Ministry of Housing approaches new projects tentatively, tries to build experience, says Housing Minister Madbouly

Mohamed Darwish
12 Min Read
Housing Minister Moustafa Madbouly

The Ministry of Housing hopes to attract new investment in the real estate sector by promoting various investment projects in Arab countries, as well as expanding its proposal for new projects in partnership with the private sector. Some of these projects were proposed by the ministry in the Sharm El-Sheikh Economic Summit.

During the Saudi-Egyptian Coordination Council’s meetings, the ministry proposed 22 new projects to Saudi Arabian investors. The projects will be located in the New Administrative Capital and eight new cities affiliated to the New Urban Communities Authority (NUCA). Moreover, a new Emirati project will be launched in Egypt with investments worth EGP 40bn.

In an exclusive interview with Daily News Egypt, Housing Minister Moustafa Madbouly spoke about the steps the government is taking to support the real estate sector, and the challenges facing the sector. He noted that throughout the upcoming period, the government’s plan will mainly depend on a generous offerings of land to investors and individuals in partnership with the private sector.

How does the ministry plan to attract investments to the real estate sector?

In the upcoming period, the government plans to offer land to investors and individuals. Moreover, the government is targeting a number of new projects in partnership with the private sector. It is also working on attracting the largest possible number of foreign investors. Within the same framework, we aim to offer a number of projects to Arab investors, especially Saudis.

The first phase of the New Administrative Capital includes integrated urban projects with high and medium housing density, in addition to a service area and medical centres, which will be part of the first phase of the medical city in the capital.

Have the projects’ detailed activities and sizes been specified?

The projects are distributed among urban, commercial, administrative, and entertainment activities on an area ranging from 1000 to 2000 acres in the cities of New Alamein, New Cairo, Sheikh Zayed, 6 October, Sadat, New Damietta, Al Shorouk, and New Aswan.

What are the latest projects that the ministry discussed with foreign investors?

The Housing Ministry has agreed with Emirates Capital Group to develop an urban project with integrated services and facilities on an area of 1212 acres. The project includes 30,000 residential units with investments worth EGP 40bn. The government is keen to encourage private investment, whether Egyptian or foreign. There are set missions to overcome obstacles facing investors in a way that guarantees the state’s rights and increases the growth rates of the real estate sector.

What is the ministry’s work programme for the upcoming period, especially after the government proposed its programme to the Parliament?

The government’s work programme includes the implementation of residential unit projects for low-income citizens. The government seeks to complete the implementation of 700,000 units within its social residential project by the end of FY 2017/2018.

We hope to find drastic solutions for the prevalent, unsafe informal housing areas. We are also working to merge unplanned areas with urban and planned areas in several Egyptian cities. The government aims to increase the contribution of the sector to GDP growth figures.

What about the potable water and sewage crisis?

The government’s policies, from now until 2018, will focus on enhancing its water services and stopping the shift system. It will also concentrate on investments that improve the quality of water in areas that depend on groundwater wells.

Moreover, the government seeks to provide 100% sewage coverage in all cities, compared to a current coverage of about 60%. Sewage coverage in villages reaches 15%, and we aim to take this to about 50%.

What new projects is the ministry working to implement?

The Housing Ministry is working to implement the first phase of a group of new cities, which includes the New Administrative Capital, New Alamein, New Tushka, and East Port Said. It also hopes to provide land for investment in currently-existing new cities. The efforts aim to create sufficient land for the growing demand from the real estate market until 2018 through an intensified plan.

What does the ministry expect for the real estate sector’s growth rates?

We expect the sector to achieve growth rates of about 4.8% this year. However, we expect this percentage to jump to 9% next year.

Will the ministry be offering new areas of land?

The ministry plans to offer 60,000 pieces of land from a total area of 35m sqm. It started to announce the offering of 214,000 pieces in 21 new cities with areas ranging from 209sqm to 1500sqm.

The lands are allocated for low- and medium-income individuals. The ministry seeks to facilitate the licensing procedures by giving architectural models to the lottery winners.

Will the lands be provided with full facilities?

NUCA is implementing a plan to provide facilities for about 30,000 acres in new cities in order to ensure the land is delivered fully facilitated for the beneficiaries. This delivery will be on specified timings to help begin the development process.

The authority’s plan includes offering lands for real estate investment. It announced offering 64 pieces in 20 new cities on a total area of 1500 acres through the one-stop shop system in the General Authority For Investment (GAFI).

Is the ministry satisfied with the indicators of the initial offers by the one-stop shop?

The demand indicators are good, taking into consideration the novelty of the experience. The government will be offering more lands with facilities during the upcoming period. Preparations are also ongoing to offer service lands in a number of cities affiliated to the authority in order to begin the establishment of commercial chains and provide services on the location of the “Dar Misr” project.

When will the ministry begin the implementation the New Administrative Capital project?

A number of construction companies began to extend facilities to 3,000 acres of the first phase of the New Administrative Capital, which will be developed on 105,000 acres. Those companies include Mokhtar Ibrahim, the Arab Contractors, Hassan Allam, and Concord.

The cabinet has issued decisions to assign extended facility operations to a number of companies in order to speed up the process, as the prime minister announced starting the project’s first phase.

Paving and repairing the land on which government buildings will be established will be carried out by several Chinese companies. A number of contractors will begin constructing residential units as the designs for the first residential district have been finalised.

Was the deal with the Chinese companies concluded?

The China State Construction Engineering Corporation (CSCEC) has finalised the designs for the governmental buildings. We chose 24 designs for 12 ministries and will select the final designs to begin construction in April.

The ministry has signed contracts with CSEC to establish 12 buildings for ministries, a building for the cabinet, another for the parliament, and the major conference hall, as well as the fair zone with $3bn provided from Chinese financial institutions.

The Egyptian Engineering Consultants Group has co-developed the designs. We agreed with CSCEC to begin operations and digging in April. The company will also finalise the designs and cost studies within three months.

The approved land area of the administrative capital is estimated at 1,666m acres. NUCA, the National Services Projects Organisation, and the Armed Forces Land Projects Agency are currently negotiating to establish a company that will oversee the construction.

The Ministry of Housing has signed a memorandum of understanding (MOU) with the China Railway Group Limited (CREC) to implement the Olympic Park Sports City on an area of 2,000 acres. The ministry signed another MOU with the China Metallurgical Group Corporation (MCC) to establish the entertainment city at the New Administrative Capital on an area of 600 acres.

What is the role of Egyptian construction companies in the implementation of the capital?

About 95% of constructions will be assigned to Egyptian contracting companies. We will develop 184,000 acres over several phases, the first of which is 30,000 acres. We will start with 10,000 acres and we hope to finish constructions within three years.

What is the ministry’s plan to expand partnership projects with investors?

Despite the many proposals put forward during the Sharm El-Sheikh Conference, we decided to choose only five projects, so that we can gain more experience when activating MOU we sign with developers, as well as to ease the competition, where each MOU was signed after choosing one of two competing proposals.

The Ministry of Housing has signed four contracts with real estate companies worth EGP 131bn, including two contracts with the alliance of the Egyptian Mountain View and the Saudi Sisban Holding for two projects. The first contract is for a project on 500 acres in New Cairo and the other is for 470 acres in 6 October City. Other contracts include the establishment of a resort in 6 October City on 557 acres with Arabia Group. The fourth project is developed in collaboration with Palm Hills on 500 acres in New Cairo.

The Ministry of Housing will focus on partnership projects in the coming period. It will also pay special attention to developing new cities, such as New Alamein, on larger scales ranging from 1,000 to 2,000 acres.

The partnership projects faced opposition when they were first put forward, but actual experience proves the possibility of success in the implementation of new investment ideas.

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