Research centers expect an inflationary wave to hit real estate in 2022
The Russian-Ukrainian war and accompanying inflation have driven up the cost of building materials, with the annual inflation rate in Egypt registering 10% for February 2022, from 4.9% a year earlier.
Al-Ahly Pharos Research expected construction material costs to increase by 15% in 2022, noting that previous research had pegged the increase at around 5%.
The center also predicted that developers will increase property sales prices by 10% in 2022 to account for increases in building material costs.
Pharos, however, expected sales to increase by around 10% in 2022, in addition to an increase in sales of move-in ready units, particularly in light of the mid-income mortgage program, which now covers units with prices up to EGP 2.5m.
He explained that expectations indicate that changes to installment schedules will not be made in 2022 by development companies, expecting average installment schedules to continue for eight years from 2022, and in the event of change, it will be minor, especially for ready units. .
Pharos also believes that 2022 will see a restructuring of the real estate sector, especially after legislation requiring property developers to pay around 30% of the value of the project before it is launched.
It anticipated that the pace of deliveries would increase to allow for more securitization transactions, with only receivables related to the units delivered being able to be securitized.
He pointed out that 2022 is the year of real estate market regulation, pointing out that there is an ongoing dialogue between major developers and the Ministry of Housing to seek the most effective and efficient way to regulate the sector. She explained that these transformations pave the way for a more regulated real estate financing market.
Aly Adel, real estate analyst at Beltone Securities, expected real estate unit prices to rise between 20 and 30 percent in the current year, especially after rising commodity prices around the world. due to developments in the Russo-Ukrainian War.
Adel added that it is possible that the inflationary wave in house prices will last until the beginning of next year after increases expected to be between 10 and 20% during the current year in due to expected inflation.
He explained that most developers have building material inventory up to about six months, and increases will start at the beginning of the third quarter (3Q) of this year.
Daily News Egypt conducted a survey of the top 10 real estate companies listed on the Egyptian Stock Exchange (EGX) in terms of profitability, contract sales and revenue.
Emaar Misr tops the list with profits of EGP 4.12 billion, market value of EGP 11.87 billion and contract sales of EGP 23.2 billion. Talaat Mostafa Group ranked second with profits of EGP 1.78 billion. The group reached a value of EGP 17.97 billion and its contract sales amounted to EGP 32.4 billion; followed by Orascom Development Egypt in third place, earning EGP 1.12 billion in earned profit, while the group’s market value reached EGP 4.66 billion and contract sales reached EGP 9.2 billion. ‘EGP in the first nine months of 2021.
SODIC came in fourth place with EGP 865.1 million in profit earned, and its market value reached EGP 4.67 billion with contract sales of EGP 11.4 billion; followed by Palm Hills in fifth place, with a market value of EGP 4.55 billion, profit of EGP 653.3 million and contract sales of EGP 17.3 billion.
Nasr City’s profit fell by 72%, to rank sixth, its profit amounting to EGP 282.8 million with a market value of EGP 3.68 billion and contract sales of 2 EGP.95 billion.
Zahraa Al-Maadi Company ranked seventh as the company’s profits increased over the past year to EGP 274.8 million with a market value of EGP 3.03 billion and sales contracts of EGP 227 million; followed by Arab Developers Group – formerly Porto – in eighth place with a market value of EGP 476.3 million, profits of EGP 92.9 million and contract sales amounting to EGP 1.47 billion. EGP.
Amer Group ranked ninth with realized profit of EGP 83.2 million, market value of EGP 882.7 million and contract sales of EGP 4.9 billion; followed by Heliopolis Housing in tenth place with earned profits of EGP 16 million and a market value of EGP 6.52 billion.
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