In a televised interview on the “Hadret al-Mowaten” program, businessman Naguib Sawiris commented on the significant recent increase in real estate prices in Egypt.
Sawiris explained that real estate developers in Egypt are competing not only on prices, but also on payment periods.
He stated that these payment plans have extended up to 12 years.
“When you calculate 12 years with a 25 percent bank interest rate, that’s 300 percent ,” he said. “On average, the property price is inflated by 150 percent in interest alone.”
“The price of a property today, if you pay in cash, is a quarter of the value you’d pay in installments over 10 years,” he added. “Meaning if an apartment costs a million in installments, it should be 250,000 in cash, and there isn’t even a million-pound apartment today!”
He noted that banks abroad offer mortgages on apartments for up to 30 years, which allows a regular employee to buy an apartment over a long period.
“The problem in Egypt is that the real estate developer has taken on the installment issue,” he said.
Sawiris further explained that the current drop in bank interest rates will lead to a decrease in real estate prices in the near future.
“The banks are the ones that should handle the installments,” he continued.
“The state should offer installment plans to employees for 30 or 40 years because it can guarantee them. This would make real estate more affordable for people. Real estate prices should increase by 10 percent or 15 percent annually, not 150 percent”.
Edited translation from Al-Masry Al-Youm
