According to statements by its CEO, the company is considering obtaining banking facilities exceeding 5 billion pounds during the current year and aiming to inject investments worth 10 billion pounds into construction works during the current year.
Egypt’s Madinet Misr for Housing and Urban Development, operating in real estate development in Egypt, is negotiating with several banks to obtain banking finance for its ongoing projects.
The company disclosed this in a statement to the Egyptian Stock Exchange on Sunday in response to an inquiry about a news report in an Egyptian newspaper regarding its quest for banking facilities exceeding 5 billion pounds.
Abdullah Salam, CEO and Managing Director of Madinet Misr, stated in remarks to the Egyptian Stock Exchange last weekend that his company is considering obtaining banking facilities exceeding 5 billion pounds during the current year. It targets injecting investments worth 10 billion pounds into construction works in 2024, up from about 7 billion pounds in the previous year.
Real estate developers operating in Egypt’s real estate market are facing challenges due to the rise in building material prices, such as iron and cement, and construction costs, prompting developers to raise housing unit prices.
The increase in building material prices in Egypt comes amid a shortage of foreign currency liquidity that the country suffers from, casting its shadow over inflation rates. However, the government has recently received billions of dollars in support with a deal signed with the UAE for $35 billion to develop a project in Ras Al-Hekma and announce financing agreements with the International Monetary Fund, the World Bank, the European Union, and others.
Madinet Misr, formerly known as “Madinet Nasr for Housing and Development,” specializes in developing integrated urban communities. Its prominent projects are Taj City and Sarai. The company has a land portfolio of up to 84 million square meters.
The increase in building material prices is one of many challenges facing real estate developers in Egypt. Difficulties have also increased with the Central Bank of Egypt’s decision to raise interest rates by 600 basis points earlier in March, which is expected to boost the cost of building properties and, consequently, housing unit prices.
However, Salam, CEO of Madinet Misr, stated in his interview with the Egyptian Stock Exchange that the decision to raise interest rates is complex for real estate development companies as they heavily rely on banking facilities in their work. Yet, he added that the Central Bank’s decision significantly contributes to market stability and creates balance.
He also pointed out that Madinet Misr is open to financing mechanisms, including bank loans, sukuk, and securitization.
Madinet Misr raised the prices of its housing units by approximately 10% since the beginning of 2024 due to the rise in construction input costs, according to Salam, after the company had already increased its prices by about 60% during the previous year.
In the face of rising inflation rates and building material prices, Salam emphasized the importance of developers balancing project implementation rates and sales volume.
The annual inflation rate in Egyptian cities jumped to 35.7% in February 2024 from 29.8% in the previous January.
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