Real estate sales in Egypt are expected to end the second quarter this year on a high note, with sales forecast to boom, a recent news report has stated.

High demand for units and strong control measures for COVID-19, including an increase in the country’s vaccination rate, have led to a positive outlook for real estate sales in Egypt. Real estate investments are also doing well across the board. 

This is further encouraged by an increase in the number of companies and the supply of units in Egypt’s National Administrative Capital (NAC). Moreover, land and residential prices are expected to spike in the NAC, with the government announcing its move to the city this month.

Unit prices may be headed towards a price increase anywhere between 5%-15%, the report further stated. Moreover, prices of building materials and land offerings may also go up.

Developers have been expecting a price hike since early 2021 due to increase in raw material and construction costs, and a dip in interest rates. Real estate sales in Egypt were already seeing a rebound in Q3 and Q4 last year, with the trend expected to continue into the second quarter of 2021. 

REAL ESTATE SALES IN EGYPT: THE STORY SO FAR

Despite pandemic-induced economic shocks last year, real estate in the country remained resilient and transformative. Developers were already expecting real estate sales in Egypt to pick up, post a disappointing sales performance in the first two quarters. 

Backed by structural reforms and a strong COVID-19 response, the sector was able to absorb the shocks of the pandemic and emerge a success in 2021. 

Commercial lease rates in Central and West Cairo took a bargain, but remained stable in New Cairo. Residential rents increasing by 8% 6th of October city and 5% in New Cairo was another key highlight.

One developer anticipated that new urban communities and lower interest rates would result in real estate sales in Egypt to the tune of at least EGP 1 billion in 2020. In the same year, net sales of Orascom Development, one of the biggest developers in the MENA region, grew 32.3% to reach EGP 1.8 billion in Q4 2020 real estate sales in Egypt. 

The predicted spike in 2021 sales prices have been welcomed. At the same time, developers also expect real estate to play a stronger role in Egypt’s GDP, overtaking manufacturing to become its primary contributor, and contributing twice the current rate of about 10%, over the next 15 years.

 

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here

A recent survey by The Economist that indexed the most liveable cities in the world reported that the global average score for liveability dropped by seven points as compared to the pre-pandemic score. Border closures, COVID-19 management, and vaccination drives affected the rankings significantly.

Auckland’s ability to contain the pandemic quicker than other countries, thus lifting restrictions soon, placed it on the top spot of the 2021 index as the most liveable city. Further, more than half of the top ten cities in the index were located in New Zealand or Australia.

Tighter border controls are at the crux of what has enabled residents in these two countries to observe a relatively normal city life. In other words, what these two countries achieved is a safer public space designed to enhance the safety of their residents.

RETHINKING URBAN PLANNING POST PANDEMIC

A 2021 report by Gensler notes that over a fourth of surveyed residents were likely to move out of their cities because they were unhappy with urban living standards, including their neighbourhoods.

City living already featured some of the worst problems that come with a high rate of urbanization, especially in metropolises. These involve hygiene, affordability, and high population densities.

The pandemic exacerbated these issues. In a city that is not prepared to meet the sanitation standards required for a safe public life, clear space to make social distancing effective enough, or handle the sheer number of people susceptible to community transmission, the pandemic can have a devastating effect on public life.

It also deters urban planners from addressing emerging resident needs, such as walkability. Walkability refers to the ease of walking to different spaces within a city for different needs, such as groceries, malls, or restaurants. The walkability of a city can be environmentally beneficial, makes commuting more efficient, and also poses personal health advantages for residents.

DESIGNING SPACES FOR WALKABILITY 

The simplest way to enhance walkability within a city is to ensure that pavements remain dedicated for pedestrians, and not used up by motorists to park their vehicles. 

Another, is to cordon off low-traffic roads at a designated time, allowing only pedestrians to go through. Several cities have already had success in trialling this, with some moving to make these changes permanent. Further, building mixed-use developments can be more suited for walkability purposes, with pedestrians able to address multiple errands at a single location.

Ultimately, walking is a “pillar” of urban mobility, making it safer and more inclusive. It is also a COVID-safe way to commute, allowing pedestrians to avoid closed or crowded spaces, and situations involving close-contact, only making it more valuable to urban planning.

 

KEEP UP WITH THE REAL ESTATE INDUSTRY
Subscribe to the Cityscape Intelligence newsletter here

Saudi Arabia has joined a consortium of countries working towards clean energy innovation and the Paris Agreement through a global initiative called Mission Innovation 2.0. In the second phase of this project, the member nations have committed to investing an additional USD 5.8 billion every year towards research, development and implementation efforts.

Amongst GCC countries, the UAE will also be joining Mission 2.0. Member nations also include China, the US, Germany, India, Japan, and South Korea, which are some of the two countries’ top trading partners.

The initiative was launched five years ago, around the same time as the Paris Agreement. In its new avatar, Mission Innovation 2.0 will launch a decade of clean energy innovation to support clean energy transitions, focus on pathways to net zero emissions, and meet global climate and energy goals. 

Member nations will partake in public-private Missions, collaborate through an Innovation Platform, and also commit to National Innovation Pathways outlining individual state goals.

SAUDI ARABIA'S PARTICIPATION IN MISSION INNOVATION 2.0

“In Mission Innovation 2.0, Saudi Arabia is committed to promote technologies and solutions that address GHG emissions under the Circular Carbon Economy platform through accelerating research, development, deployment, and dissemination of such technology,” Saudi Energy Minister Prince Abdulaziz bin Salman Al Saud said about the initiative.

On the clean energy front, the country will be involved in the Clean Hydrogen sector of Mission Innovation 2.0, which aims to drive down the end-to-end costs  of clean hydrogen by USD 2 per kilogram in the next decade. It will also take part in the Green-powered Future sector, which focuses on integrating variable renewable energies up to 100%  in future energy mixes.

Saudi Arabia will also be a member of the Mission Innovation Steering Committee, which provides oversight and top-level strategic guidance for the implementation of Mission Innovation 2.0’s vision and clean energy action plan.

The UAE, on the other hand, will be contributing to the initiative’s Innovation platform for affordable heating and cooling of buildings under Mission Innovation 2.0.

OTHER CLEAN ENERGY INITIATIVES IN SAUDI ARABIA

Saudi Arabia has also undertaken clean energy efforts outside of Mission Innovation 2.0. One of its most ambitious green projects, Saudi Arabia is currently working on NEOM, aa USD 500 billion planned zero-carbon megacity. The city will be powered completely by renewables and clean energy, such as hydrogen.

Further, under the “Saudi Green plan" which was announced this year, half of the country’s domestic energy will come from renewable sources, in addition to an afforestation drive that will plant 10 billion trees. Saudi Arabia also has an agreement with Germany for the production and transportation of green hydrogen.

_{Photo credit: www.goumbook.com/saudi-arabia-unveils-worlds-largest-green-hydrogen-project/}

 

KEEP UP WITH THE REAL ESTATE INDUSTRY
Subscribe to the Cityscape Intelligence newsletter here

A recent report by Research and Markets has found that Saudi Arabia’s entertainment and amusement market is forecast to grow to USD 1.17 billion by the end of 2030. This represents an annual growth rate of 47.65% for entertainment in Saudi Arabia. The market is currently worth USD 23.77 million, the report said.

The study reflects the country’s efforts to “build a unique and world-class entertainment hub,” the report also said.

Further, a boost for entertainment in Saudi Arabia is expected to benefit Saudi Arabia’s real estate sector as well. The study includes an assessment of theme and amusement parks, festivals, concerts, and entertainment companies as well.

SAUDI ENTERTAINMENT INITIATIVES

Saudi government initiatives for entertainment in Saudi Arabia include setting up the General Authority for Entertainment, and the Saudi Entertainment Ventures Company (SEVEN) under the country’s sovereign wealth fund Public Investment Fund (PIF).

The newly launched Saudi Entertainment and Amusement exhibition taking place in September this year is expected to further encourage growth and interest in entertainment in Saudi Arabia. It is also aimed at Vision 2030 goals of increasing double household spending on entertainment and amusement to 6%, from the current 2.9%.

Saudi Arabia has so far announced two entertainment hubs in the country, located at Qiddiya and Riyadh. Both projects are backed by the PIF. The Qiddiya entertainment city mega project will include sports and arts initiatives alongside entertainment experiences. The entertainment hub in Riyadh, announced by SEVEN, will feature facilities for entertainment in Saudi Arabia, such as open spaces for events, sports and live shows, and cinema halls.

In 2019, the country had announced four projects worth USD 23 billion for entertainment in Saudi Arabia. These included the King Salman Park, Green Riyadh, Riyadh Art and Sports Boulevard. 

ENTERTAINMENT IN SAUDI ARABIA: 2020 RECAP

In 2016, the Saudi government announced its Vision 2030, outlining investments to the tune of SD 64 billion in leisure and entertainment in Saudi Arabia over ten years. The investment announcement came as a boost for real estate in the country as well. A year later, the ban on cinemas was lifted.

Entertainment in Saudi Arabia has been on a growth track since then, now featuring the year-long Saudi Seasons Program, the Qiddiya project, the Jeddah Opera House and more. With Saudi Arabia diving headfirst into efforts to diversify its economy and attract foreign capital, emphasis on its entertainment sector will continue to rally.

_{Photo credit: www.arabnews.com/node/1688001/saudi-arabia, www.egis-group.com/perspectives/city-life/green-riyadh-green-horizon-2030}

 

LOOKING TO ENHANCE YOUR REAL ESTATE KNOWLEDGE? 
Sign up now to the Cityscape Intelligence newsletter here

G7 nations recently arrived at a landmark decision to impose a global minimum corporate tax rate of 15%. The tax is aimed at discouraging corporations from shifting profits to countries that have low-tax regimes.

The global minimum corporate tax rate will act as a “top up” over existing local corporate taxes. This means that for any multinational company from a G7 nation holding profits overseas, they will pay corporate tax at a rate adjusted to the global minimum corporate tax rate to negate any benefits of keeping profits outside their home country.

G20 nations will be deliberating on how much support the G7 accords will receive at a meeting in Venice next month. Moreover, OECD and G20 nations are also expected to soon reach a decision on taxing cross-border digital services (which would drastically affect big tech companies such as Amazon and Facebook), and reining in tax erosion. 

The average OECD corporate tax rate is 21.5%, but can range anywhere from 32% to as low as 8.5%. 

The global minimum corporate tax rate will also have an effect on Saudi Arabia and the UAE, both of which are business and financial destinations in the MENA region. Saudi Arabia is also a G20 member nation. While Saudi Arabia has a corporate tax of 20%, the UAE only taxes oil companies and foreign banks as of now. 

GCC COUNTRIES EXPECTED TO COMPLY WITH GLOBAL MINIMUM CORPORATE TAX

GCC countries are likely to act in accordance with the global minimum corporate tax rate, a Dubai-based economist told Arabian Business. For corporations in GCC countries, this would mean an increase in taxes payable.

“The G20, which Saudi Arabia is part of, will be expected to endorse the agreement. And countries like UAE and Qatar will also want to be seen to be complying with global regulations,” economic advisor at Institute of Chartered Accountants in England and Wales, and chief economist at Oxford Economics, Scott Livermore, said.

He added that the global minimum corporate tax could diversify the tax base in GCC countries, and also allow them to increase their tax revenues. The drop in tax benefits would also bring added focus on ease of doing business as a competitive advantage.

A Reuters report also suggests that rather than opposing the global minimum corporate tax, low-tax countries (including the UAE and Bahrain) are likely to lobby for a lower tax rate, or seek out exemptions. 

 

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here

Shurooq, Sharjah’s Investment and Development Authority, has launched two new beach development projects for AED 197 million (USD 53 million), Executive Chairperson of Shurooq, Marwan bin Jassim Al Sarkal recently announced.

The projects include an AED 110 million Al Luluyah Beach project in the eastern coast of Khorfakkan, and an AED 87 million Al Hira Beach project in Sharjah city. The projects are aimed at boosting infrastructure in retail, tourism and hospitality, and promote the emirate as an adventure destination.

The projects will include children’s playgrounds, restaurants, cafes, and retail outlets.

Speaking at a live interview on Sharjah Radio and TV, Al Sarkal noted that the projects were in line with the vision of Sheikh Dr. Sultan bin Muhammad Al Qasimi, ruler of Sharjah, to foster leisure, and social and community development, through public facilities.

Shurooq will also be commencing with Phase 2 of its Khorfakkan beach project, developing the last kilometre of the coastline.

ADVENTURE ACTIVITIES AT AL LULUYAH BEACHFRONT 

Work on the 1.6-kilometre coast will be completed by November 2022, Shurooq said. Facilities will include caravan camping, a swimming island with a play area, a miniature swimming pool, a ‘Safe Beach’ (where a low-lying area of the water will be cordoned off for children), and an ‘Adventure Beach’ for water sports and other water-based activities.

Moreover, the Al Luluyah Beach project will also feature a women-only beach, in addition to public beaches and swimming pools.

Further, Shurooq’s plans also proposed the development of the nearby Al Suwifa mountain for adventure activities. Called the Adventure Mountain, facilities will include mountain coaster rides, Fatboy biking, mountain-top zipline rides, and glass bottomed viewing platforms.

SHUROOQ HAS ALREADY COMMENCED WORK ON AL HIRA BEACH

While work on the Al Luluyah Beach will commence in the next few months, work on the Al Hira Beach development project was started in February this year. The project is expected to be completed in October 2021.

Located in the Al Fisht area, the Al Hira Beach will feature a 3,300-metre jogging track, Islamic-style gardens, a beachfront promenade, a cycling route, and sport facilities. Children’s play areas, food trucks and European-inspired kiosks are currently open and will remain so till the end of 2021.

“By undertaking such infrastructural projects, Shurooq aims to support the diversification of Sharjah’s economy, boost GDP growth, and offer increased investment opportunities in various sectors ranging from tourism, hospitality, entertainment, and retail to F&B," Al Sarkal said.

_{Photo credit: www.mepmiddleeast.com/projects/78218-shurooq-unveils-563mn-family-friendly-beach-development-projects?amp, www.m.dubaiprnetwork.com/pr.asp?pr=152896, www.meconstructionnews.com/47787/shurooq-announces-development-of-two-beach-projects-valued-at-53-6mn}

 

WANT MORE REAL ESTATE INSIGHT? 
Subscribe to the Cityscape newsletter here

Samana Developers recently announced that it would be accepting dogecoin, a volatile memestock, as payments for purchases in an upcoming residential project located in Jumeirah Village Circle. 

Transactions would take place on Binance, a cryptocurrency exchange, and investors purchasing property from Samana would receive a 5% discount, the company said. 

This isn’t the first time a property developer has attempted to use crypto as a medium of exchange in the UAE. Dubai government-owned licensing company KIKLABB had announced earlier this year that it would accept payments for trade licenses and visa fees in Bitcoin, Ethereum, or Tether.

These are big steps in the midst of a global deliberation on integrating cryptocurrency with the formal financial system. At the same time, however, the UAE government has clarified that the virtual currency is not counted as legal tender in the country, which makes it tricky for crypto holders looking to strike a real estate deal.

WHY CRYPTOCURRENCY?

The appeal of cryptocurrency lies in the fact that it is based on a decentralised distributed ledger technology, also known as a blockchain. Here, nuggets of information are captured in virtual “blocks” that are immutable and transparent. This helps to create a permanent and accessible history of transactions.

As a decentralised currency, these digital tokens are not pegged to fiat money or controlled by a central authority. This is precisely why cryptocurrency can still be used to buy or sell in the UAE, even though it is not yet recognised as legal tender.

Its application in real estate is still emerging, and has divided expert opinion. While some see it as a way to hedge risk, increase efficiency and attract foreign capital, others have pointed to a lack of regulation and high volatility as potential pitfalls.

USING CRYPTOCURRENCY TO PURCHASE REAL ESTATE

Early crypto investors have benefitted wildly from a surge in value of these currencies over the years, making millionaires out of several. As they look to diversify their assets, real estate has become an attractive space to park their wealth.

Developers are responding to this demand. Fam Properties in Dubai, for instance, partnered with crypto exchange Huobi to allow individuals and institutional clients to trade property using cryptocurrency.

Moreover, buying or selling using cryptocurrency is highly efficient because of the technology backing it. Buyers of a Texas home that was purchased using cryptocurrency in 2017 found that the process simply involved choosing the right exchange, provided that insurance and escrow companies are on board.

For investors in the UAE, several loopholes still need to be resolved in the use of cryptocurrency. But with government authorities rolling out virtual asset schemes and licensing regimes, it is clear that the crypto conversation is here to stay. 

 

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here

If asked, would you like to invest your money more responsibly, in more sustainable, more ‘green’ assets, how would you answer? Scruples would likely force your hand: yes, you would reply, of course I would like that, for my portfolio to reflect conscientiousness.

The question is biased, built-in with a ready answer, and it provides no real clue to whether values-driven investing is actually profitable, and more importantly, whether it is here to stay. That responsible investing — best known as ESG investing, or screening an investment for environmental (E), social (S) and governance (G) integrity — is surging without doubt. Globally, a record USD 490 billion of green, social and sustainability bonds were sold in 2020, along with a further USD 347 billion allocated to ESG-focused investment funds.

The trajectory is promising: the total market value of ESG investments has almost doubled over four years, and more than tripled over eight years, to USD 40.5 trillion in 2020. Projections have it this total will swell to USD 53 trillion within the next five years — which works out to more than the GDP of the USA, the UK, China and Germany combined.

But perhaps the best indicator that ESG investing is more than just a passing fancy is the response it has stirred up in the Middle East. For a region historically reliant on oil, there is now a marked shift, and even a sense of urgency, to weave ESG-based objectives into national agendas and economic visions across the region.

ESG DEVELOPMENTS IN MENA

In April last year, the Dubai Financial Market (DFM) launched an ESG index for companies in the UAE, while in August the Saudi Stock Exchange (Tadawul) announced plans to launch its own ESG-themed index in 2021. Then in September, Saudi Electricity Company (SEC) issued bonds valued at USD 1.3 billion, a green sukuk (Islamic bond), which was five times oversubscribed — driven by growing appetite for ESG-compliant investments.

Incidentally, a month after, Saudi Arabia also witnessed the cost of ignoring ESG requirements: the kingdom was excluded from the investment portfolio of top global fund Candrian, alongside Russia and China — according to the fund’s representatives, the three countries scored low in ESG ratings.

In another major step, the Abu Dhabi Investment Office (ADIO) launched an ESG policy in February, which aims to apply ESG principles in partner companies and public-private partnership transactions. And Abu Dhabi sovereign wealth fund Mubadala — the third largest in the world after Norway and China — has established a responsible investing arm to deploy billions of dollars across the Middle East and North Africa (MENA) region, with ESG standards at the core of its investment strategy.

In 2020, the UAE, Egypt, Saudi Arabia and Qatar, all issued new green and sustainability-linked bonds. Qatar National Bank (QNB) set up its Green, Social and Sustainability Bond Framework in February, and in September it launched its USD 600 million green bond, for which it received more than USD 1.8 billion in subscriptions.

ESG AS A DIVERSIFICATION STRATEGY

Investments guided by ESG — for example, in renewable energy — offer a way to augment diversification. And as well all know, the slump in oil prices have underlined the importance of a more broad-based economy.

Globally speaking, ESG-guided companies have proven remarkably resilient in the face of the COVID-19 pandemic. The pandemic was a lesson in risk management, in future-proofing an investment portfolio against disruptions to the supply chain. If you didn’t diversify, if you didn’t take into account the possibility that everything could change overnight, you may have found yourself on the wrong side of 2020. An increased focus on ESG is not just a nod to changing social conventions, it’s good financial policy.

 

EXPAND YOUR REAL ESTATE KNOWLEDGE
Subscribe to the Cityscape Intelligence newsletter here
 

With global real estate markets on the recovery track from COVID-19, and global lockdown restrictions easing relative to last year, MENA real estate investors are keen to get back onto the investments field.

Wealth managers in the MENA region expect their clients’ wealth to mostly increase in 2021, and 31% of Middle East clients plan to buy a new home this year. Here’s a snapshot of the top global investment decisions for MENA real estate investors.

TOP DESTINATIONS FOR MENA REAL ESTATE INVESTORS

1. UK

The UK remains a favourite among MENA real estate investors for its strong yield opportunities and a weakened pound. While investments fell to its lowest level in a decade in Q2 2020, investor sentiments improved over the next quarter as lockdown restrictions were eased. Nearly USD 500 million was transacted in Q3 2020, an increase of 26% from the same period in 2019. 

At the same time, investor interest is also diversifying outside of London, into Glasgow, Cardiff, Bristol, Manchester, Edinburgh, Birmingham, and Leeds.

2. US

In line with global trends, the US is also a top investment destination for MENA real estate investors. Chicago, Boston, Washington DC, Los Angeles, and San Francisco continue to be global leaders for office and retail yields.

Further, Los Angeles, Miami, and Vancouver have already reported a rebound to pre-pandemic sales of luxury residential properties in prime locations. Miami and Los Angeles are further expected to have an optimistic forecasted change in luxury property prices.

3. TURKEY

As a global tourist destination, the country has been on the receiving end of foreign investments, which increased 14.7% year on year in 2019. In addition to its tourist economy, lowered property investment limits for citizenship in the country have previously attracted MENA real estate investors, and this trend is expected to continue.

Following the UK and the US, both of which dominate global real estate capital inflows, MENA real estate investors are also looking closely at Turkey for opportunities. 

4. SPAIN

Spain has also emerged as a destination of choice for MENA real estate investors. In particular, this is because of steep discounts in Spain’s hospitality industry, with hotels going at a bargain of 15% to market price.

With most capital outflows from the MENA region going to Europe in the first quarter of 2021, Spain was among several European countries to benefit from the trend.

5. AFRICA

Real estate opportunities are opening up across Africa for MENA real estate investors. With urbanisation growing rapidly in sub-Saharan Africa, and the strategic benefits of geographical proximity between the two regions, several projects by investors from the MENA region are now emerging across the African continent.

For instance, Sharjah signed an MoU earlier this year with Zanzibar to boost investments, while Egypt plans to build the longest road network in the continent that will connect nine African nations. 

In recent years, MENA investors have been paying closer attention to Nigeria, South Africa, Kenya, Rwanda, Senegal and Ghana as they look at their energy, agriculture, and infrastructure sectors.

 

LOOKING TO ENHANCE YOUR REAL ESTATE KNOWLEDGE? 
Sign up now to the Cityscape Intelligence newsletter here