During Cityscape Egypt Conference, the Real Estate Funds Panel Sheds Light on Their Scope

Cityscape Egypt 2024 Conference featured a panel discussion titled “Real Estate Funds – Scope and how is it going to disrupt Egypt’s real estate?” The panel discussed the role of real estate investment funds in financing real estate projects in Egypt, their future growth prospects, and the challenges they face.

The panel was moderated by Dr. Hisham El-Sayed, Executive Chairman of Egyptians Real Estate Fund, and included a distinguished group of experts and specialists in the real estate and finance sectors. Key participants included Mohamed Selim, General Manager of Research & Market Development at the Egyptian Exchange; Sally George, Head of the Mutual Funds Department at the Financial Regulatory Authority (FRA); Wael Ziada, Founder and Managing Partner of Zilla Capital; and Sherif Sami, Board Member at the Commercial International Bank of Egypt and Chairman of the National Asset Management & Investment.

The panelists highlighted the importance of real estate investment funds in providing essential financing for large-scale real estate projects, emphasizing their role in attracting foreign investment to the Egyptian real estate market. This contributes to diversifying funding sources and boosting confidence in the Egyptian economy. The participants also stressed the need for clear and organized regulations to govern the operation of real estate investment funds and protect investor rights.

The speakers addressed the challenges facing the growth of real estate investment funds in Egypt, such as limited investor awareness, market volatility, and the opportunities for this sector’s growth, especially given the government’s support and ongoing economic reforms.

Dr. Hisham El-Sayed, Executive Chairman of Egyptians Real Estate Fund, said: “Real estate investment funds are an important tool for financing real estate projects in Egypt. They help diversify funding sources and reduce reliance on traditional bank financing.” He added: “We are working on developing an attractive environment for real estate investment funds, providing the necessary incentives to attract more foreign investments.”

Mohamed Selim, General Manager of Research & Market Development at the Egyptian Exchange, noted that the process of listing real estate investment fund certificates on the stock exchange is highly flexible, aiming to serve fund certificate holders. “The global market capitalization of investment funds has exceeded one trillion dollars, and Egypt has all the necessary legislative and procedural frameworks to encourage the establishment and activation of investment funds. However, we need to enhance investment awareness regarding the role of these funds and their ability to enable developers to hedge against investment risks.”

Sally George, Head of the Mutual Funds Department at the Financial Regulatory Authority (FRA), explained that several legal amendments have been made to make investment funds more flexible for certificate and bondholders. One of these amendments removes the requirement for real estate to be registered in the real estate registry before it can be invested in by the fund. She emphasized that it is now possible to establish a multi-issue investment fund for each new investment opportunity, which is a significant facilitation for investors. Additionally, the fund is permitted to borrow from banks. She pointed out that there has been a major leap with the financial technology law, allowing funds to contract with investors remotely, anywhere in the world, through electronic means.

George also clarified that real estate development companies can rely on real estate investment funds by transferring ownership of real estate assets to small investors through public offerings. The Financial Regulatory Authority has set guidelines for evaluating real estate assets, allowing the fund to manage these assets and generate profits for the company, which has turned into an investment fund by separating ownership from management. These funds also generate profits for small investors, who are their primary target, as these funds are an investment vehicle, not a financing entity.

Wael Ziada, Founder and Managing Partner of Zilla Capital, explained that real estate investment funds first appeared in the United States in the 1960s, aimed at managing real estate assets and encouraging collective investment through bond ownership. Over time, approximately 62% of real estate funds globally have come to invest in commercial assets rather than residential ones, which allows them to generate revenue.

Ziada emphasized the need to raise awareness among real estate developers about how investment funds operate and to select real estate assets and entrust their management to one of these funds. He noted that Egyptian banks own significant real estate assets that could be invested through real estate investment funds.

Sherif Sami, Board Member at the Commercial International Bank of Egypt and Chairman of the National Asset Management & Investment, stated that real estate investment funds are an effective financing tool but are not popular in Egypt because Egyptian developers build to sell rather than to lease and manage, as is common in other countries. He pointed out that there are real estate funds in Egypt with many incentives and no legislative obstacles to their operation, but they do not attract real estate developers. He added that the main difference between investment funds and companies is the separation of management from ownership, which allows the fund to manage real estate assets successfully and achieve growth.

It is worth mentioning that Cityscape is Egypt’s premier real estate event, shaping the future of the sector by providing advanced insights to professionals and enthusiasts on the latest developments and technologies. The 13th edition of Cityscape exhibition is the largest ever, covering more than 40,000 square meters across four exhibition halls, with the participation of over 80 leading real estate developers. Attendees will have the opportunity to explore exclusive offers and projects across various sectors, including commercial, administrative, and residential real estate.