Real estate funds are increasingly becoming a force to be reckoned with in the Egyptian market. The subject also garnered a lot of attention during Cityscape Egypt 2023 in Cairo last week.
In a session titled "Real estate funds are new horizons for investment and financing", Hisham Sayed, CEO and vice chairman of the real estate fund "The Egyptians", shared that the real estate fund provides investors with diversified real estate investment opportunities and access to a wide array of properties and projects. He further stressed their mounting role in attracting foreign investment.
The session also touched on the real estate bourse, scheduled to launch next year, according to media reports. Sayed confirmed that the ministries and entities concerned are working to decide on the methods by which real estate assets can be listed on the bourse.
PREPARING FOR FUNDS
Highlighting the keenness of the government to accelerate the rollout of real estate funds, Sayed said that the respective regulatory framework has been modified three times over the past year alone, adding that efforts are ongoing to introduce more tax incentives for real estate funds.
In that context, he explained that real estate funds can be established with a minimum capital of EGP 5 million and can be fully operational within 60 days of closing subscriptions.
“There have been a lot of efforts to facilitate the creation of a lot of real state funds, the significance of which is recognised globally. There has been around $1.9 trillion worth of real estate funds established over the past five years, and 671 funds have been set up as of late," he said.
The "Egyptians" real estate fund, founded three years ago, has not been fully active due to the lack of proper ad hoc legislation governing real estate funds.
NEW CONCEPT
Earlier this year, Banque Misr launched "Real Estate Investment Fund 1", in partnership with Banque du Caire, Misr Insurance Holding Company, and Allianz Egypt, with a target capital of EGP 500 million.
The fund, launched late last year, looks to invest in commercial projects with recurring revenues and has the ability to create higher value for participant investors since the division of risk is fairly balanced, a statement by the bank said.
Speaking at the same session, Ahmed Sobhy, Chief Investments Officer, Banque Misr, said that the fund started by targeting commercial assets due to the newness of the idea and the ensuing lack of awareness from the side of customers.
“Real estate properties are considered an asset class for investors for a variety of reasons, as they retain their value over time. But people tend to prefer buying these assets instead of directly investing in them, so we saw that people are not ready to accept the idea of investing in real estate funds; that's why we were after commercial sets," he explained during the panel discussion.
ESTABLISHING PARTNERSHIPS
For the real estate funds to effectively work, Amr Elhamy, senior vice president at The Sovereign Fund of Egypt (TSEF), talked about the importance of fostering partnerships among stakeholders, most importantly the private sector entities.
"We can't work in silos; there's a greater role for the private sector to participate and work hand in hand to maximise returns on underutilised assets," he said at Cityscape, explaining that real estate funds offer an easier path for investors to exit, making them a lucrative form of direct investment.
The Sovereign Fund of Egypt is a private investment fund that works to offer and manage investment opportunities in state-owned assets to preserve Egypt's heritage and culture.
The panel discussion was moderated by Alaa Fikry, chairman at Beta Real Estate Development. Alaa Wally, Advisor to the Chairman, Promotion and Business Development, Egyptian Exchange also attended.
