InterviewsReal estate

AHMED SHALABY CEO AND MANAGING DIRECTOR OF TATWEER MISR.

  • Tatweer Misr launches 3,600-unit 1st phase of Bloomfields project at Cityscape
  • Company aims to market 25% of Il Monte Galala project’s units abroad
  • Bloomfields’ investments worth EGP 33bn
  • The company invested EGP 2bn in 2017 and intends to pump EGP 3bn in 2018
  • The company is keen to repeat the implementation of a university urban project in west Cairo

Tatweer Misr intends to launch the first phase of its Bloomfields project at the Cityscape exhibition. The first phase is located on an area of 51 feddans and includes about 3,600 residential units with areas ranging from 80-350 sqm. In addition, it has an entertainment area on about 12 feddans with about 4 feddans already constructed, as the company looks to market the phase within two years.

Bloomfields is Tatweer Misr’s latest project in Mostakbal City. It is situated only 15 minutes from the American University in Cairo and 10 minutes from the New Administrative Capital. It is a 415-feddan mixed use development project and will include a variety of properties: apartments, villas, twin houses, and townhouses.

Ahmed Shalaby CEO and managing director of Tatweer Misr: said that Bloomfields is a full-fledged project on an area of 291 feddans, including 162 feddans for residential activities with a total built-up area of 68.5 feddans, with a total of about 10,000 housing units, a 39-feddan amusement area, and an approximately 90-feddan educational area, in addition to schools on an area of 20 feddans and a university zone on an area of 70 feddans. 

Tatweer Misr signed a partnership agreement with El Mostakbal for Urban Development to develop 415 feddans in Mostakbal City with investments worth EGP 33bn last December to implement two fully integrated projects. The project will be developed over 10 years, with investments of EGP 28bn into residential activities and EGP 5bn into educational activities.

Shalaby added that the project offers a new real estate product capable of competing in the local and external markets, especially with the strength of competition within Mostakbal City, as well as the real estate market.

Shalaby noted that the implementation of a distinct and integrated real estate project meets the different needs of target customers, who are the main element of competition, and then comes the price element in second place to compete for companies, which are taking place in a close area.

“The company had a partnership between two engineering consultants, one Egyptian and the other Italian, to prepare the designs for the project,” Shalaby pointed out. “The educational part that the company is planning to implement focuses mainly on the idea of entrepreneurship, which will be used by the commercial and administrative activities of the project.”

He revealed that the company aims to launch foreign branches of international universities inside Egypt, the first step of its kind, which reflects the size of the challenge imposed on the company to provide an Egyptian university model with international standards and experience.

Regarding the sources of funding the educational activities, Shalaby explained that it is planned to search for new financing mechanisms to implement the educational part of the project within Mostakbal City, which may include investment funds. 

Shalaby pointed out that the completion of the procedures and obtain the ministerial decision on the university part of the project and the agreement with foreign universities and completion of studies for required syllabuses to be available within the university takes about a year and a half.

“It is planned to obtain the ministerial decision and licenses for the first phase of the project, as the company has already received the land of the project from El Mostakbal for Urban Development. Furthermore, the acceleration of the implementation process is a top priority during the current phase, in order to avoid risks due to the continued high cost of implementation, which prompts the company to expand its investment plan and sign contracting agreements progressively within our projects to avoid the crisis of price differences,” said Shalaby.

He said that the company invested EGP 2bn in 2017 and intends to pump EGP 3bn in 2018. The new investments will be distributed between Il Monte Galala and Fouka Bay projects. We will allocate EGP 2bn for Il Monte Galala, compared to EGP 1.5bn in the current year. The investments will cover earthworks worth EGP 450m and the establishment of services and utilities with about EGP 300m. 

In addition, the company will implement an artificial lake at a cost of about EGP 100m, and ready-made walls at a value of EGP 300m, in addition to the construction cost. Fouka Bay’s share of the New Year’s plan includes EGP 1bn, compared to EGP 500m in 2017. Moreover, the company seeks to accelerate the rate of construction works this year, according to Shalaby.

He, further, added that Il Monte Galala is being built on an area of 2.2m sqm in Ain Sokhna. The project is a residential tourism project and will be developed over 10 years.

The project is being implemented by Top Tech Contracting Company, which is implementing the first phase of the project on 400,000 sqm with investments of EGP 600m. In addition, 511 units are being implemented with Nadinco Construction Co at cost of EGP 500m. Moreover, 556 units were assigned to Inshaa for Contracting Investments and trading at cost of EGP 500m.

Six hundred units are planned to be allocated to a number of contractors at a cost of EGP 700m, and the construction of roads, facilities, and lakes will be carried out the General Contracting Company (Fawzy Abdo) at a total value of EGP 450m. 

With regard to the developments of the project’s marketing plan, Shalaby noted that the company has marketed 2,500 units of the total project until now.

The company is developing Fouka Bay project, which is being built on 1m sqm in the North Coast and is being developed over five years. The first deliveries of the project start in December 2018. 

He explained that the earthworks, digging, roads, facilities, and lakes are underway with a total value of EGP 200m.

The first phase of the project includes the implementation of construction works of 45 half-finished villas. Also, 966 units are being implemented at a total cost of EGP 1.5bn.

The project’s lakes will be implemented in the coming year at a total value of EGP 200m. The total units sold reached 1,300.

“We plan to achieve contractual sales ranging from EGP 7bn to EGP 8bn this year, driven by the real estate market booming and the launch of the first phase of the Bloomfields project, especially as the first phase of any project has the ability to attract a large segment of the target customers compared to the remaining phases of a project, along with launching new phases of the other company’s projects,” Shalaby noted.

Concerning his vision to real estate market after interest rates were cut, he clarified that the lower interest rates, which are expected to continue to decline gradually, will be in favor of the real estate market, to which customers will head to invest in high-yielding property.

Moreover, the state, represented by the Ministry of Housing, has an interest in the real estate investment sector and dealing with a crisis of lands shortage, which is one of the most prominent problems facing real estate investors over the past decades.

Tatweer Misr Managing Director said that the company is awaiting the launch of the third phase of the partnership projects, which the Ministry of Housing intends to launch during the current year to determine the feasibility of the investment opportunities available at this stage and how they fit with the company’s expansion plans to determine the participation therein. 

The company is keen to repeat the implementation of a university urban project in west Cairo.

He commented that the company is implementing its projects through self-financing so far, in addition to marketing revenues, especially with the difficulty of resorting to bank financing to fund projects because of the high interest rate, which burdens the project with an additional financial cost, ultimately affecting the sale prices of real estate units.

Regarding exporting real estate, Shalaby said “The export of our property does not target Egyptian citizens working abroad, but mainly foreign clients. Studies reveal that the British, followed by Russians and then Gulf Arabs, come in the first three ranks in terms of citizens wishing to own units inside Egypt, which makes these countries fertile markets for the export of property”.

“We are studying participating in first home exhibitions in the cities of Abu Dhabi and Dubai this year, which will focus on marketing the company’s new project in Mostakbal City.”

It is important to provide a real estate product commensurate with the requirements of this target group of customers, especially that the British and Russians prefer touristic residential units, second homes, prompting the company to market them Il Monte Galala project, Shalaby added.

He believed that Egypt real estate market is the least expensive compared to the markets of the region, which makes a strong opportunity to expand the export of Egyptian real estate abroad during the coming period.

The company has recently contracted with Liverpool FC to stimulate the company’s sales abroad through the use of the club’s name for marketing the company’s projects. This step is part of our strategy to export property. Furthermore, the company aims to market 25% of total units in Il Monte Galala project abroad.

With respect to mortgage finance system in Egypt, Shalaby said that the market is in need of strong real estate finance to support purchasing decisions for customers, where a largest segment of the real estate market cannot buy a real estate unit even with the facilities recently provided by real estate investment companies.

Moreover, mortgages help developers and clients, especially as a developer will not continue to act as a client’s financier, which hampers the former’s expansion plans, as well as diminish the value of their funds over the customer’s installments period.

We plan to expand in west Cairo and Upper Egypt. However, investing in Upper Egypt requires a clear and strong vision by the government and it providing integrated services to facilitate the launch of business in this region for developers, Shalaby told the magazine.

Commenting on the company’s plan to be listed on the Egyptian Exchange, he explained that the initial public offering (IPO) is one of the most important expansion plans for the company, which it will not be able to implement at this time, due to some procedures that are not currently available to the company, most notably the availability of three profitable budgets of the company, which begins only after the delivery of the first phases of the company’s projects.

He denied that the real estate market faces a bubble, noting that the real estate market is far from a bubble. It is a real market that depends on a real purchases and the real pricing of housing units rather than imaginary ones, which maintains the survival and continuation of this market. Unit pricing is based on the cost of implementation of a unit, not on speculative pricing.

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