Egypt needs to build half a million of units a year to address its severe housing shortage.
Egypt has severe shortage in housing units. I think Egypt has 500,000 units a year of shortage, so the residential real estate sector, at all levels in the scope of affordability, is going to present profitable opportunities, Amr Seif, head of asset management of Cairo-based investment bank EFG Hermes, tells MEED.
The country is the most populus in the region, with about 84 million people. It has an estimated shortfall of about 1.5 million homes, which the government aims to address by tendering several housing contracts, as well as signing a $40bn memorandum of understanding (MoU) with UAE-based Arabtec Holding in early March to develop and construct 1 million low-cost homes.
The MoU hints at continued involvement by GCC countries such as the UAE, Kuwait and Saudi Arabia if Field Marshall Abdul Fattah al-Sisi is elected president, which could help Egypt revive its economy. That has led to Egypts stock market rising 20 per cent year-to-date.
Should growth start, I think banks are usually prime beneficiaries. Also due to the nature and demographics any consumer-related sector is going to present a big opportunity, says Seif.
Private equity activity involving consumer-oriented businesses is also expected to help deal-flow in Egypt take off this year, adds Karim Moussa, EFG Hermes head of private equity, which plans to invest in Egypt, the GCC, Turkey and east- and sub-Saharan Africa.
From 2005 to 2007, most of the deal flow happened [outside the GCC] in the [wider Middle East and North Africa] region, with Egypt representing a large portion. I think Egypt will play a larger role again, says Moussa.
I think people just accept that [the country] will be in political turbulence for a bit. We hope its ending, but at the same time people realise its time to do business now. Egypt really needs capital, companies are struggling and it still has a population of 80 million to cater to.