“Businessmen”: The continuation of the “cashback” phenomenon threatens the delivery of units to customers

0
19


The General Division for Real Estate Investment of the General Federation of Chambers of Commerce will hold a meeting next Tuesday to discuss the phenomenon of “cash back” in the real estate sector, and to develop radical solutions to regulate the work of real estate marketing companies.

In this regard, businessmen criticized the continuation of some real estate marketing companies offering “cashback” offers, which are the marketing company assignment to the customer on a percentage of the commission in exchange for the purchase of the unit, explaining the reason to the concerns of real estate companies faltering in completing the implementation of projects due to the high selling and marketing expenses Up to 15% of the unit value, calling for the speedy passage of the Real Estate Developers Union law to regulate the market.

Engineer Fathallah Fawzi, head of the Egyptian Businessmen Association, said that he had previously warned repeatedly that some real estate marketing companies would continue to deal with “cashback” because of the potential for this phenomenon in terms of the ability of developers to deliver housing units to customers; Because the rise in the commission rate of marketing companies to 15% of the value of the housing unit, i.e. 3 times the normal rate, affects the developers’ ability to spend on the project and then deliver the units on time, adding that the solution to stop this phenomenon is the speed of approval of the real estate developers law currently before Parliament to be As an official umbrella that defines the framework of the real estate sector.

On the performance of the real estate market in the first two months of 2021, Fawzi said that major real estate development companies such as Talaat Mustafa Holding Group, Sixth of October Development and Investment – SODIC, continue to achieve positive performance at all levels, whether delivery, project completion rate or sales. Meanwhile, small companies face problems in selling and delivering units due to lack of proper planning for the project from the beginning, such as granting a high marketing commission and attractive repayment periods.

For her part, Abeer Essam, a member of the Board of Directors of the General Division for Real Estate Investment, listed the disadvantages of the “cashback” phenomenon, the most important of which is the realization of a defect in the client’s confidence in the real estate development company, which prompted some developers to issue official statements declaring the suspension of dealing with any real estate marketing company that follows this. The method, indicating that during the next division meeting, she will be required to put controls in place for real estate marketing companies, and to hold marketers accountable for using cashback.

Karim Mamoun
Karim Mamoun

For his part, Karim Mamoun, head of the commercial sector at Edge Holding, believes that the solution to confront the “cash back” phenomenon is to reduce the real estate development companies’ commission of real estate marketing companies to between 2.5-3% in order to eliminate this phenomenon, explaining the disadvantages of raising some real estate companies marketing commission Real estate to 5-6%, which prompted some marketing companies to waive part of that commission to the customer with the aim of attracting the largest segment of customers to the project besides being an amateur means in the competition without exerting any effort or professionalism in the stages of marketing and selling at the expense of the entire real estate market system without considering the consequences This policy applies to all investors and workers in the sector.

Mamoun stressed the need for real estate companies to agree to confront this phenomenon, and the requirement that the commission be obtained only by the real estate marketing company at its normal rates. The performance of the real estate market, which is witnessing great competition between real estate companies, will be required to enter the real estate development room to prevent these phenomena with the aim of Control the market and warn companies that follow this mechanism, which affects the rest of the system and threatens the continuing work and success of real estate marketing companies.





LEAVE A REPLY

Please enter your comment!
Please enter your name here