rand Plaza for Real Estate and Touristic Investment intends to expand in implementing non-residential projects in the coming period, and it studies investment opportunities in New Alamein, Ain Sokhna, and New Administrative Capital.
Grand Plaza Chairperson Sherif Osman said diversifying the company’s investment portfolio has become necessary to face any changes that may occur in the market, and to guarantee the continuation of revenues in case of demand slowdown among a certain segment of customers.
He pointed out that the company targets EGP 600m sales this year, relying on its marketing team in addition to contracting with other marketing companies.
Grand Plaza has sold two out of the six phases of the La Mirada project in Mostakbal City. It has signed an agreement with Housing and Development Real Estate Investment Company, whereby the latter will buy the fifth phase, which comprises about 1,200 units. The first and fifth phases of La Mirada represent about 50% of the project’s total units.
“The company bought a 77-feddan land plot in Mostakbal City, East Cairo late 2016, and obtained required licenses to launch La Mirada. About 60% of concrete and construction works were completed in the first phase,” Osman said. “Over and above, the company has paid 68% of the land price, which is an unprecedented percentage for any company operating in the third phase of Mostakbal City.”
He explained that the project’s investments reached EGP 5.5bn, and it would be completed in 2024.
Foreign exhibitions contributed to raising the company’s sales, especially for Egyptian expatriates, who account for about 35% of the total sales in La Mirada, equivalent to approximately EGP 900m.
The spread of COVID-19 will have a temporary effect on the real estate sector. “We had a plan to participate in many exhibitions in this period, but many foreign exhibitions that were scheduled for March and April were postponed due to the Coronavirus outbreak,” said Osman.
Nevertheless, Egyptian real estate market is still attractive due to the massive development projects launched by both the Ministry of Housing and the private sector, in addition to the competitive prices of Egypt’s properties compared to other neighbouring countries, he added.
Osman said Grand Plaza has completed the construction of all residential units in La Mirada, with 98% sales.
The company is currently implementing a commercial centre in the compound to serve 180 families residing there. The company has also established a temporary sewage plant to serve the residents as the implementation of the project’s main sewage plant has been delayed.
The company’s chairperson noted that Grand Plaza has completed the construction works for the commercial-administrative-medical mall, dubbed La Mirada Plaza, with EGP 250m investment. The company has also begun working on interior finishing of the La Mirada Plaza.
Interior finishing works in the La Mirada Plaza cost EGP 60m and the mall will be completed and delivered within 15 months.
La Mirada Plaza is located close to the American University in New Cairo, on an area of 3,850 sqm, and comprises commercial units with spaces ranging between 60-350 sqm, medical clinics with spaces ranging between 35-300 sqm, and administrative offices with various spaces up to 300 sqm.
He highlighted that the company focuses on the medical sector because it is an almost neglected area by real estate companies, perhaps because it needs high financial capabilities, but it is necessary to pay attention to this sector to serve the project’s residents.
Osman pointed out that the biggest problem in the local real estate market was the significant increase in construction materials prices which led to a spike in the cost of residential units. Consequently, some companies was prompted to provide some facilities in payment and longer instalment periods, sometimes 12 or 14 years, that negatively affected companies because the more payment period lasts, the more the financing gap increases.
These financial gaps might lead to some crises in the market, namely, delay in delivering units, which would make customers lose trust in developers.
With regard to financing, Osman said, “We did not get any loans, but we did check factoring twice, the first with Al Tameer Mortgage Finance – Al Oula and the second with Egyptian Arab Land Bank with a value of EGP 60m.”
He expected no price increase in the coming period, especially after slashing interest rates and the stability of building materials prices.