For years, residential real estate has been a point of attraction for investors; however, commercial real estate could also be a good investment but making the decision isn’t easy.
That is why Property Finder is bringing you this insightful interview with Mohamed Salem, the CEO of Enwan Developments. He will make our eyes wide open to the newest facts about commercial real estate. Let’s dive in!
1. Can You Tell Us a Bit About Enwan Developments?
As real estate developers, we started working in the field through the construction of residences: buildings and villas in the fifth settlement.
Then, we got involved in constructing projects for industrial buildings. When the new administrative capital was launched as a national project, we focused on commercial real estate, as it is the future of real estate development.
Here are some of our contributions to the New Administrative City:
- Pixel Technology Plaza is our first contribution to the New Administrative Capital (NAC). It’s a mixed-use building that includes commercial and administrative units. The plaza is still under construction.
- Oxygen Clinics Tower is in the Downtown zone of NAC; it mainly serves clinics to provide a safe and convenient environment for doctors and patients.
- Life Clinic Tower is a 15-story high-rise building that encloses clinical, administrative, and commercial units. It is also located in the heart of the Downtown zone.
2. What Are the Trends in Commercial Real Estate?
The trends in commercial real estate mainly depend on two factors:
Available Areas Are Getting Smaller
Regarding units for sale, especially commercial units, the price ranges between 7-10 times that of residential square meters. The large areas are mostly offered for rent. This condition is not only applicable in Egypt but also in the Middle East as a whole.
For instance, when it comes to Dubai, we find that small areas dominate either in residential or commercial real estate. Consequently, hotel apartments, one-bedroom apartments, and even studio apartments cover the needs of many residents.
In light of the critical current economic status that the world is experiencing, this may be a global phenomenon that is not only about Egypt or the Middle East.
High Rise Building
In the past, a residential building could include administrative and commercial spaces. In the past decade, the situation has changed.
Some blocks are entirely used for business and administrative functions. Today, for instance, you can find complexes in New Cairo that only contain medical clinics or administrative offices.
Besides, in Fifth Settlement and Sheik Zayed, there are only 3-story buildings at most. Now, in the new administrative capital, there are mixed-use high-rise buildings with 10, 20, and even 50 stories.
3. What Are the Main Challenges and Opportunities That Face Commercial Real Estate?
The main issue, which is impacting the whole sector, is Egypt’s economic situation. But in terms of opportunities, residential apartments, and villas have lower returns on investment than commercial properties.
As a result, commercial real estate is now more appealing to investors.
4. Where Can People Invest in Commercial Real Estate?
When investors are looking for commercial properties, new cities always offer better opportunities. Unlike the old capital, purchasing a property in new cities at a lower or same price can lead to greater returns on investment when it comes to reselling or renting the unit.
If we compare new cities like Fifth Settlement and Zayed to the recent ones like New Administrative Capital, New Alamein, and Galala, more unexpected results are found.
Furthermore, you will pay more if you invest in Fifth Settlement for a commercial or administrative project in order to generate quick money. A unit with the same features can be purchased in the New Capital for less money, which will result in a higher revenue that will be realized soon.
For me, making an investment in a young city is a double investment. In comparison to those in new cities, the commercial units that you can afford will have better features.
However, this may differ from one case to another; each investor has unique circumstances of their own that might influence them to make the best decision.
5. Do You Have Any Advice for Investors Looking to Buy Commercial Real Estate Properties?
One of the most important things you need to consider when buying a commercial unit is “How does the developer manage the facilities?”
- Do they contribute to generating traffic?
- What is the degree of security they provide?
- How are logistics and ventilation managed when running, for example, a restaurant or cafe?
- Who is responsible for facility management?
Also among the factors that you should consider while choosing the commercial unit is the management system; there are two options. The first one is when the developer already has a private business for facilities management and they use it to manage the units owned by them.
Another option is the availability of a facility management firm that the developer hires to manage the commercial building. Consequently, the maintenance deposit that you pay preserves the unit’s market value.
Investing in commercial units cannot be riskless, same as residential ones. However, your break-even point can be achieved in 10 years or less. Don’t miss the opportunity, as the New Administrative Capital is waiting for more investors.
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