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.
