The Pulse | Real estate: Weathering rising construction costs in Egypt
We introduce this periodical to flag on-the-ground themes influencing MENA property developers and how to position.
In this edition: Weathering rising construction costs in Egypt
Factoring in the expected price increases to infrastructure, material, finishing, and manpower costs, we estimate the blended cost rise to come in the vicinity of c17% vs. an estimated c27% increase during the latest inflation/FX outshoot in 2016-17.
Developers differ in their ability to navigate through cost inflation, but we generally expect margins to remain intact.
In Egypt’s backdrop of rising cost and interest rates, Emaar Misr [OW | TP EGP4.50] emerges as the largest beneficiary. It enjoys the highest ability to pass on price increases. The company is also set to benefit from the rise in yields on treasury securities.
Emaar’s operational performance has been solid through the years, yet with little reflection on the stock, likely due to the absence of active cash deployment. Nevertheless, we argue that this is imminently changing.
CI Capital is a diversified financial services group and Egypt’s leading provider of leasing, microfinance, and investment banking products and services.
Through its headquarters in Cairo and presence in New York and Dubai, CI Capital offers a wide range of financial solutions to a diversified client base that include global and regional institutions and family offices, large corporates, SMEs, and high net worth and individual investors.
CI Capital leverages its full-fledged investment banking platform to provide market leading capital raising and M&A advisory, asset management, securities brokerage, custody and research. Through its subsidiary Corplease, CI Capital offers comprehensive leasing solutions, including finance and operating leases, and sale and leaseback, serving a wide range of corporate clients and SMEs. In addition, CI Capital offers microfinance lending through Egypt’s first licensed MFI, Reefy.
The Group has over 1,700 employees, led by a team of professionals who are among the most experienced in the industry, with complementary backgrounds and skill sets and a deep understanding of local market dynamics.
CI Capital has been recognized as the “Best Investment Bank in Egypt” by EMEA Finance for four years running from 2013-2016, and by Global Finance in 2014 and 2015.
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