Darwish Hassanein, CEO of the Saudi Egyptian Construction Company (SECON), said that the decision to float the Egyptian pound was mandatory despite its delayed release; however, it made challenges faced by real estate investors more difficult.
Hassanein said during his speech at the Al-Ahram “Egyptian Economy on the Road to Development” conference held on Saturday that the government had to provide Egyptian citizens with sufficient information about the decision to float the pound and explain the negative effects and how to avoid and overcome them in a specific timeframe.
He stressed that the decision led to a significant price increase in all components of building and construction.
He explained that real estate investors are facing two major challenges after the pound’s flotation. The first is contractual commitment with some clients on the pre-flotation price of units without the ability to adjust prices.
The second challenge is the difficulty of marketing new units as a result of the high cost after the increase in prices of construction materials as a result of the flotation.
He pointed out that banks refused to finance any investment process in the real estate sector if the cost exceeded revenues, which hindered the work of many of the contractors who needed additional funds.
He demanded a fair compensation for the contractors who contracted with the state without delay.
He proposed a balanced contract between the government and any other body, whether contractors or investors, to ensure the rights of all parties.
Arabia Group for Development and Urban Progress chairperson Tarek Shoukry said that the pound’s flotation is one of the best decisions made for economic reform; however, it is not accompanied by any protectionist policy aimed at lower-income segments to alleviate its social effects.
Shoukry added that the real estate sector was affected by the liberalisation of the exchange rate, which the government recognises increased contractors’ dues by 35%.
Shoukry praised the cabinet’s decision in December on the law on compensation for companies operating under contract for the government on construction, supply, and public services. The law applies to all contracts which were carried out from early March 2016 until 31 December 2016.
The Development Chamber of the Federation of Egyptian Industries (FEI) demanded the cabinet grant contracting companies a six-month extension to deliver their projects so as to avoid any fines as a result of delays, according to Shoukry.
He said that the FEI is seeking innovation during the coming period, especially in the implementation of economic spaces and accurate supervision of the construction sites of the projects under implementation.
He added that the chamber launched an initiative to provide foreign exchange by requiring foreign workers to deposit $250,000 with the Central Bank of Egypt (CBE) in exchange for accommodation for three years.
He explained that the chamber is about to sign a protocol of cooperation with the Chamber of Media Industry to develop special requirements for the announcement of real estate products in order to preserve the reputation of the sector from the disreputable practices of some people.