Navigating Egypt's Real Estate Market:
What are the Prices of Real Estate in Egypt!!
The Egyptian real estate market is currently facing unprecedented challenges. With the volatility in currency and soaring inflation, both buyers and sellers find themselves in a complex and uncertain environment. This article delves into the current issues plaguing the market and presents transformative solutions.
The Current State of Egypt's Real Estate Market
Economic Turbulence and Its Impact
Over the past couple of years, the Egyptian pound has experienced significant devaluation. At its peak, there were widespread fears that the dollar might reach 70-80 EGP. In response, real estate developers set astronomical prices to hedge against future currency, inflation and high interest rate risks, especially because they sell off-plan properties and offer long-term payment plans with minimal down payments. This pricing strategy was essential to cover the financial risks associated with building over several years.
Simultaneously, buyers, worried about the diminishing value of their Egyptian pounds, saw real estate as a safe investment. Purchasing property with extended payment plans seemed like a smart hedge against inflation and currency devaluation, even though the inherent risk is already built into the prices by developers. It was either this or put your money in certificates which put you just below the breakeven point in regard to the value of your cash and only for a couple of years.
Market Shifts and Stabilization
Recently, however, the exchange rate has stabilized around 48 EGP to 1 USD, buoyed by significant foreign investments in Egypt, including major deals like the sale of Ras Elhekma. This stabilization has put developers in a tough spot. With prices set high under the expectation of a much weaker pound, they now face an inventory that is overvalued in the current market.
Lowering prices could lead to a wave of returns or damage their reputation, making this an unviable option. The only possible strategy has been to offer the same price but extend the payment plan for new buyers. This approach allows them to maintain nominal prices while effectively reducing the present value of payments, offsetting some of the overpricing without explicitly cutting prices.
On the flip side, buyers are no longer in a rush to purchase real estate as the fear of currency devaluation has subsided. The once-hot primary sales market has cooled, leaving developers and buyers in a stalemate.
The Resale Market: An Alternative Yet Uncertain Path
With primary sales slowing, attention has shifted to the resale market. Many individuals who acquired properties at bargain prices several years ago are now struggling to gauge the true market value of their assets. Properties that were snapped up for 3-4 million EGP are anticipating values to skyrocket to 14-20 million EGP due to expected currency devaluation and rampant inflation, now they find themselves in a pricing limbo.
Unlike developers, individual sellers in the resale market have more flexibility to adjust their prices. However, the million-dollar question remains: what is the true current market value? The recent economic volatility has muddied the waters, making it challenging to determine accurate property valuations. It will likely take a significant period of stability to gather reliable market data and establish a new pricing equilibrium. What if I need to sell or buy today? We can’t rely on the current methods of guessing a property’s market value.
Buyers’ Dilemma in a Buyer’s Market
With the market stabilizing and sellers rushing to offload their recent purchases, power has shifted to buyers. With a dizzying number of options, the next question becomes: where do I buy? Even in a market downturn, buyers still are eyeing the long-term value of any potential purchases and the ability to generate rental income to cover their repayments. This is even more crucial for foreign investors and Egyptians living abroad, who are not as familiar with the local market.
Regrettably, according to JLL’s Real Estate Transparency Index 2022, Egypt ranked 61 out of 94 countries. Put simply, there’s no data on any property transactions. To make the best purchasing decisions, buyers need to either be experienced themselves or find an experienced and unbiased property consultant, which is not easy. Even with expert advice, the available information is naturally limited, making broader access to data highly beneficial.
True Market Value: Filling the Gap with Innovation
Amidst the current market uncertainty, Belmazad.com and Propertysorted.com have combined forces and emerge as a beacon of hope for determining true property values that you can actual transact on creating an ecosystem that benefits all parties.
Sellers can instantly value their homes, access a list of comparable and previous auctions, and set an attractive auction price for a quick sale or list their property to find the ideal buyer.
Buyers gain unprecedented access to comprehensive historical data on each property, including price growth, rental rates, unit numbers in the area, popularity, and the performance of the developers’ other projects. This helps buyers avoid overpaying and ensures they invest in properties aligned with their goals.
Upon a successful transaction, all necessary legal paperwork is handled, and funds are held in escrow until sale conditions are met, protecting both parties
This method of setting the market price has a rich history, from ancient bazaars to today's prestigious auction houses, consistently proving its effectiveness for achieving a fair market value.
Introducing belmazad.com: The Solution to Egypt's Real Estate Challenges
In response to these challenging market dynamics, belmazad.com stands at the forefront of the online real estate revolution. Our platform offers a comprehensive suite of services tailored to address the complexities of today's real estate market:
Cutting-Edge Online Auction Platform
Our platform is designed to provide a seamless and transparent experience, perfect for navigating the current volatile market:
- Serious Sellers and Buyers: All sellers and buyers participating in auctions will be verified through ID numbers, OTP to confirm mobile, as well as security deposits to ensure that each participant is real and serious.
- Property Valuations: Done by professional valuators like propertysorted.com and for more detailed valuations we have licensed IFA and FRA valuators.
- Competitive Environment: Online auctions create a competitive bidding environment, ensuring properties are sold at their true market value.
- Accessibility and Transparency: Online auctions are multilingual and accessible to a broader global audience while maintaining transparency in the bidding process.
- Targeted Online Advertising with Global Reach: With digital advertising, Social Media campaigns, email &whatsapp marketing, vast broker network, and professional call center we are able to sell fast at market value.
- Escrow & Security: Transactions are secure, with funds held in escrow until all sale conditions are met.
- Exclusive Properties: We offer rare properties exclusive to us through our partnerships with financial institutions, government entities, and private funds and institutions that you won’t find anywhere else.
- Data Collection and Analysis: Utilizing AI and CRM, we analyze data to maximize successful connections between properties and interested buyers, enhancing the efficiency of our platform
- Digital Transformation: We are a digital transformation tool revolutionizing the way companies and institutions sell and buy property.
Meet PropertySorted.com: The Information Revolution, a Platform Pioneering Transparency of Real Estate Information in the Middle East
Property Sorted powers informed decision-making. The first Real Estate platform of its kind in the Middle East dedicated to empowering buyers and sellers with unprecedented access to information, bringing transparency to opaque markets characterized by fragmentation and gated information.
- Egypt’s 1st AVM model: Instant Home Valuation: Homeowners can find their home’s current market price online in seconds on PropertySorted.com as we are building Egypt’s 1st AVM model that can predict home value at scale like Zillow’s Zestimate in the US.
- Affordability Check: Buyers can discover which homes they can afford with a few clicks. Properties within their budget, salary, and monthly payment.
- Comparisons: Buyers can compare properties based on price growth, rental yield, and rental income.
- Mortgage Applications Made Easy: Buyers can apply for mortgages. They can also take it a step further to understand how rental income contributes to repayments.
- Net Present Value Calculator: Buyers of new build off-plan can calculate the Net Present Value of their homes, essentially comparing like-for-like with existing resale cash-only properties.
- Compare Property Developers: Buyers can now review each developer’s past performance, enabling them to make more calculated purchase decisions.
- Rental Property Yields: Homeowners and landlords can track market rental rates to negotiate more fair contracts with tenants at market rates.
- Open APIs: Creating “Open” Real Estate allowing other startups like Belmazad and financial institutions to build a suite of new products and allowing for new types of investments.
The collaboration between Property Sorted and Belmazad is set to boost hope to Egypt’s Real Estate market. By combining Belmazad’s innovative auction platform with Property Sorted’s AI-driven valuation solutions, transparency and liquidity are poised for a significant boost. Sellers can instantly value their homes and list them for auction, while buyers can bid with confidence, knowing the true potential of each property. This collaboration promises to make buying and selling of Real Estate more transparent and efficient for all stakeholders involved.
" We're thrilled to announce our collaboration with Property Sorted to empower our clients with the latest market data. This collaboration enhances belmazad.com's commitment to streamlining the buying and selling process, removing the guesswork, and allowing our users to complete the entire sales cycle from anywhere online. "
- Mahmoud Farahat,
Co-founder at Belmazad.com
“We’re really excited to partner with Belmazad to transform the Egyptian real estate market. By combining our transparent and data-driven platform with their innovative auctions system, we’re empowering buyers and sellers with unprecedented clarity and efficiency.”
- Youssef Zohairy
Co-founder at Property Sorted