Selling Egypt and the real estate 'boom'

Daily News Egypt
9 Min Read

In the sizzling July temperatures, something unmeteorological and very sinister is provoking Cairo’s heat sensation.

Those behind it give it happy terms like Egypt’s “growing economy and “real estate boom. After acquiring large swaths of cheap, mostly desert land from the state, Arab and Egyptian real estate companies are now reselling their purchases at staggering prices to the citizens of this country – or at least some of them.

Promising a new life of ultimate “luxury and “higher standards to Egyptians, the Dubai based Emaar and Damac companies began their official sale of housing units a few days ago. The price of one meter in Emaar’s Uptown Cairo housing units in the Moqattam district is LE 7,500 ($1,339). Damac’s first housing project located at the beginning of the Cairo-Alexandria highway is LE 6,500 ($1,160) per meter. These are just primary phases for Emaar and Damac. Egyptian real estate tycoon Talaat Mustafa’s Madinati city project in the desert of New Cairo is LE 4,129 ($ 737) per meter.

One obvious problem with these rates is that in the short span of two months, they caused an enormous and exaggerated surge in Cairo’s real estate prices. Emaar’s cheapest and smallest housing unit – a 93 square meter apartment – costs a staggering LE 700,000 ($125,000). The cheapest apartment in Madinati costs LE 925,000 ($165,178).

In a country where annual per capita income is $1,260 (according to 2005 World Bank figures) it’s not difficult to imagine that the targeted market of this type of real estate is limited to a miniscule fraction of society. Only in very rare circumstances does this include the upper middle class.

And with the “lifestyle that these prices offer, come the values. What was once a middle class district, Moqattam is now associated with Emaar’s – note the English name – Up Town Cairo project. Both Emaar and Damac’s websites – which primarily address a Gulf Arab clientele – are only in English. Damac’s newspaper advertisement campaign was also – you guessed it – in English, with marketing slogans such as “The most expensive lifestyles in the Middle East and “Sorry, the Damac luxury is not for everybody.

Indeed. Here are multi-billion dollar Dubai-based companies (where per capita income is $25,000) invading Egypt’s real estate market, surging prices to maddening heights with the blessings of the IMF and World Bank applauded by Prime Minister Ahmed Nazif.

Meanwhile the vast majority of this population can only watch from a distance as more and more desert land is resold to the very rich, then transformed into European, American or Dubai-style gated communities with English names. And with every new project and impressive advertisement campaign, comes the assertion that only the very “privileged are welcome.

At the same time entire villages in Egypt’s delta live without fresh water supplies, relying instead on polluted water. As a result, kidney failure and hepatitis C are as common as influenza. But the daily demonstrations of the “thirsty have fallen on deaf ears. Officials are too busy selling Egyptian land, banks and assets and issuing hollow statements on how these revenues fund development and infrastructure projects. Needless to say, these projects never materialize. Our railway network, sewage system and basic services have collapsed and almost every Cairene has a story to tell about days without water and long hours of power cuts.

Fifteen years after the government initiated its controversial privatization of public sector firms program, a new aggressive state policy is now underway to sell bigger and faster.

Last year saw the selling of 90 percent of the historic Omar Effendi stores to the Saudi Anwal company for LE 589.5 million ($102.7 million) although a government appointed committee had originally valued it at LE 1.14 billion.

When the government decided to sell a majority stake in Bank of Alexandria last October to Italy s Sanpaolo for $1.6 billion, it became clear that the state is reducing its role in this country’s economy.

Back then President Hosni Mubarak promised there will be no more selling of state-owned banks. But last week the cabinet decided that 80 percent of Banque du Caire, one of Egypt’s four main state-owned banks, will be sold in a public auction in six to nine months. On Tuesday it was none other than deputy secretary general of the ruling National Democratic Party (NDP) Gamal Mubarak who defended the decision arguing that the move is part of efforts to reform the banking sector. Proponents of this policy point to the massive debts Banque du Caire accumulated over the years, largely blaming “mismanagement and “bureaucracy. Selling to the private sector, they say, should lift the burden off the government.

But they fail to mention how decades of corruption within the establishment allowed for the accumulation of these debts. Four years ago while investigating the loan deputies case the prosecution concluded that it is both the “corruption and mismanagement of two banks – Misr Exterior Bank and Banque Du Caire – that have been responsible for the bulk of the country s banking fraud.

Those involved in the mega-fraud scandal were NDP MPs, businessmen and senior bank officials. So instead of tackling the roots of Egypt’s economic problems which is government-condoned corruption, the state chose the easy way out: sell, sell and sell. In fact, last month Muslim Brotherhood-affiliated MP Farid Ismail presented an interpellation in parliament claiming that approximately 60 percent of Egyptian land is now owned by foreign investors. Independent business estimates suggest that currently foreigners own 18 percent of Egypt’s banking sector.

It is no wonder that a new movement opposed to the “selling of Egypt was born last month. Its founder, Yehia Abdel Hadi is ex-chairman of the board of Banzione, one of Omar Effendi’s sister companies. Abdel Hadi was part of a group tasked with evaluating Omar Effendi and the one who filed a complaint to the public prosecutor accusing Minister of Investment Mahmoud Mohieddin, and others of squandering public funds by trying to sell the department store chain at a knock-down price.

The movement’s latest statement condemning the selling of Banque du Caire rightly sounds an alarm to the ease by which national assets are sold to foreigners and the private sector. Why shouldn’t we be skeptical of assurances that Egypt’s two national banks – Al-Ahli and Cairo Exterior – won’t be privatized if similar promises in the past were not kept? What guarantees are there that they won’t sell the Suez Canal one day, asks the movement? This might seem exaggerated, but who would have thought that so much of Egypt would be sold under our very noses, as we – ironically – mark the 55th anniversary of the July 23 Revolution?

Share This Article
Leave a comment