Madinet Nasr Housing (MNHD) held a “Meet-the-Board” event yesterday. All board members were present, as well as representatives of the company’s partners, including Benoy (master-planner), m2 (retail consultants), CISTRI (market research consultants) and Brand Union (brand consultants). Below are the main topics discussed:

2017 targets: EGP5bn in contracted sales; EGP1.4bn in cash collection                                                

-        MNHD is targeting EGP5bn in contracted sales in 2017 (+46% Y-o-Y), driven by increased volumes and selling prices. c38% of the target has been achieved to date

-        Targeted cash collection for 2017: EGP1.4bn (up from EGP848mn in 2016)

-        The company is targeting EGP2.3bn in revenue (standalone), EGP1.2bn in net income in 2017, up 34% Y-o-Y and 66% Y-o-Y, respectively

-        Sarai’s Phase II launch offered 80% more units, quoted at a 50% higher price than phase I

-        700 units have been delivered so far at Taj City; another 500 are planned for delivery 2017

-        Historical delinquencies at 97%. In 2016, it has improved to 99%

-        Turnaround story was driven by a number of factors, including: i) revamp of the product offering, making it more efficient (3BD over 135 sqm units, S-villa design provides high efficiency on land); ii) increasing sales force by growing the direct sales team from 15 to 65, and indirect sales brokers share in total sales from 10% to 50%; iii) rebranding was necessary for higher-end projects to appeal to the A and B-class (Sarai, Taj City);  and iv) attracting new talents from prominent companies and adopting a lean organisational structure. The company had introduced an Early Retirement Programme, which attracted 98% of the targeted pool; number of employees was brought down by 15% as a result

-        Remaining space at Taj City is estimated to take another 10 years to develop (total of seven phases). At the current accelerated pace, it would take a shorter period

-        Co-development project with Palm Hills, Capital Gardens, has a strong operational and financial (collection wise) position. Palm Hills has recently requested MNHD to launch phase II

c600,000 sqm of non-residential space earmarked at Taj City

-        600,000 sqm of land at Taj City is earmarked for non-residential purposes. It is currently master-developed by Benoy (master-developer of Sarai)

-        The idea is to capitalise on the land plot’s prime location and high accessibility to establish some recurring revenue asset base

-        First phase will spread over the 1.5km spine and the strip

-        Out of the 600,000 sqm area (465,000 sqm of leasable area), c150,000 sqm will be dedicated to retail area (all to be rented-out), and the rest in office (could be on a sale-rental mix) and other services

-        Execution is planned to kick-off in 1H18, with the masterplan completed within six months

-        Findings from CISTRI study of retail market in Egypt

-        Local residents contribute 94% of retail sales, rest coming from international tourists

-        Company expects 14% growth per annum over the coming 10 years: coming from price inflation, population growth and higher per capital spending

-        Current retail mall floorspace per capital is at 0.46 sqm, expected to grow to 0.61 sqm by 2030 – lower than many other cities

New land acquisitions  

-        The company is interested in expanding outside of Cairo, capitalising on its wide heritage within the middle-income segment

-        As for its Interest to expand into New Capital City, the interest is there. The reasons why the company did not bid for the first phase because: i) its location, which is close to Sarai; thus, making it less attractive to be involved in the first phases; and ii) the tight construction duration attached to it. The company will look into further launches at the city

-        There will be a bias to revenue-sharing agreements, preferably with the Ministry of Housing and the New Urban Communities Authority (NUCA)