FRA nears completion of regulatory framework for online real estate platforms

Daily News Egypt

6 hours ago

Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), announced that the Authority is close to finalising a new regulatory framework to govern the operations of electronic platforms in the real estate sector.
Speaking at the Akhbar El Youm Real Estate Conference on Monday, Farid underscored the importance of supporting the real estate sector in achieving its development goals by exploring financing opportunities through the non-banking financial sector.
Farid delivered a comprehensive overview of the financing solutions and services offered by the non-banking financial sector under the FRA's supervision. He outlined mechanisms such as listing and offering on the stock exchange, which provide diversified financing tools to help companies reach their objectives. He also highlighted securitisation bonds and sukuk as capital market instruments available to unlisted companies. In addition, he pointed to the adoption of updated accounting standards that allow companies to revalue their assets based on fair market value.
He emphasised the strategic role of securitisation bonds and sukuk, citing the New Urban Communities Authority's recent securitisation bond issuance as a leading example. Farid also referenced the potential of real estate investment funds (REIFs) as a vital financing tool for the sector.
The FRA Chairperson noted that, in recent months, the Authority has held a series of meetings as part of its broader strategy to maintain open and effective dialogue with stakeholders. These discussions are intended to inform the development of regulations that deliver tangible benefits across sectors under FRA supervision, while ensuring the protection of stakeholder rights, market stability, and the solvency and professionalism of service providers.
These meetings brought together major figures from the real estate development sector as well as operators of digital platforms involved in the sale of fractional property shares to the public.
Farid explained that the discussions involved a review of the FRA's vision for regulating such activities within the framework of existing non-banking financial laws. The Authority concluded that the most suitable and realistic legal model would be the real estate investment fund framework. This model aligns with market demand for diversified financing options and provides individuals with a structured, secure investment product governed by clear oversight and protective measures.
Farid reaffirmed the FRA's commitment to continued engagement with market participants to support sectoral development, create new opportunities for companies, and clarify the reforms and prospects emerging from these changes. He stressed the importance of establishing a shared language of dialogue between public and private sector stakeholders.
He further noted the value of the recent consultations, emphasising that the detailed inquiries raised by participants could only be thoroughly addressed through direct discussions between the Authority and relevant stakeholders.
As a result of these engagements, three companies operating electronic platforms offering fractional real estate ownership have formally submitted requests to the FRA to regularise their legal status. Each company is proceeding with the establishment of two separate entities: one to operate as a real estate investment fund, and the other to undertake promotion, underwriting, and investment fund management activities.
Farid stated that this positive response reflects a growing awareness among companies of the importance of complying with legal and regulatory frameworks, and their willingness to operate under formal oversight. This ensures the delivery of services in an organised and monitored manner, protects the rights of all involved parties, and expands access to the financial tools offered by the non-banking financial sector. These developments are expected to significantly enhance financial, investment, and insurance inclusion—especially through real estate investment funds.
He also pointed out that listing and offering shares on the stock exchange enables companies to substantially expand their operations and grow their capital base. Numerous real estate development firms—regardless of size—have already taken this step and have seen notable increases in equity. Moreover, listing supports their ability to expand both within Egypt and internationally, given the improved governance and compliance with listing and trading requirements.
Finally, Farid noted that the past period has witnessed a comprehensive overhaul of Egypt's accounting standards. These reforms include a shift from book value to fair value in asset assessments, and enhanced treatment of real estate investments and equity rights. The revised standards now incorporate revaluation models for fixed and intangible assets, and apply fair value principles to real estate investments—enabling companies to reflect the true market value of their assets in financial statements. These changes support more accurate and reliable financial reporting, ultimately strengthening investment and financing decisions.