Al-Fouli: 15% expected increase in real estate rents during 2022

Hesham El-Fouly, head of the commercial sector at IHD Real Estate Development, confirmed that real estate prices will rise by 15% during the second quarter of 2022 as a result of high inflation rates and the consequent rise in the prices of raw materials, especially iron and cement, as well as as a result of the Russian-Ukrainian war, which cast a shadow on the economy.

The world and the real estate market, pointing out that the real estate sector is facing successive and sudden changes that have led to confusion in the companies’ accounts and affected the economic feasibility studies of projects, marketing plans for companies and their profit margin

Fouli added that the recent increases in the prices of iron and cement devoured the profit margin set by the companies, and the companies could hardly spend on implementation, pointing out that the companies that sold their projects completely before these price increases will not be able to implement without losses, especially since they did not start construction and will be subject to stumbling Pointing out that the companies that have new stages of projects and have not yet offered them, will offer them at prices commensurate with the increases in the current iron and cement prices, and therefore there will be a large price difference between the unit prices in the early stages of the projects and between the other stages. It is expected that the new stages will cover the losses of the previous stages as a result of the differences. new price

Al-Fouli explained that companies under these circumstances will not be able to prolong the capital cycle, expecting to integrate payment periods during the coming period with giving discounts to the cash client to face the liquidity crisis, especially with the rise in land prices and the installments due on them, which coincide with the stages of project implementation, in addition to the high prices Raw materials and construction costs, thus increasing the financial burden on companies

Al-Fouli pointed out that many companies that have strong financial solvency can withstand this crisis until they overcome it without major losses, while small companies or those that have recently entered the market and do not have sufficient experience to face such crises will stumble and will not be able to fulfill their obligations towards customers.