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))
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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.



Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)

As Saudi companies start reporting their Q2 financial results, experts are optimistic about the transport and logistics sector. They expect a 10% annual growth, with total net profits reaching around SAR 900 million ($240 million), driven by tourism and an economic corridor project.

In Q1, the seven listed transport and logistics companies in Saudi Arabia showed positive results, with combined profits increasing by 5.8% to SAR 818.7 million ($218 million) compared to the previous year.

Four companies reported profit growth, while three saw declines, including two with losses, according to Arbah Capital.

Al Rajhi Capital projects significant gains for Q2 compared to last year: Lumi Rental’s profits are expected to rise by 31% to SAR 65 million, SAL’s by 76% to SAR 192 million, and Theeb’s by 23% to SAR 37 million.

On the other hand, Aljazira Capital predicts a 13% decrease in Lumi Rental’s net profit to SAR 43 million, despite a 44% rise in revenue. This is due to higher operational costs post-IPO.

SAL’s annual profit is expected to grow by 76% to SAR 191.6 million, driven by a 29% increase in revenue and higher profit margins.

Aljazira Capital also expects a 2.8% drop in the sector’s net profit from Q1 due to lower profits for SAL and Seera, caused by reduced revenue and profit margins.

Mohammad Al Farraj, Head of Asset Management at Arbah Capital, told Asharq Al-Awsat that the sector’s continued profit growth is supported by seasonal factors like summer travel and higher demand for transport services.

He predicts Q2 profits will reach around SAR 900 million ($240 million), up 10% from Q1.

Al Farraj highlighted that the India-Middle East-Europe Economic Corridor (IMEC), linking India with the GCC and Europe, is expected to boost sector growth by improving trade and transport connections.

However, he warned that companies may still face challenges, including rising costs and workforce shortages.