Naguib Sawiris urges interest rate cuts to boost Egypt's real estate sector
According to Sawiris, the current rates pose a significant challenge to Egypt's real estate sector, which plays a vital role in the country's economy, contributing 35 percent to the GDP.
Since March 2022, Egypt has adopted a tightening monetary policy that allows the Central Bank of Egypt (CBE) to hike the key interest rates by a total of 19 percent (1900 bps).
Sawiris, who serves as executive chairman of Orascom Investment Holding, urged the CBE to reconsider its stance on interest rates, stating that a rate of 30 percent is detrimental to the sector.
He highlighted the adverse effects high interest rates have on attracting foreign investment, warning that they could lead to a potential real estate bubble.
The billionaire also addressed the impact of currency devaluation, which has led to soaring property prices, with costs for one- or two-bedroom units reaching EGP 2 million.
He highlighted the dramatic increase in prices for building materials, particularly iron and cement, which has placed additional pressure on developers to deliver projects on time, despite incurring significant losses.
Sawiris noted that many smaller developers have accepted deposits from buyers while promising future delivery of units. He shared that the profit from the first phase of the Zed project in El Sheikh Zayed was negligible, attributing this to high inflation and currency depreciation.
In addition to these challenges, Sawiris announced the upcoming foundation stone laying for the Ras El-Hekma project, set to take place in collaboration with UAE partners on 4 October.
This ambitious project will feature a global marina and an international airport, which Sawiris believes will greatly enhance tourism from Europe, benefiting all real estate developers in the region.
Despite the challenges, Sawiris remains optimistic about the potential within Egypt's real estate sector, citing numerous investment opportunities in the Mediterranean.
He highlighted the increasing interest from Arab investors in the North Coast and mentioned a new Egyptian-UAE project aimed at establishing a tourist resort with an investment exceeding EGP 3 billion.
He urged the government to foster a collaborative environment with investors to stimulate growth.
Drawing comparisons with Tunisia, which attracts 10 million tourists annually, Sawiris expressed confidence that Egypt can achieve even greater success in this area.
The conference brought together industry leaders, many of whom echoed Sawiris's concerns regarding the current challenges facing the real estate sector, particularly high interest rates.