Mohamed Al-Bostany, head of the New Cairo and New Administrative Capital Developers Association, revealed that mortgage financing has doubled by 94% in only eight months. This confirms that mortgage financing is an impactful solution to the ongoing rise in real estate prices.
RISE IN MORTGAGE FINANCING CONTRACTS
The Financial Regulatory Authority (FRA) has reported a rise in the quantity of mortgage financing contracts. This amounted to 6,801 contracts worth EGP 8.7 billion from January to August 2022, compared to 4,057 contracts worth EGP 4.5 billion over the same period last year. According to Al-Bostany, this amounts to a 67.6% increase in the number of contracts and a 94.8% increase in the value of contracts.
Over the first eight months of 2022, the total amount of mortgage refinancing reached EGP1.5 billion. This indicates a growth rate of 32.5% when compared to the EGP 1.2bn earned within the same time last year.
The signing of mortgage contracts also saw significant growth as per the FRA. They report that mortgage firms signed 5,710 contracts worth EGP 8.5 billion for income brackets over EGP 3,500. This is near twice as many as the 3,204 contracts worth EGP 4.3 billion signed in the previous year.
CHANGES IN EGYPT’S REAL ESTATE MARKET
Al-Bostany stated that there have been significant changes in the real estate market in recent years. These changes most notably include a shift in consumer behaviour. He also noted that there is now a need for mortgage financing because of the decline in the proportion of savings owing to the high costs.
Most Egyptian residential real estate businesses have created their projects per the demands and culture of their clients. This is due to the rapid development of consumer culture and the resulting need for homes within compounds.
The New Administrative Capital (NAC), which is a global metropolis and the largest smart city in the Middle East, altered the course of investment and business in Egypt. It stands in a strategic location that makes the city successful in serving as Egypt's real estate industry's compass.
Al-Bostany stated that there are minimal restrictions on new companies joining the Egyptian real estate market or investing in it. This is the case even if they lack prior expertise. Although there are some requirements, most prominently the usage of large consulting firms to undertake feasibility studies. This key requirement is critical in enabling only those real estate developments that are well planned out and have a net positive impact to commence.
To combat inflation and a drop in sales, real estate firms must carefully develop what the Egyptian real estate industry requires. It is crucial to do this correctly since vast spaces are now not needed owing to high expenses and prices, necessitating the creation of actual research to determine the rates of demand for required spaces.