Cairo, Egypt. 25th November 2008. In his address to the delegates of the annual real estate conference held by the American Chamber of Commerce in Egypt, Mohamed Abdalla, President of Coldwell Banker Intercontinental Affiliates and Chairman of the Real Estate Committee at the chamber declared Egyptian real estate to be in a uniquely strong position in the face of the global economic crisis. The conference entitled Real Estate: Where is it Heading? was organized to gain an insight into the industry from its top executives and researchers on how it will fair in the challenging times ahead.
According to Abdalla, tight measures in place by the government – who experienced a banking crisis at the beginning of the century – coupled with low mortgage penetration and a healthy exports-to-GDP ratio mean that Egyptian real estate will continue to be a strong growth sector in the coming years. “The country cannot suffer the full effects of the economic crisis if the causes of this crisis do not exist within the local economy. Loans-to-deposits ratios stand at 55% compared to 150% in some developed countries. Mortgages comprise less than a quarter of one percent of GDP, and exports are below 32% of GDP; split evenly between developed and emerging markets. All these factors will play an important role in diluting the effects this crisis will have on the country”
The Egyptian stock exchange, much like other regional markets, has taken a beating in recent months as major overseas investors have suffered the effects of the global crisis and pulled out of the market. In contrast, the Egyptian property market is still seeing positive gains. “The Egyptian real estate industry is unique. Consumers are cash driven and developers build with equity rather than debt meaning neither are in need of immediate sources of cash. Moreover, the market is still considered to be in its infancy, so while there is the expected slowdown in expensive luxury properties – which eventually happens to young markets – there is in fact clear demand for middle income housing, especially apartments, which are still in short supply” says Abdalla.
Several independent financial bodies have recently classified Egypt as one of the few countries which is a safe haven from the global economic crisis. Most recently, Merrill Lynch published a report on the 4th November 2008 ranking Egypt in the ten least vulnerable economies worldwide.