Amendment of the Rent Law Releases Assets Worth 1.5 Billion Pounds for 'New Cairo'

SadaNews - The New Cairo Housing and Development Company, listed on the Egyptian Stock Exchange, is preparing to exploit real estate assets currently valued at approximately 1.5 billion pounds, represented by about 200 residential units subject to the old rent law, according to the company's managing director and CEO, Sameh El-Sayed, in an interview with "Al-Sharq".

El-Sayed clarified that these units currently yield the company only an annual return of 25,000 pounds, averaging 10 pounds per unit per month (20 cents), considering that the amendment of the law provides the company an opportunity to recover and re-utilize these units as "latent real estate wealth".

All real estate rental contracts in Egypt signed before 1996 are governed by old laws that set the rent at very low amounts, allowing contracts to be inherited (under certain controls), and preventing the owner from reclaiming the unit.

According to the new law approved by President Abdel Fattah El-Sisi this month, residential rental properties are divided into three categories: premium, mid-range, and economic, with rental values starting at no less than 1,000 pounds, 400 pounds, and 250 pounds respectively, with an annual increase of 15%, and requiring the tenant to return the unit to the owner after 5 years for residential units and 7 years for commercial and administrative units.

This means that the company, which is mostly government-owned, is among the largest beneficiaries of the new law, which will allow it to exploit massive real estate assets that were "frozen" due to the old rent law.

No Plans to Sell Assets

The CEO indicated that the company's land portfolio ranges between 1,350 and 1,400 acres, valued at nearly 20 billion pounds, distributed between "New Heliopolis" and "Capital Gardens", in addition to land plots in various locations, affirming that the company "does not plan to sell any new lands, but is working on increasing the portfolio and maximizing its value".

New Cairo has started self-development on an area of 300 acres in "New Heliopolis", with expected total revenues of 40 billion pounds (825 million dollars) over 10–12 years. El-Sayed stated: "We aim to launch the first phase in September as part of the Cityscape exhibition, with targeted sales revenue of 4 billion pounds (82.5 million dollars)".

New Heliopolis City, located east of Cairo Governorate in Egypt, spans an area of 5,885 acres and was established under presidential decree No. 193 of 1995.

Partnership Projects

Regarding the projects that the company is working on in partnership with Sodic, the Middle East Company for Real Estate Development and Investment, Housing and Construction Company, and Ajad for Real Estate Development, El-Sayed expects New Cairo's revenues from these projects to reach 3.3 billion pounds by the end of 2025, with expectations to double this value next year.

He revealed: "We are currently negotiating with a major real estate development company to establish a commercial entertainment project on a 26-acre plot in New Heliopolis".

Debt Settlement

Regarding financial obligations, El-Sayed stated that the company "has paid 1 billion pounds of its debts to banks, in addition to 6.3 billion pounds to the Urban Communities Authority for the land value of "Capital Gardens", alongside an annual expenditure ranging between 600 million pounds and 700 million pounds on infrastructure projects".

Last January, the New Cairo Company announced the purchase of 766 acres in the Capital Gardens City, located east of Cairo, for 12.1 billion pounds, with part of the payment made in advance and the remainder in installments over 8 years, according to the company's disclosure to the Egyptian Stock Exchange.

Date of Free Shares Distribution

El-Sayed revealed that the company intends to distribute the free shares approved by the shareholders last May at the rate of two shares for each original share in the first week of next September, after completing the necessary procedures with the Investment Authority, the Financial Regulatory Authority, and the Stock Exchange Management.

The government-owned Construction and Development Holding Company owns approximately 72.25% of the shares of "New Cairo Housing and Development", which has a capital of approximately 334 million pounds.