As inflation skyrockets, many struggle to purchase homes in Egypt’s current economic climate, and even fewer are left with the privilege of owning a vacation home on the side.
Seeing an opportunity in innovating the real estate market, Partment, a proptech (property technology) startup, is hoping to revolutionize the way Egyptians purchase vacation homes.
Their solution to high market prices: co-ownership, like buying shares in a company.
Founded in 2022, Partment has already closed its pre-seed round – a round of funding done prior to a startup operating – at EGP 29.2 million (USD 1.5 million) on 28 September, enabling it to streamline its platform and fully launch its services.
“Partment is a new concept in Egypt, and we believe it will change how people buy and use real estate in the local and international market,” commented Nadim Nagui, founder and Chief Executive Officer (CEO) of Partment, in a press release.
Nagui is joined by co-founders Ahmed Raggal and Chinmaya Das, who serve as Chief Operations Officer and Chief Technical Officer respectively – both bringing years of senior experience after working for behemoths such as Uber, Amazon, and Booking.com
The company’s innovative methodology is already gaining support in the venture capital world. Its pre-seed funding was received from Nclude, a leading venture capital platform focused on investing in fintech (financial technology) and fintech-enabled start-ups in Egypt, the Middle East, and Africa, and Plus Venture Capital (VC+), a Middle East and North Africa (MENA)-focused venture capital firm investing in pre-seed and seed tech startups.
Through the company’s digital platform and smart booking system, users can explore, research, purchase, and co-own second homes at a fraction of the price.
Once limited by high market prices, Egyptians now have the agency to purchase homes in prime locations. For example, a two-bedroom chalet in the coastal town of El Gouna would normally sell for EGP 3.5 million (USD 180,000) – but with Partment, individuals can co-own it for around EGP 600,000 (USD 30,000).
Marassi, an upscale compound in the North Coast, offered 230 square meter chalets at a price of EGP 3.1 million (USD 387 thousand at the time) in 2015.
In 2022, seven years later, a fully-finished chalet of the same size could sell for up to EGP 20 million (USD 1 million).
Over on the Red Sea, in the affluent town of El Gouna, a 128 meter, three-bedroom apartment in the G Cribs compound was priced at EGP 1.4 million (USD 205 thousand at the time) in 2013. Today, that same apartment could cost up to EGP 5 million (USD 256 thousand).
Partment positions itself as a solution to the rise in demand for second homes, as well as the rising costs of the market.
Co-owners are allocated over 40 nights per year to use the property, divided based on the number of shares owned and travel seasons. The startup also guarantees home management and maintenance on all properties listed.
The idea of shared ownership in Egypt has been previously explored, primarily through timeshare – a method to purchase the use of a property (often vacation homes) for a period of time. However, the timeshare system was heavily criticized, and often shied away from due to its reputation for being a scam.
While timesharing is often the purchase of a timeslot to use up in certain properties, Partment offers equity and ownership in the real estate itself.
The pre-seed round also featured a group of angel investors ranging from leading tech executives to real estate industry veterans.
Both officials at Nclude and VC+ hailed the startup as an opportunity to “disrupt the real estate sector” in Egypt, as citizens continue to grapple with inflation and an increasing cost of living.
The disruption in question hopes to innovate the industry, but also serves as an indicator that bubbling housing prices could prompt citizens to split up ownership.
Egypt’s cost of living has soared over the past six years. Commodities as basic as fast food have become a luxury for some Egyptians. The same sentiment is reflected in the real estate sector, particularly vacation homes.
The question remains: Is Partment a salvific innovation for the housing market, or merely an indicator that inflation is pushing customers to unconventional compromises?
Though this concept is not unique to Egypt; vacation home prices are appreciating rapidly across several countries. A 2022 study on vacation homes in the United States witnessed a 20 percent year-on-year price increase in certain locations. The United Kingdom witnessed a 10 percent increase.
The key difference is that while demand for vacation homes abroad has decreased, Egyptians’ demands for vacation homes continue to increase, even amid a rapidly rising cost of living.
Partment may not act as a permanent solution to Egypt’s staggering real estate inflation, but, if done right, has the potential to change up the way prices are handled.
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