The government of Egypt is trying to increase its foreign currency reserves and collect the highest amount possible in hard currency to meet its obligations. This was evident in the recent offer of lands that required paying their value in dollars.
The Administrative Capital for Urban Development Company (ACUD) offered 50 plots of land in New Administrative Capital’s MU 23 area with various mixed-use purposes, with a down payment of 20% of the plot value, to be paid in dollars.
The plots ranged from 4,000 to 12,000 sqm, for EGP 20,000 per meter, an increase of about 10% over the previous offer, according to press statements by an ACUD official.
This was the first time since the ACUD was established in 2016 to offer lands in dollars. Thus, the ACUD followed the example of the New Urban Communities Authority (NUCA), which recently offered lands whose value and installments were paid in dollars to attract hard currency income for the authority.
Basem Elsherbiny, CEO and Founder of ETQAN Business Development, commented on the offer, saying, “The new offer is distinguished by the location of these plots and the spaces suitable for the nature of projects.”
Elsherbiny added that paying the down payment in dollars did not require bank transfers or payments from abroad.
He noted that this new offer was different from the recent NUCA’s offers that conditioned paying the full value of lands in dollars. Moreover, the full value had to be paid in cash from outside Egypt, which was a huge burden on companies in providing currency and bearing the costs of transferring money from abroad to Egypt.
He pointed out that the developer was responsible for providing hard currency for the down payment only, while the rest of the land price was paid in Egyptian pounds in equal installments over four years, plus interest on installments.
He explained that his company provided consultations to developers to help them determine the actual price per square meter when offered for projects, which involved calculating the currency management difference for the down payment, as well as for the installments.
On Sunday, January 14, the ACUD offered lands for reservation in equal installments, and the terms and conditions for the offer were published on the company’s official website until January 24.
Last November, ACUD’s Chairman & Managing Director Khaled Abbas stated that the company would announce a new offer of 50 plots in fixed installments with a value of about EGP 5bn.
Daker Abdellah, a member of the Real Estate Investment Division of the Federation of Egyptian Chambers of Commerce and the Construction Committee of the Egyptian Businessmen Association, said, “There is a state of confusion in the local real estate sector due to the rise in the price of dollar in the parallel market and the significant increase in the prices of building materials during the recent period, which led to a lack of clarity in property sales pricing.”
Abdellah elaborated that the real estate sector was using a kind of hedging against the increase in the prices of dollars and building materials in sales operations, such as buying building supplies and materials in large quantities and stopping sales in some projects or delaying the sale of some project units.
He warned that selling lands in dollars would have an impact on the market in general because it would allow all companies to deal in dollars and sell units in dollars, and this would result in higher prices, higher demand for dollars, and a rise in its price in the parallel market.
Abdellah highlighted the necessity of granting additional periods to developers in the delivery of projects within the New Capital as well as government projects.