16 / 17
16
Furthermore,
the
report
added
that real estate companies and
investors are required to launch more
projects addressing the low-income
demographic that accounts for the
largest shareof theEgyptianpopulation.
Real estate companies were also
advised to stay clear of luxury projects
in order to avoid a potential collapse in
prices and demand for real estate units
and enhance economic growth rates
in order to preempt any more crises.
The non-availability of hard currency
in the banks that fund foreign trade
will cause investors and traders in the
Egyptian real estate sector to sustain
heavy losses, pushing them to get their
financial needs at much higher prices
from the black market – a situation that
will lead to increasingly high inflation
rates. The report attributed the current
financial crisis to an imbalanced
management of foreign credit and the
lack of a proper mechanism to generate
sustained flows of foreign currency.
The report summarised the crisis the
Egyptian realty market is going through
due to the lack of balance between
demand and supply. This is a result of
the rapid population growth, the low-
income demographic’s inability to pay for
housing, and the discrepancy in property
prices fromone area to another, in addition
to the decreasing purchasing power.
The report noted that property prices
represent a real challenge, with real
estate development companies finding
growing difficulties in selling housing
units at the current high prices. The
report also urged all parties concerned to
collaborate before the situation worsens
and escalates into a significant crisis that
would certainly impinge on the Egyptian
economy, leading ultimately to a situation
where the banks would not hold sufficient
funds to fund real estate companies.
Mazaya Monthly Real Estate Report -
Week 5 - October 2016
The report mentioned that the building
and construction sector posted fair
growth rates reaching up to 12% during
the first 9 months of 2016, which makes
government estimations of scoring a
growth rate of 4.5% a valid possibility.
The current and expected growth
rates continued to rise during August,
reaching up to 16.4% on an annual basis.