Real Estate Sector & Mortgage Finance in Egypt

Always on a Positive Horizon!

Egypt’s real estate sector is largely dominated by private developers who are heavily investing in the high-end consumer market (high-end gated and mixed-use communities), accounting for only 10% of the housing supply in Egypt.

So, how is mortgage finance going hand-in-hand with the real estate sector market today? What has changed and how will it impact both the real estate & mortgage market?

Mortgage Finance Sector Is Largely Unexploited In Egypt, Why?

The market has come a long way since home loans were activated in 2004, but mortgages remain severely unexploited in Egypt for several reasons. In developed countries, mortgages account for the bulk of bank loan portfolios. Regulations also require that properties are properly registered and at least 30% of construction is completed before buyers can land a mortgage contract. The mortgage market has come a very long way, and mortgages are just getting started to finally become exploited in Egypt. The market is finally tapping into its myriad of opportunities and full potential.

Big Banks Are Stepping Up Their Efforts To Boost Mortgage Finance Sector, How?

More banks now have established subsidiary MFCs over the past decade to tap into this market. Credit Agricole Egypt acquired Egyptian Housing Finance Company, which currently has a list of 76 upscale real estate development projects pre-approved for financing.

SODIC partnered with CIB in September 2021 to help the growth of bank mortgages, – it’s one of the first agreements of its kind to hit the market, SODIC clients will be able to purchase ready-to-move homes with CIB mortgages with up to 20 - year terms. Existing homeowners offering their units for resale through the company will also be able to offer extended payment options to potential buyers.

What Is The Role Of the Central Bank In the Real Estate Sector & Mortgage Financing?

CBE allocated EGP 10 billion to encourage mortgage financing for middle and low-income households. CBE’s initial mortgage initiative is based on offering a low lending rate for 20 years at a declining rate of 7% - 8%, with a down payment of EGP 15,000.

The CBE introduced EGP 100 billion mortgage finance initiative with payment plans of up to 30 years with a low-interest rate of no more than 3%.

The CBE allocated EGP 50 billion to a real estate financing initiative for middle-income individuals.

New amendments were introduced to CBE’s initiative, where low-income individuals earning less than EGP 1,400 will be qualified for a loan at an interest rate of 5%. Down payments have been reduced to EGP 12,000.

Egypt’s Mortgage Finance Sector: Who Are The Top Players?

The top 4 players are; Ahly Mortgage with 34.4% of Egypt’s mortgage finance market, with funds exceeding EGP 220 million. Second is Tamweel Group with 15.1% of the market, with funds exceeding EGP 130 million. Third, Amlak finance Egypt has achieved new financing worth EGP 410 million by the end of September 2020, to acquire 16.5% of Egypt’s mortgage finance market. Finally, Taamir mortgage with about 12.1% market share and funding of more than EGP 106 million.

What is the Future Outlook for Both Real Estate and Mortgage Finance?

The government's plan to build new cities across the country is driving demand in all segments. In addition, lower interest rates make financing easier for both buyers and builders. Yet, given the current economic situation, many might not be able to afford formal housing without proper mortgage solutions. That’s why now more than ever mortgage financing is put at the forefront of Egypt’s leadership decisions.

The Social Housing and Mortgage Finance Fund announced plans in November 2021 to launch several housing projects to be developed under public-private partnership agreements throughout 2022. This could be the first step in opening up private sector participation in this high-volume segment.

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