What is the effect of raising interest rates on the real estate market?

Dr. Maged Abdel-Azim, professor of economics and economist in real estate affairs, said that there is a major impact on the real estate market after the Central Bank raised interest rates by 200 points.

Major obstacle for the investor

Abdel-Azim explained that the Central Bank's decision to raise interest leads to raising interest for investors, which constitutes a major obstacle for the investor to bridge the profit margin of banks.

 In addition to the rise in building materials, a large part of which is imported from abroad, which in turn is affected by the rise in the exchange rate of the dollar, which led to a continuous increase in the prices of building materials and materials.

He added that raising the interest rate does not cause significant harm to the national economy, but rather it is necessary to treat the waves of inflation that the Egyptian market is witnessing.

Real estate developers

  He pointed out that all real estate developers reviewed the pricing policy for the new housing units following the decision, as in the event that the pricing of the units is not revised, this will lead to the erosion of the investors' profits or facing a large loss of the investor's capital.

  Which in turn will be a burden on the state and the bank, as most developers resort to borrowing from banks to cover the cost of housing units.

He continued, some of the real estate developers stopped selling housing units during the last period until conditions stabilized to achieve the target profit margin, while others tended to price the units in dollars to diminish the loss in light of the current economic conditions.

He added that the real estate sector is a safe haven for investment in light of the difficult economic conditions, as it was, is and will remain the security of investing in gold and the dollar.

Global crisis

He continued, there has been no collapse of the real estate market in Egypt over time in all the economic conditions that the country has gone through, despite the gold and the dollar and the repeated collapses that gold has achieved during the past years.

Global financial crisis

He pointed out that by comparison between the real estate sector in Egypt and Dubai and the countries of the world in 2008, the occurrence of the global financial crisis due to mortgages.

 The crisis started in America and then spread to all countries of the world, which achieved huge losses in the real estate sector in all countries of the world, reaching 50%.

  But that collapse and loss did not happen at that time in Egypt, but the increase in real estate prices stopped and there was a relative slowdown in sales, then the sector returned to its strong start after the crisis.