InterviewsReal estate

Ahmed Sabbour Managing Director of Al Ahly for Real Estate Development

Ahmed Sabbour Managing Director of Al Ahly for Real Estate Development.

 

  • The company aims to raise land bank to reach 6m sqm this year.
  • The company expects to attract 1,700 families to City of Odyssia in Mostakbal City in 2018.
  • Al Ahly is launching a new project in Ras Al Hikma next summer worth EGP 10bn .
  • The fourth phase of the Amwaj project in the North Coast will be delivered during 2019.
  • The company is beginning the implementation of the Aria project in Mostakbal City in June, with expected sales of EGP 5bn.
  • Al Ahly is directing EGP 3bn for construction works of the company’s projects in the current year.
  • 45% construction works are completed for the Green Square project and the company plans to raise that to 70% by the end of the year.

Al Ahly for Real Estate Development aims to raise its land bank to 6m sqm during the current year and launch a project in Ras Al Hikma next summer.

The company aims to achieve EGP 6bn contractual sales and pump EGP 3bn into construction works.

Its Managing Director Ahmed Sabbour said the company's land bank is 4.5m sqm and seeks to raise it to 6m sqm during the current year.

Sabbour added that the company is studying the available lands to choose which corresponds with the directions of the company, whether through partnerships or buying. The cities of Sixth of October, Sheikh Zayed and the New Administrative Capital are among the company’s priorities, along with New Alamein, Ain Sokhna, and Upper Egypt.

Sabbour pointed out that the company submitted to compete for a plot of land within a partnership system proposed by the Ministry of Housing in Sixth of October city, west of Cairo, on an area of about 144 feddans.

Al Ahly is competing with El Komy for Real Estate Investment and Sixth of October Development and Investment Company (SODIC) to acquire the 144-feddan plot of land in the Eastern Expansions, Sixth of October city for the establishment of an integrated urban project.

He explained that the company achieved EGP 2.5bn in sales during the past year and expects to raise sales to EGP 6bn in 2018 through an expansion plan to ensure the launch of a number of new projects and complete the sale of its offered phases.

“The company began selling units of the City of Odyssia project in Mostakbal City earlier this month and expects to offer units for about 1,700 families in 2018 out of 12,000 families targeted to inhabit the project,” Sabbour noted.

The City of Odyssia is a new mixed-use urban community compound in Mostakbal City on an area of 578 feddans, the equivalent of 2.4m sqm, and will be developed over 10 years. It includes residential units comprising 150 models, ranging from apartments to townhouses and villas and includes a 25-feddan club. It is being developed in partnership with El Mostakbal for Urban Development with investments of EGP 32bn.

The company has allocated 100 feddans of the project to service activities, which will be managed through two joint venture companies that will be established, providing a long-term return. The plan includes asset retention and leasing, Hill International will be managing the design and construction of the project.

Gensler, an award-winning global leader in architectural design, was tasked with providing innovative master planning and urban design services for the new city. Meanwhile, Jones Lang LaSalle (JLL) has been tasked with providing consultancy services on the development and leasing of the Central Business District.

Al Ahly share of the project’s revenues is 62% compared to 38% for El Mostakbal for Urban Development, in addition to revenues from the two companies planned to be established, as the revenues will be determined by the development of the land space.

Sabbour pointed out that the company had an initial agreement with an investment bank to manage the company’s initial public offering (IPO) on the Egyptian Exchange (EGX). The bank examined the company’s financial situation and identified the strengths and elements that need to be developed. Within a few months, the company will begin formal procedures for obtaining approvals for the IPO.

The company aims to provide liquidity to enable it to finance large expansions planned in other areas of Egypt, expand its ownership base and attract local, regional, and international investment funds. It is also aiming at liquidating shareholders’ shares and enabling them to reap the fruits of their investments in the Egyptian real estate market over the past decades.

Sabbour said the City of Odyssia is the company’s fourth project in Mostakbal City, as it had already began to develop the Green Square project on an area of 80 feddans, which includes small villas and apartments with investments of EGP 450m. The company has completed 45% of the construction works of the project and seeks to increase that to 70% by the end of the year. Furthermore, the company sold 75% of the units and plans to exceed 90% by December.

Al Ahly is one of the first companies to acquire land in Mostakbal City out  20 companies that applied for acquiring the first plots of land in the city. It opened initial reservations for the Green Square project during the Cityscape exhibition in 2015.

He noted that Green Square was the second partnership project with Saudi Arabia’s Dar Al-Maali Company after finishing the development of the Square project in New Cairo.

Dar Al-Maali has placed at the disposal of Al Ahly for Real Estate Development Company a sum of EGP 1.5bn to develop new projects in the Egyptian market.

“The company has marketed 90% of L’Avenir project, which is located on the area of 100 feddans in Mostakbal City, and implemented 15% of the construction works for the project. We expect to raise that to 40% by the end of the year, while the investments of Green Square and L’Avenir projects amounted to EGP 4.5bn,” Sabbour said. “The company depends on three sources for financing the development of the project, which include the company’s capital, bank financing, and proceeds of sales, and we determine their respective ratios according to economic conditions and changes during the stages of development.”

He added that the company will begin the implementation of Aria project in Mostakbal City in June and it will be located on 100 feddans. The company is developing one phase that will house 2,300 families with expected sales of EGP 5bn. Moreover, the company has marketed 50% of the units and targets to increase them to 75% by the end of this year.

 

He noted that the company has marketed 70% of the fourth phase of the Amwaj project in the North Coast, which is built on 80 feddans and includes 600 units with investments of EGP 450m. The company has carried out 55% of the construction works and it will be delivered next year.He added that the company plans to launch a project in Ras Al-Hikma in the North Coast during the coming summer. The project’s investments reach EGP 10bn and the company expects to achieve EGP 1bn in sales for the project during the current year.

He explained that the company did not apply to acquire lands at the New Administrative Capital as a developer but is participating in it through Sabbour Consulting Company, where the office is designing and supervising the implementation of five plots of land obtained by developers, as well as one of the six universities planned to be built in the capital.

He stressed that demand is expected to increase during the current year with the start of interest rate cuts on deposits because the alternative is property to provide an investment return higher than other savings vessels.

Sabbour expected that real estate prices will hike by 25% during the current year in light of the expected stability of construction costs compared to hikes of 60% during the previous year as a natural reaction to the large increase in cost due to the economic reforms undertaken by the Egyptian government, such as the liberalisation of the pound’s exchange rate against the dollar.

Al Ahly for Real Estate Development was established in 1994 and the National Bank of Egypt owns 40%, while 60% is owned by the Sabbour family and other partners. The company has entered into partnerships with a number of investors from Saudi Arabia, Kuwait, and Yemen through Al Ahly for Real Estate Development or through Sabbour Consulting Company.

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