Egypt's Palm Hills Developments May Offer Budget Housing, Expand in Africa

Palm Hills Developments SAE, Egypt’s second-biggest publicly traded property company, may start building low-cost housing and expand into sub-Saharan Africa.

“Low-income housing is a very sexy business because of the high turnover,” Chairman and Chief Executive Officer Yasseen Mansour said in an interview. “We’re also looking at sub- Saharan Africa. We think this is where the market will be in the coming period.”

Companies including Orascom Development Holding AG, run by Egyptian billionaire Samih Sawiris, have started building budget housing in Egypt. Mansour called it the biggest market in the Arab world’s most populous country and said Egypt needs 200,000 to 250,000 new low-cost homes every year while only about 120,000 are being built.

Palm Hills, which has 32 developments and 48.8 million square meters (517 million square feet) of land, would need a partner for low-income housing because it’s new to that market, Mansour said in an interview yesterday at the company’s Cairo headquarters. “This is a 2011 project,” he said. “You need a lot of know-how in the way you build these units.”

Mansour said he’s also concerned about profit margins for budget homes, which tend to be lower than for the houses Palm Hills typically builds. Properties costing 500,000 Egyptian pounds ($90,134) to 1.6 million pounds make up 68 percent of Palm Hills’s real-estate inventory, while the rest is more expensive, he said.

“The market has suffered the most above the 2 million pound price tag,” he said.

Reservations in the first quarter increased about 80 percent from the same quarter a year earlier, Mansour said. The company expects a 50 percent increase in profit margin this year, he said.

To contact the reporter on this story: Mahmoud Kassem in Cairo

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