CEO of Maxim : Eliminating corruption stimulates real estate development
“Adopting new concessions and eliminating unstable investments is a starting point for the real estate sector. In cooperation with Russia and China, we have presented the Kandil government with a project worth $9 billion dollars and foiled attempts of Muslim Brotherhood encroachment. Some 97 per cent of our investments are self-funded and we are looking forward to the opening of Kempinski Royal Maxim Palace in March 2014”
Mohamed Karar, President of Maxim Holding Group for Real Estate and Tourism Investment said the Egyptian economy is going through a critical period. The effects of political and security instability Egypt has been experiencing over the past two and half years have affected most industries and resource allocation. These impacts would not last for long, he added, since the government is keen on implementing the roadmap it has set on finalizing the restructuring of state institutions, legislative councils and the upcoming elections and constitution.
The Egyptian economy still does not have all the fundamental pillars that would enable growth and development. It is still unable to attract foreign investment while the population is growing and there is a newly emerging skilled labour force.
In an exclusive interview with Amwal al-Ghad, Karar called upon the government to begin taking critical decisions that would revive investment in Egypt. This would eliminate the instability that public sector institutions are currently experiencing, which has left serious consequences for the economy. Several vital economic projects and contracts with local and Arab investors have been suspended – this has had a negative impact on investments and the image of the Egyptian economy internationally.
Karar went on to say that there are several projects that the government should begin working on in order to attract new investors. There needs to be increased focus on infrastructure projects – notably roads, hospitals and schools – this requires government cooperation with the private sector through (Public Private Partnerships) PPPs. This would attract foreign investments and narrow the public budget deficit. There should be clear legislation to protect investment and the state. The government should also present Build Operate and Transfer (BOT) projects of which investors would have ownership rights for between 25 and 49 years. It should also work on developing packages in favour of real estate and tourism investors to cover losses incurred after the January 2011 Revolution.
Maxim Holding Group had submitted to the Kandil government a huge project that would entail the building of a ring road around Cairo and connect the capital to the Sinai ports and Ain Sokhna. This project would be funded by the PPP system with investments totaling LE9 billion. They had obtained preliminary approval from the Russian and Chinese governments to fund and implement the project, Karar said. The Maxim Holding Group had failed to implement this project under the previous government due to its political ideologies and policies.
Although there is a discrepancy in supply and demand, the real estate sector currently has the potential to develop and grow rapidly during the upcoming period. Karar emphasised the sector’s potential to become a leader in the Egyptian market since it can attract foreign investors easily. Over 100 industries are depending on the success of the real estate sector, which is also considered to have a large pool for job opportunities. The success of this sector depends on the reforms that should be implemented by the Ministry of Housing to facilitate the investment process by depending less on letting land go to the highest bidder.
The current decisions by the Beblawi government prove that it seeks to develop the land and the property sector. It also aims to stabilize land prices, eliminate corruption in the sales process, which results in selling land at prices that do not reflect its real value. Minister of Housing Ibrahim Mahlab is shifting away from the policy of auctioning land at unrealistic prices in order to boost investment.
Karar added that his company had completed the Kempinski Royal Maxim Palace Hotel, set to open on 1 January 2014. The opening of the hotel had been postponed to March due to the unstable security situation and the slump in tourism.
Karar believes that hosting international conventions and conferences in Egypt is an important and promising means to support and boost investment. He added that this should be government priority in order to regain foreign investor confidence. It also serves as a platform for exchanging know-how between Egypt and the rest of the world. The government should not stop hosting conferences but should also aim to promote investments in the world’s financial capitals and present the Egyptian roadmap to new markets and investors.
