In a significant move to support the real estate sector, Egypt’s Ministry of Housing, Utilities, and Urban Communities has approved new measures to establish fixed land prices and extend building licenses. These decisions, announced by Minister Sherif El-Shorbagy, aim to reduce investment risks and streamline procedures for developers. The changes come in response to demands from the Real Estate Development Chamber at the Federation of Egyptian Industries, following extensive consultations with industry stakeholders.
The introduction of fixed land prices marks a major shift in Egypt’s real estate policy. Previously, land prices were determined at the end of the offering process, creating uncertainty for developers. This new system sets a fixed price at the start of the offering, providing greater clarity and reducing financial risks for investors. Tarek Shoukry, Chairperson of the Real Estate Development Chamber, emphasized that this change will end the debate over fluctuating land prices and enhance the feasibility of development projects.
By establishing a fixed price, developers can now conduct more accurate feasibility studies and financial planning. This predictability is expected to attract more investors to the Egyptian real estate market, fostering growth and development. The fixed price system also aligns with international best practices, making Egypt a more competitive destination for real estate investment.
The decision to fix land prices is part of a broader strategy to create a stable and transparent investment environment. By addressing one of the key concerns of developers, the government aims to stimulate economic activity and support the construction sector, which is a vital component of the national economy.
Extended Building Licenses to Simplify Procedures
In addition to fixed land prices, the Ministry has also approved the extension of building licenses for administrative buildings. Previously, these licenses were issued annually, requiring developers to undergo a cumbersome renewal process each year. The new policy extends the validity of building licenses to five years, with annual reviews by the Civil Defense to ensure compliance with safety standards.
This change significantly reduces the administrative burden on developers, allowing them to focus on project completion and quality. The extended licenses provide developers with more time to complete their projects without the constant pressure of annual renewals. This is particularly beneficial for large-scale developments that require longer construction periods.
The extension of building licenses is expected to accelerate the completion of ongoing projects and encourage the initiation of new ones. By simplifying procedures and reducing bureaucratic hurdles, the government aims to create a more efficient and developer-friendly environment. This policy change is part of a broader effort to streamline regulations and support the growth of the real estate sector.
Financial Boost for Developers
The new measures also include provisions to register both developed and undeveloped land for projects that have reached 80% completion. This decision provides a financial boost for developers by allowing them to register the entire project, helping to absorb some of the impacts experienced by companies in recent times. The Chamber previously secured approval from the Ministry to consider 80% of project completion as fully completed, further supporting developers in the swift completion of their projects.
Additionally, the Ministry has agreed to fix the interest rate at 15% on land installments for one year, from May 2024 to May 2025. This fixed interest rate provides financial stability for developers, enabling them to plan their finances more effectively. The combination of fixed land prices, extended building licenses, and fixed interest rates creates a supportive framework for real estate development.
These financial measures are designed to alleviate some of the economic pressures faced by developers and encourage continued investment in the sector. By providing financial incentives and reducing uncertainties, the government aims to foster a more dynamic and resilient real estate market.
