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
Ahmed Megahid



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.”


Ahmed Meghid is an Egyptian reporter based in Cairo.


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