Despite housing shortage, a glut of Egyptian real estate
With its rapidly growing and largely impoverished population, Egypt’s government faces a massive obstacles when it comes to housing. According to Business Today, surveys show that more than 1.3 million families are in urgent need of new housing, and about nine million citizens will choose to remain single because they lack the funds to buy a home in which it possible to raise a family.
But visit the better neighborhoods, and not only will you find houses for sale, but you will empty homes looking for buyers, as long as you have a million ($263,000) or so Egyptian pounds to put on the line.
Business Today reports that this is a result of the banks having encouraged property development companies to overextend themselves with debt, which lead many to default when they were unable to sell what they built. As a result, real estate prices have fallen 20 percent over the past year, and, with the situation in flux, more affluent Egyptians are choosing to rent, rather than pour their money into real estate that is depreciating in value.
This Business Today says, has caused a glut at the high end of the market.
Property developers are hoping that the Egyptian parliament will approve a proposed law which will increase the financing available for low-income buyers, who to date have been locked out of the market because loans could not be extended over long periods.
At present, the law is being held up on religious grounds, inasmuch as Islamic law restricts interest-bearing loans as well as the right of the financier to seize property in the event that the lender defaults.
On its part, the Egyptian government is hoping that the solution to the housing problem can found outside of the veteran urban areas. According to Al-Ahram Mohamed Ibrahim, the country’s minister of housing and new urban communities, reported that in recent years 480,000 residential units were built in 20 new cities.
And for the residents of those cities, the minister added, the means of livelihood were provided with 4,236 factories constructed at a total investment of EP 29 billion. The output of these plants, which employ 512,000 workers, thus far has totaled EP 32 billion. – (MENA Report)
© 2001 Mena Report (www.menareport.com)