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Despite the economic slowdown caused by the global pandemic, Mountain View, one of Egypt’s key real-estate developers, has surpassed its initial sales projections for a tumultuous 2020, according to the company’s CEO.
“Sales have gone higher than our initial goals,” Amr Soliman, Mountain View’s chairman and CEO, told Zawya. “Our initial goal for this year was to make sales worth EGP 7 billion ($444 million). We brought the figure down to EGP 5 billion after the onset of the coronavirus. We are close now to achieving EGP 9 billion in sales.”
Since its inception, the 15-year-old company has specialized in top-tier housing, developing upscale gated communities in Egypt’s key new urban centres, namely East Cairo, West Cairo and the northern Mediterranean coast. Mountain View now boasts over 10 projects across the country.
Egypt’s real-estate sector has proven quite resilient in recent years despite the political unrest that swept the country following the 2011 uprising. However, most of the country’s listed real-estate developers have reported a decline in revenues during the first half of 2020, citing economic contraction due to the pandemic.
Nevertheless, Soliman believes his company has better prospects thanks to a fundamental change it made in its marketing strategy. Instead of focusing on advertising, Mountain View rolled up its sleeves to expedite the delivery of fully livable residences.
“We used to deliver units before the compound landscape was fully finished and even before all needed services could be made available,” explained Soliman. “It usually took between 12 and 18 months to turn a delivered project into a livable one. So we decided to work on achieving both goals simultaneously and hence deliver livable units right away. This made a huge difference in sales.”
By focusing on livability, Mountain View could also secure for buyers a faster appreciation of their units and ultimately higher returns on their real-estate investment, said Soliman.
“Around 60 percent of buyers are looking for a place to live in, and the rest are looking for venues to invest their savings,” said Soliman. “The culture of real estate has improved a lot: even if the buyer has no resale intention, they always measure the value appreciation of their real-estate unit. They consider it more of their own financial portfolio.”
The country’s strong demographic fundamentals are the driving force behind a fairly steady demand for real estate. Against fluctuating bank interests and rising inflation rates, real estate also remains one of the safest and most lucrative forms of investments.
Mountain View is prepped to move forward aggressively with its three I-City compounds, which the company says will bear various new urban concepts. The compounds are being developed in three different locations: east and west Cairo as well as the northern Mediterranean coast.
“An I-City is 500 feddans big. It is as big as Monaco,” he said. “It carries the advantages of a small self-contained compound that has all the facilities of a small city.”
In its latest forecasts, Knight Frank said that Egypt’s prime residential market is facing an oversupply of villas and apartments, while the demand for affordable housing continues. The London-based consultancy firm expects a period of “market readjustment” for 2021 until the new stock can be absorbed.
“There is a demand, but there is also an affordability issue,” said Soliman, explaining that this paradox has contributed to the emergence of some new business trends.
Like many real-estate developers, Mountain View has launched new products that combine affordability with the elegance of upscale residential compounds by cutting down on unit spaces. “Ten or fifteen years ago, the surface area of a villa was at least 500 square meters. Now, the average surface area of a villa is 200–300 square meters,” said Soliman.
For almost ten years, the company has been constantly introducing changes to the I-Villa, one of its most popular products, which caters to the growing appetite among upper middle-class Egyptians for affordable villas.
“It is like business-class versus first-class seats in the air travel business,” Soliman said. “It is not a full-fledged villa. It is like two villas stacked above each other, with each having its own entrance and outdoor space. The model has been a huge success because people want an uplift but at a good price.”
The same principle applies to apartments, he added, as more young families are after small affordable units in safe and luxurious compounds that guarantee enough outdoor facilities.
To survive the fierce competition amid increasing oversupply, many real-estate developers have recently introduced generous installment payment plans that stretch over as many as 12 years, a model that Soliman is vehemently against.
“We think this is a very wrong and risky payment plan for any real estate developer. This causes a huge cash flow gap and inflicts a huge financial burden on the developer,” said Soliman. Mountain View’s longest payment plan is only nine years.
Although COVID-19 has had almost no impact its sales, Mountain View had to put off plans for its first initial public offering.
“We have everything ready for an IPO and the plan was to go IPO [at the] end of 2020, but we will put that off for another one or two years,” said Soliman. “You cannot not go for an IPO when the financial market is not in its best shape.”
(Reporting by Noha El Hennawy, editing by Seban Scaria)
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