EGY.COM - PROBLEMS & ISSUES
by Samir Raafat
EGYPTIAN MAIL, May 4, 1996
A few weeks ago I wrote Definitely Not for The Nouveaux Pauvres" a sequel to "Rich-Raff: A Peek At Our Rising Millionaires". Several inquiries came in asking, how had Al-Hag Megabucks, the notorious chairman of Korrupt & Sons, become so rich in so short a time? What was the secret of his success? Was it like Mario Puzzo's quote in "The Godfather" that behind every great fortune there is a small crime?
And what about the director of Engulf & Devour. We all know he started off as a small contractor in some God forsaken Libyan province. Today he is super rich living in a hidden mansion in the posh enclave of Moneyria. What did he contribute which enabled him to make it into Egypt's Fortune 500?
While I don't have the answers to the above questions, I nonetheless arrived to unspecified conclusions regarding certain high-rise millionaires.
In our state of unorganized chaos it's open season for architectural terrorism. Somehow, legislators can't make up their minds. Are they on the side of preserving our national heritage and promoting a clean and safe environment, or, are they siding with the Hag Megabucks and the chairman of Engulf & Devour? With the collusion of the Sharks of Nasr City it appears these shameless tycoons have reportedly put everyone at City Hall in their large pockets.
For the sake of argument, let' see what kind of cash we are talking about here.
First, get your calculators out and let's do some arithmetic.
Let us suppose Megabucks and his buddy from Engulf & Devour are relative latecomers to the Infitah. They're in a desperate hurry to catch up with the "dollar" millionaires. They're ready to pool their resources and search for a quick kill.
Winning scenario: They decided to capitalize on the shortage of luxury apartments in Maadi, Zamalek, Garden City and the Nile ribbon.
With the square meter of land in Zamalek now going at LE 10,000 (up from LE 120 in 1973) there must be someone desperate enough to sell out. Bingo! The old colonial house on Shagaret al-Dor with the multiple heirs and claimants succumb to the temptations of ready cash. They hurriedly sign over their property to Hag Megabucks and his pal Devour Effendi.
A few weeks later, despite ALL the so-called regulations and ignoring loud angry protests from a bunch of NGOs led by the indefatigable Zamalek crusader Madame Guzel, down comes the old family stead on Shagaret al-Dor along with its four royal palms.
The 1000 square meters are quickly cleared, the foundations dug up, and the rising water table capped. So far, our daring investors have put down LE 10 million of hard cash in real estate, kickbacks and minor legal fees, most of it borrowed from the generous Banque du Caire where Megabucks has close connections.
Up goes the seductive billboard announcing the coming of a spanking eight-floor condominium promising deluxe 300-square meters configurations. These include four bedrooms, living rooms, large kitchen, a chimney and two-car parking slots per apartment. Front door intercom, 24-hour security service, central dish antenna are standard givens .
Investors and apartment buyers rush to put down their downpayment. The price per square meter is LE 8,000 only. This means that each 300 sq.m. apartment sells for the "paltry" sum of LE 2,400,000. And since there are two apartments per floor, this means each floor sells for LE 4,800,000. While the country is rescheduling its debts for the tenth time, surprisingly there are countless takers including the indefatigable Madame Guzel's son-in-law .
There are so many takers for the new Shagaret al-Dor apartment building, that Megabucks and the chairman of Engulf & Devour are obliged to sell their still-to-be-built apartments on a first come first served basis.
The disbelieving developers rake in the first installments and commence construction immediately. As the billboard mentions the plans are for an eight level superstructure measuring 600 square meters per floor. The remaining 400 square meters of original terrain is reluctantly allocated for public sidewalks and that compulsory narrow strip of land separating their property from that "irritating" embassy next door. It now appears that because his view has been cut off, the ambassador is vacating the premises. This ostensibly triggers the domino effect. As far as Hag Megbucks is concerned, good riddance. Diplomats are a nuisance anyway creating parking restrictions all over the city!
With eight floors planned, the developers are in fact multiplying their original land surface 4.8 times with the end result that they will add 4,800 square meters of new living space on the market. But Megabucks dislikes fractions and odd numbers which is why he adds another two illegal floors augmenting the surface area by another 1,200 square meters.! This gives him a round even figure of 6,000 square meters. Never mind if building regulations stipulate that in Zamalek you cannot go above eight floors. This small detail can be "amicably" worked out with Megabucks's friends at the building commission or with his accommodating brother-in-law at town council. hankfully, they all have voracious appetites.
Multiplying 6,000 square meters by the selling price of LE 8,000 per square meter our clever developers are making LE 48 million grosso modo. Yes, but what about the cost of building, the cost of plumbing, electric cables, bricks and mortar, marble or teak wood parquet and the Jawhara ceramic bathrooms and Contestal kitchens and, yes, the two Mitsubishi Japanese elevators?
O.K., here's what you do. Apply the rule of thumb at today's rates: average cost of construction per square meter with deluxe "finish" is LE 2,000 all inclusive. It even takes care of the "gifts" to our friends at city council and the planning commission. Now, multiply 6,000 square meters by LE 2,000 and you reach LE 12 million in construction costs. Add to it the cost of land (LE 10 million) and another miscellaneous 2 million and you find out that you have so far spent LE 24 million. Subtracting that from sales revenue, you are left with LE 24 million in net profits!
Just in case you are as surprised as I was, sit down and run these figures once more on your calculator.
Now, can you blame our developers?
Maybe you and I would do as much, given the prevailing architectural anarchy, absent governing building controls, etc... or would we... ?
All this profit and in under two years! Aren't the owners of Korrupt & Sons and Engulf & Devour clever? They are so astute that it is a matter of time before they purchase the recently vacated villa next door to you.
Meanwhile Hagga Megabucks (the Hag's wife) is scanning the daily obituaries in search of the odd villa owner who left it to several squabbling heirs or, perhaps, to a lonely desperate widow.
Prime real estate is in such demand that blatant cases of property frauds and deed swindles are on the rise if one believes what was recently printed in the opposition press (see front page al-Wafd dated May 1, 1996).
As if all this were not enough, some of the cost-cutting embassies seem keen to sell or develop their own properties. The US State Department has recently sold several villas in Maadi cashing in on the real estate boom. These were the same villas it had bought for a song in the bust days of the '60s when some of these half-acre properties sold for under LE 8,000 (eight thousand)!! How ironic that some of the lucrative difference is now coming back in the form of US-AID!!
As they get more urbane and pretentious, and their Mercedes cars sleeker and larger, Hag Megabucks and the director of Engulf & Devour form another joint venture: Rapacious Design Center. Hagga Megabucks lends a hand as chief interior decorator.
Hungry, overzealous but ecologically shortsighted developers are after the same proverbial goose. In the meantime the concerned public watches these new urban developments in a state of frozen apathy.
Rapacious Design Center meanwhile goes national and inaugurates a branch in Sharm al-Sheikh and Hurghada.
Reserve your condo NOW!