MNHD to sell 1,700 homes by early 2015
Cairo, May 8, 2014
Egyptian builder MNHD plans to complete the off-plan sale of 1,700 homes in its 300,000 sq m Tag Sultan project by early 2015, then launch another development of similar size, its general manager told Reuters.
Egypt needs around 500,000 new units a year, officials have said, but filling such a shortage has proven difficult over the past three years, especially after investors were driven away by political instability following the 2011 uprising.
However developers with a focus on mid- or low-income housing have benefited from a weak currency and a volatile stock market, as some Egyptians seek better accommodation and others invested in housing to help preserve their wealth.
MNHD, or Medinet Nasr for Housing and Development, is also in talks with banks for a six-year, 500 million Egyptian pound ($71.3 million) loan to help finance the completion of Tag Sultan and hopes to start delivering its first units by October next year, general manager Ahmed El Hitamy told Reuters.
Speaking from his office on the 8th floor of a run-down building in Nasr City, one of the most crowded areas in the country, crammed with middle-class residential buildings and blighted by frequent traffic jams, Hitamy said the company managed to weather the past three years of turmoil by keeping its focus on middle-class demand.
"This is why our sales did not drop after the revolution. It is because these are the type of people who are buying to live, to marry, to buy apartments for their children," he said.
Contracted sales at MNHD more than doubled to 340 million pounds in 2012, thanks to the launch of Tag Sultan, then more than doubled again last year to reach 800 million, Hitamy said, estimating the figure would rise to 1 billion this year.
MNHD, which started as a government institution in 1959, has been allocated large plots of land in Cairo to widen the city's urban development. It has already sold half of the 1,700 units at Tag Sultan and will use the 500 million pound loan to help finance construction of the development, expected to cost 880 million pounds in total.
"We had a lot of offers (from banks). We expect to come to a decision this quarter," Hitamy said.
The firm is also awaiting government approval to launch a low-income housing project called Nasr Gardens covering 150,000 sq m at the 6th of October satellite city near Cairo.
Most of the housing shortage in Egypt is for low and mid-income individuals, in a country which has one of the world's highest poverty rates, with around 40 percent living under or near the poverty line.
MNHD's Nasr Gardens project has been held up for almost five years, pending government approval and infrastructure work, but Hitamy expects it to start moving this year.
"It stopped because there were problems with approvals over the height of buildings, which stalled the rest of the master plan and other issues ... it was a long process and we have resolved it," he said.
The firm, which has a land bank of 10 million square meters, is also looking to start a major new project this year, a mixed-use development called KM 45 on 5.5 million square meters by the Cairo-Suez road, which will focus on the higher end of the middle class.
The masterplan for KM 45 was designed by architects Benoy, who also designed the masterplan for Abu Dhabi's luxury Yas Island and Ferrari World theme park.
"We are looking to start developing late this year or early next year through a co-development agreement whereby we get a share from the revenues," he said. "We are currently budgeting it and running a feasibility study."
MNHD was privatized with Beltone's private equity arm acquiring a 30 percent stake in 2006. The government still has a 15 percent stake. – Reuters