The Egyptian real estate market is set to witness significant changes with the proposed classification of developers into 7 categories, up from the current 5. This move is aimed at regulating the market and ensuring that developers are categorized based on their capabilities, project size, and experience. According to Tarek Shukri, head of the Real Estate Development Chamber at the Egyptian Federation of Industries, this classification will provide a clearer picture of the market and help in reducing risks associated with property purchases.
The real estate sector in Egypt contributes around 20% to the country's economy and employs approximately 6 million people, with around 30 million citizens connected to it. The sector has become a major attraction for Arab and foreign investments, necessitating regulatory steps to match its size and multiple stakeholders. Shukri emphasized the importance of establishing a union for real estate developers to organize the relationship between the government, developers, contractors, and buyers.
Shukri pointed out that the union's decisions should be balanced and well-studied, and that a clear legislative framework is needed to determine the union's powers, its relationship with relevant authorities, and its mode of operation. He also stressed the need for a clear letter from the government confirming the developer's right to extend the contractual deadline with unit buyers, similar to the deadline granted to contractors.
To support the financing of medium housing units, Shukri suggested offering land at cost price, providing real estate financing with a 10% interest subsidy from the Ministry of Finance, and increasing the supply of such units to expand financing, create jobs, and boost tax and insurance revenues. He also emphasized the importance of protecting buyers by providing clear information to help them evaluate developers and associated risks.
The classification of developers into 7 categories is part of a broader plan to regulate the market, which includes three main axes: classification, buyer protection, and dispute resolution. Shukri proposed establishing a committee to resolve disputes through a clear legal and technical mechanism and specialized real estate courts similar to economic courts.
Shukri revealed that nearly 9 meetings have been held to organize the relationship between the government and the union of developers, with expectations of completing procedures within a month and issuing the law as soon as possible. He called for the law to include two main sections: one on the union of real estate developers and the other on organizing the real estate sector.
Shukri concluded that many market problems are related to the post-delivery phase and called for defining the developer's role to end at unit delivery, with specialized companies for maintenance and security under the developer's supervision and control. He also suggested having a company for facility management and an independent auditor to ensure impartiality, quality, and preservation of property value.
Key points
- Classification of developers into 7 categories
- Regulation of the real estate market
- Protection of property buyers
