Fractional Real Estate Investment and Its Impact on Egypt’s Market?

Have you heard about fractional real estate investment in the commercial market and want to know more? This is your guide to know about fractional real estate, how it goes, and how it could be a beneficial investment.

This is through our talk with Ahmed El-Desouky, Managing Director at Valda, who believes that fractional real estate is the passcode for this sensitive stage. Let’s see how!

Fractional Real Estate Is the Solution That Valda Delivers

Fractional real estate gives clients the opportunity to invest in stores during high inflation rates. They can buy the store in the form of shares or portions.

Consequently, clients acquire specific shares, and the company acts on behalf of the shareholders; this is through collecting and distributing rents according to each client’s share ownership.

In addition, you should also know that the minimum fraction that can be purchased is 10 m2. This is simply the concept of Fractional Real Estate, which is buying a share in a commercial unit; this allows the clients to invest their money without needing a big bulk of cash.

How It Goes

Valda (a managing company) manages the property from A to Z. The data of all the shares are known from the beginning, like the store number, level, etc.
Then the client reviews the rental contract with 100% visibility on the agreed yearly rent, where the client delivers 90% of its equity and 10% goes to Valda.

Furthermore, the price includes maintenance, security, cleaning, property management, etc.

Valda provides 5% of the property value as guaranteed rent for the first 3 years so the clients feel comfortable and financially secure; not just that, this reduces their fear of the store not being rented.

Backstory of Valda

Valda started 3 years ago as a real estate development business. The expertise of 3 partners with different backgrounds met in one company, coming from Akoya Developments and New Avenue Real Estate Consultancy.

Firstly, New Avenue, Real Estate Consultancy, found Akoya Developments to be a credible developer who is qualified and professional in terms of engineering and construction.

Also, professionalism extends to the fast unit delivery to the clients, so individuals who deal with them do not worry about the time factor.

Secondly, Akoya Developments also found New Avenue to be a reputable real estate consultancy. This is because numerous investors and owners have put their trust in it in the last decade and gained fruitful results.

Besides, they proved their efficiency in real estate brokerage and consultancy, especially in the commercial sector. Consequently, the companies merged in 2020 to become Valda.

Rove Mall New Cairo From Valda Developments

Rove Mall City Project is the first fruit of this cooperation; it launched in 2021 in Mountain View iCity New Cairo. It’s a commercial strip that comprises a ground floor and a first floor.

It stands out for many features as follows.

The average areas of the stores range around 100 m² while each one has unique specifications.
The building doesn’t include administrative offices, so customers and shoppers can enjoy free parking lots.

The first level has outdoor stores with gorgeous designs; this is in addition to the availability of escalators to carry customers from outside to the first level for easy commute between stores.

The mall’s ceiling is nearly 6 m high; however, Valda has a construction license for two levels. They built just one level to make all the stores feel more spacious.
Rove Mall’s structural columns are about 10m high.

It overlooks the administrative district of Heartwork Mountain View and residential Palm Hills New Cairo, giving the visitor easy access to the different areas of the compound.

Challenges That Faced Rove Mall

1. The First Challenge in Launching Rove Mall: Pandemic of Covid-19

However, being a challenge, commercial real estate had better chances than other sectors.

This is because, during the pandemic, clients found retail stores in the commercial area a great investment opportunity, especially when they are already rented.

On the contrary, administrative offices were going downhill as many businesses went remotely and others decided to downsize; consequently, they didn’t need large areas anymore.

Besides, most offices were fully finished, so the tenants easily left the place. On the other hand, the brands that rented the stores paid millions of pounds for finishing works, which made the leaving decision not that easy.

2. The Second Challenge: The Devaluation of the Egyptian Pound

This led to an increase in construction material prices. However, the feasibility study of Rove was perfectly prepared. Luckily, the study was pessimistic in advance, and that’s why the Rove project made it.

In addition, some construction materials increased by 200% and 300% in price, which was also considered in advance as part of market analysis and accurate forecasting.

Now, the skeletons of Rove are 100% completed; Valda also started the facade works. They’re pretty sure they will deliver the project by the middle of 2024, as it’s been announced.

Investment Made Possible

Commercial units have always achieved higher ROI compared to residential units. Valda believes that “Investment Made Possible” is a slogan that well describes its aim.

Everybody deserves to preserve the value of their money through fractional real estate, which is a brand-new form of investment. However, it is widely spread in Dubai, the UK, North America, and Europe.

The client signs 3 contracts that protect their rights and keep a safe investment:

Contract of purchasing the commercial unit
Contract of the 3-year guaranteed rent
Contract for delegating Valda to manage the property.

Introducing a fresh concept can be challenging because adapting to change isn’t always easy.

Yet, the hurdles in fractional real estate mirror those in traditional whole-unit real estate; they could produce the same questions in the clients’ minds.

Will I be able to receive the unit/shares on time as proposed?
Will it be easy to resell or rent the units/shares?

As a client, you get more chances when you have partners and professional companies that can do the marketing, renting, and exposing units to popular international brands.

Fractional real estate is a great investment opportunity to maintain the value of your money and also get an ROI. It’s also considered to be a low risk compared to other investment chances.