Owning a home becoming unthinkable for many Egyptians
Behind the rise in real estate prices, experts said, is a huge gap between supply and demand.
Inaccessible dreams. Tractors are seen at the Tahya Misr housing project in Al-Asmarat district in Al Mokattam. (Reuters)
2017/08/27 Issue: 121 Page: 21
The Arab Weekly
Cairo - Abdurrahman Ahmed’s dreams of marriage have been dashed because he cannot afford to buy a flat. In Egypt, as in most Arab countries, grooms are expected to enter marriage with an apartment prepared and furnished and renting is simply out of the question.
The 33-year-old security guard worked virtually non-stop for several years to save enough money to afford a flat and get married.
“I could not buy one and it is all because of the very unaffordable housing prices,” said Ahmed, who studied accounting at university and had hoped to become a bank clerk. “The prices of flats are becoming so expensive that people like me should never even dream of owning one.”
Housing prices are surging dramatically throughout Egypt, almost doubling in a matter of a few months, despite the entry of the government as a main player in the real estate market.
Behind the rise in real estate prices, experts said, is a huge gap between supply and demand along with the effects of Cairo’s devaluation of the Egyptian pound last year.
Real estate developers need to build at least 1 million flats per year to meet demand, Egypt’s Housing Ministry said. Current construction stands at less than 350,000 new flats per year.
“When it comes to figures about supply and demand, this is the only conclusion one can reach,” said Tarek Shoukry, head of the Real Estate Development Chamber in the Federation of Egyptian Industries. “There is a huge deficit in the market.”
To bridge the gap, the government has started building hundreds of thousands of flats through its National Housing Programme.
The programme, the Housing Ministry said, is meant to address the needs of people with limited income.
“Our hope is that this increased supply would contribute to reining in prices,” said Khaled Abbas, Egypt’s assistant minister for housing.
By becoming a main player in the real estate sector, Abbas said, the government aims to reshape Egypt’s urban map and demographic distribution. Approximately 20 million people live in Cairo and its surroundings, making the Egyptian capital one of the world’s largest metropolitan areas.
The National Housing Programme was established to help Egyptians, particularly those living in Cairo’s worst slums, find housing elsewhere. However, the programme, experts said, only addresses the needs of a limited group of people, ignoring the vast majority of those who want to own homes.
Before turning to private developers, Ahmed said he tried to enrol in the Housing Ministry programme. However, he was unable to get a flat because the programme prioritised homeless families and widows.
“I belonged to none of these categories,” Ahmed said. “This was why I was left out and now I have to approach private developers who do not have any social dimensions in mind when pricing the housing units.”
With a monthly salary of less than $70, Ahmed saved money through years of hard work but rising prices means that he is no closer to buying a flat.
A property agent recently found Ahmed a flat in an overcrowded neighbourhood in Giza province. The owner of the 63-sq.-metre flat wanted to sell it for $14,500 but Ahmed did not have that much money.
“The same flat would have sold for almost half of this price a year ago,” Ahmed said.
The rate at which prices are increasing is not expected to slow soon, particularly following the slashing of fuel subsidies and the flotation of the Egyptian pound.
Both policies led to a sharp rise in the prices of construction materials. Also, with the pound losing much of its value to foreign currencies, plots of land have also greatly increased.
“The manufacture of construction materials depends on intense fuel consumption,” said Kamal al-Dosouki, vice-chairman of the Building Materials Section at the Federation of Egyptian Industries. “Housing prices will rise even more in the future with developers trying to compensate the losses they incurred due to the pound flotation and the fuel subsidy slashing.”
The Housing Ministry, however, said that house prices would have increased even more had it not intervened.
“The flats we build partly bridge the gap between supply and demand and this brings prices down a bit,” Abbas said, “but whether the prices will significantly drop in the future is something we cannot guarantee.”
Ahmed said he knows this and that is why he is losing hope of ever buying a flat or getting married.
He cannot get one of the flats built by Egypt’s Housing Ministry as he is not a priority. But many Egyptians are in a far worse situation than he is. At the same time, he is not able to afford a flat on the open market. What can he do?
“This might be difficult to say but I think I will have to give up the idea of buying a flat altogether,” Ahmed said. “Housing prices are rising every day and people like me can never keep up.”