* Investor demand came back last year after dip in 2011
* Prices rising for many higher-end developments
* Foreigners from unstable Arab states also attracted
* Politics, legal issues deterring some construction
* But many new projects planned this year
By Ulf Laessing
CAIRO, April 3 After buying gold plates for
100,000 Egyptian pounds ($14,700), Naer Wahid is considering
whether to use the rest of his savings to acquire, with his
sisters, an apartment or plot of land outside Cairo.
Like many Egyptians, the tour guide is tired of seeing his
savings shrinking along with the value of the local currency,
which has been in decline since president Hosni Mubarak was
ousted in early 2011.
"I need to move assets because the pound is losing so much
value against the dollar," said Wahid, who already owns a
multi-storey building near Cairo's Ramses train station.
Two years of upheaval have devastated much of Egypt's
economy. The pound has lost about 14 percent of its value, while
the central bank's dollar reserves have fallen to critically low
levels, hampering the government's ability to buy essential
imports such as fuel and wheat.
But for the real estate industry, especially the upmarket
part of it which caters to people with large amounts of savings,
the weak pound is actually fairly good news.
"We have a better market now," said Hisham Shoukri, chairman
of Rooya Group, one of the largest property investment firms.
"I don't say it is an excellent market, but a lot of people
want to save the value of their money by buying real estate
assets," he told last week's Cityscape property industry
conference in Cairo, which saw a 25 percent rise in participants
compared to 2012.
In addition to Egyptians, the weaker currency makes Egypt
more attractive for investors from other Arab countries trying
to escape instability at home, especially Libya, Syria and
"We have 12 Libyans who just bought apartments here," said
Ali Ibrahim, head of El Noor, a firm which just finished
building a large residential tower in Nasr City, a Cairo suburb
where middle-class people like to move to escape traffic jams in
"Some of the Libyans had political problems at home so they
moved here," he said, sitting in his ground-floor office, which
faces a quiet street and a public garden - a stark contrast to
the noisy centre of the capital.
"Other Libyans come for investment. I've also had a Kuwaiti
Asking prices for apartments in the upmarket suburb of New
Cairo rose 4 percent in the first quarter compared to the
previous quarter, consultants Jones Lang LaSalle said in a
report last week.
Some foreign developers want to get in on the action. Last
October Al-Futtaim Group and Emaar Properties, two
real estate developers from the United Arab Emirates, said they
planned a 5 billion Egyptian pound tie-up to build a retail,
entertainment and residential complex outside Cairo.
Political uncertainty over the outcome of infighting between
new Islamist President Mohamed Mursi and the secular opposition
still weighs on the real estate sector.
Several developers have delayed or stopped work at large
housing schemes after courts or the government revoked land
sales, accusing them of having paid too little because of cosy
relationships with officials in the Mubarak era.
According to Jones Lang LaSalle, delivery of 200 villas was
delayed in one project during the first quarter of this year
because of such a legal dispute.
The most prominent example may be Talaat Moustafa Group
(TMG), a large firm which has been locked for three
years - starting even before the revolution - in a court battle
over its $3 billion Madinaty real estate development project.
"We need to change a lot of regulations," said Shoukri.
"With this instability in the political situation it is very
difficult to ask someone to take the hard decision to change all
Developers also complain that the government needs to build
more roads to make land accessible - a prospect which seems
unlikely while the economy struggles and political conflict
remains so fierce.
Ahmed Tawfik, general manager of Iqarat Misr, an
Egyptian-Bahraini property investment firm, said sales for a new
housing compound in a Cairo suburb were going well, but his Gulf
partners had put on hold any new projects until they figured out
where Egypt was heading.
"How do you do a new investment if you don't have any vision
of what will happen next?" he said.
But if politics were more stable, there could hardly be a
better case for property investment in Egypt. While demand in
some Gulf nations depends on an influx of expatriates, millions
of middle-class local people in Cairo dream of a new home.
Tourists enjoy strolling through the old section of the
sprawling capital of 22 million, soaking up the atmosphere of
its narrow lanes and mosques and dining in elegant restaurants
on the banks of the Nile.
But for many Egyptians, life in Cairo is a struggle with
pollution, noise and traffic jams. Many buildings in the centre
are run down, dating back to the British colonial era.
"It's so bad with all these traffic jams and pollution, so
people move out," said Sharif Abed al-Shafi, who just bought an
apartment in TMG's Madinaty as an investment to escape the
pound's fall - despite the legal dispute underway.
For those who can afford at least to pay 1 million pounds -
only a small minority of the population of 84 million -
developers building a host of gated residential areas outside
central Cairo offer a better life.
The areas are mini-cities with shops, restaurants, gyms,
swimming pools and gardens, and provide services which Egypt's
cash-strapped authorities often fail to manage: clean streets
which are swept every day, a functioning garbage collection
system, plenty of parking space and - important at a time of
rising crime - security.
"It sometimes feels embarrassing to be providing such a
thing, but even in hardship (places) people have aspirations to
have a good life," said Ahmed Badrawi, managing director of
SODIC, one of Egypt's largest developers.
SODIC plans to bring seven new residential projects online
this year as it sees no let-up of demand.
"2012 was our best-ever year," said Ayman Ismail, chief
executive at Mountain View, another Cairo-based developer. "We
had a dip of probably 20 percent in 2011 - towards the third
quarter of 2012 the demand came back."
Developers and real estate agents think prices for
residential units may rise by as much as 20 percent this year,
boosted by demand but also because the weak pound will raise the
costs of imported construction materials such as steel.