>\n

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