By: Abdullah Bedeir

Cairo – Mubasher: Egyptian real estate experts considered the Central Bank of Egypt’s (CBE) recent decision to cut interest rates positive, stressing that there need to be repeat moves as the property sector has suffered since the flotation of the Egyptian pound.

On Thursday, the CBE’s Monetary Policy Committee (MPC) decided to trim interest rates by 1%. The overnight deposit rate and overnight lending rate have been reduced by 100 basis points (bps) to 15.75% and 16.75%, respectively. 

The CBE’s recent decision may marginally impact the real estate sector in Egypt, property developers and experts told Mubasher.

Hussein Sabbour, chairman of Al Ahly For Real Estate Development, said that reducing interest rates was a significant change, but it a late one. He forecast that the decision would have a slight impact on the country's real estate sector, which has been witnessing years of recession.

Any step, such as the CBE’s move, would bolster the sector, Sabbour added, noting that those who sought to purchase residential units for residence, not investment, will benefit from the central bank’s decision more than real estate companies.

For his part, property expert Fathallah Fawzy has praised the interest-rate cut move, stressing that it would reduce costs for the sector’s companies and will improve the economy.

This decision will benefit mortgage finance seekers, as well as companies aiming to borrow from banks, Fawzy pointed out. He did, however, note that the decision would not have a major impact on real estate companies' sales as citizens’ purchasing power remains weak due to the rising property prices.

The real estate business is based on supply and demand. The Egyptian population adds around 2.5 million people a year, while demand for residential units averages between 500,000 and 600,000 units a year, the real estate expert stressed.

Despite the 1% drop, interest rates remain high, the head of JLL’s Cairo Office Ayman Sami told Mubasher.

Slashing interest rate encourages investment and benefits those seeking to buy residential units, as well as companies borrowing from banks, which reduces the cost of finance and the prices of units slightly, Sami highlighted. He agreed with Fawzy on Egyptians' weak purchasing power for properties, stressing that the CBE should continue to reduce interest rates.

On Saturday, Beltone Financial Holding said in a report that the CBE’s decision would boost investments in all of the country’s sectors.

The CBE’s move would raise investors’ confidence in the Egyptian market, particularly local investors, the report showed.

Translated by: Mai Ezz El-Din