Talaat Moustafa: Real Estate Demand will Continue for 30 Years to Come

Signing ceremony of the Digital Transformation Partnership (Talaat Moustafa Group (TMG))
Signing ceremony of the Digital Transformation Partnership (Talaat Moustafa Group (TMG))
TT

Talaat Moustafa: Real Estate Demand will Continue for 30 Years to Come

Signing ceremony of the Digital Transformation Partnership (Talaat Moustafa Group (TMG))
Signing ceremony of the Digital Transformation Partnership (Talaat Moustafa Group (TMG))

Egypt's real estate sector contribution to the gross domestic product (GDP) would be stable at 17 percent in 2019, and for the 30 coming years, the sector is not likely to collapse or enter into “real estate bubble”, according to CEO of Talaat Moustafa Group (TMG).

"There won’t be any real estate collapse or real estate bubble," Talaat Moustafa said at a press conference in Cairo during the signing of a partnership agreement with Huawei Technologies for smart cities.

The real estate market in Egypt has been affected by the decline in purchasing power as a result of the rise in prices since the floating exchange rate in November. However, real estate companies maintain an increase of 10-20 percent per annum.

The main concern is to provide luxury housing units of villas and apartments, for people with the highest income, and units for middle-class valued at no less than $56 thousand dollars.

Asked by Asharq al-Awsat about his predictions for the real estate sector and its share in the GDP, Mustafa indicated he expects its stability at 17 percent this year, like last year, but the sector's direct and indirect contribution to GDP will reach 29 percent.

Officials have been concerned with the increase of the sector’s share in GDP, fearing a real estate bubble, which will be reflected negatively on the rate of economic growth.

However, Moustafa explained that the population of the age group between infants and 30 years represents 65 percent of Egypt’s population, meaning that when they get married, they will form 32 million families over the next 30 years, meaning 32 million housing units, after excluding the mortality rate and the percentage of housing increase.

He added that with the government regulating the slums, the annual demand will be at least one million units."Are we currently offering a million housing units (yearly)? … Then there won’t be a real estate bubble… There won’t a real estate collapse.”

The market needs new methods of payment that meet the current levels of income, so there are long-term repayment terms with appropriate interest, pointing to proposals to support interest rates through sources outside the state budget, in the real estate sector, according to Mustafa.

The Group signed a partnership agreement with Huawei Technologies, which aims to start the digital transformation of living for the first time in Egypt and the Middle East. This collaboration paves the way for a strategic partnership for developing TMG’s projects using Huawei’s latest digital technology.

The agreement comes as the first step towards building a strong partnership between the two sides. Huawei will start providing its innovative technologies in the group’s upcoming projects, in order to transform them into smart cities.

Huawei’s regional enterprise president Michael Li sees the partnership as an initial step toward the advancement of urban communities in Egypt, by transforming the cities and projects of Talaat Moustafa Group’s into smart cities.

Huawei’s Public Affairs and Strategic Communication Director, Hala Aranda, told Asharq Al-Awsat that the company has established about 160 projects in 40 countries and deeming that the collaboration with Talaat Moustafa Group to create smart cities in Egypt for the first time will pave the way for creating smart cities in several new regions.



US Consumers to Bargain Hunt in Annual ‘Black Friday’ Spree

 A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
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US Consumers to Bargain Hunt in Annual ‘Black Friday’ Spree

 A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)
A family eats lunch near a store advertising a Black Friday sale at the Pentagon City Mall in Arlington, Virginia, on November 22, 2023. (AFP)

US shoppers are coming out in force this holiday season, but the festiveness is being tempered by inflationary pressures that have abated but not completely faded.

After the sticker shock during the latter stages of the pandemic, a familiar frustration has settled in towards consumer prices that remain broadly elevated even if they have stopped rising rapidly.

Americans are "ready to open their wallets this holiday season," said the Conference Board ahead of Black Friday -- the day after Thanksgiving, which this year, falls on November 28 -- that traditionally sees US stores kick off the Christmas shopping season with steep discounts.

"US consumers plan to spend more than last year, but inflation reduces how far their dollars can go."

In this environment, nobody expects to pay the full price for items.

"Holiday shoppers are likely to increase their budgets this year versus last year but remain selective and are looking for discounts," said a note from Morgan Stanley.

The investment bank's survey found that 35 percent planned to spend more this holiday season. But nearly two-thirds would skip a purchase if an item is not adequately discounted, meaning a price cut of more than 20 percent.

"It's gonna be a good year, but I don't think that growth is going to be spectacular because consumers are still under pressure," predicted Neil Saunders of GlobalData.

Inflation remains above the Federal Reserve's two percent long-term target, rising in October to 2.6 percent on an annual basis from 2.4 percent in September. But that's significantly below the peak level of 9.1 percent in June 2022.

Other recent economic data has been solid. Unemployment remains low at 4.1 percent, while a preliminary GDP reading for the third quarter came in at 2.8 percent.

But Joe Biden's presidency coincided with about a 20 percent rise in consumer prices as Covid-19 pandemic lockdowns gave way to supply chain bottlenecks.

That inflation played a central role in the 2024 US presidential election, with Republican Donald Trump defeating Biden's appointed Democratic successor, Vice President Kamala Harris.

"There is still a perception among consumers that things are quite difficult," Saunders said. "So people are being quite cautious and careful in their spending."

- Tariff hit? -

How Trump's looming presidency will affect inflation remains to be seen. Industry groups have warned that tariffs favored by the Republican could reignite pricing pressures.

The National Retail Federation projected that a Trump tariff proposal floated during the campaign would dent US consumer budgets by as much as $78 billion annually.

But while tough potential trade actions are already preoccupying Washington trade groups, tariffs are not on consumer radars for the 2024 season, according to Saunders.

One challenge this year will be the shortness of the season.

Black Friday falls at the latest possible date on November 29, shortening the stretch between Turkey Day and Christmas on December 25.

But the impact of that dynamic on 2024 sales should not be overstated. Retailers in recent years have pulled the holiday shopping season ahead, with some vendors launching online "Black Friday" promotions as early as October.

Among the companies that have already begun discounts: the big-box chains Walmart and Target, electronics giant Best Buy and home-improvement retailer Home Depot.

Amazon officially launched "Black Friday Week" on Thursday.

NRF has projected holiday spending growth of between 2.5 and 3.5 percent in the 2024 season compared with the year-ago period, to as much as $989 billion over the two-month period.

Economists with the trade group have pointed to an easing of gasoline prices as a supportive factor.

Online sales are projected to grow as much as nine percent this season, extending a long-term trend. Black Friday itself has become a big occasion for online shopping, along with "Cyber Monday" three days later.

"Over time, we've moved from a period where it was just Black Friday, and maybe a little of the weekend, to it being a period of discounting that starts very early," said Saunders. "It's seasonal discounts."

There has been a diminishment of "doorbuster" sales that are known to draw hordes of waiting crowds, sometimes resulting in injury or worse.

Instead, increasing numbers of consumers are spreading out their purchases or opting to click through Black Friday promotions at home.