Egyptian developers discussed the opportunities for growth in the industrial development sector in the Egyptian market. They also discussed the procedures required to support industrial developer companies, the best system for allocating lands through the industrial developer mechanism, and the services provided by industrial developer companies to investors. This was during the third session titled “The Industrial Developer, A New Development Activity,” of the 7th Think Commercial roundtable held on Wednesday.
Sherif El-Gabaly, Chairperson of the Chemical Industries Chamber at the Federation of Egyptian Industries and head of the African affairs committee at the Egyptian Parliament, said that industrial lands are an essential element for industrial development. El-Gabaly added that there are many obstacles to the growth of industrial development activity in the Egyptian market. He recommended holding discussions between the Industrial Development Authority and industrial developers to reach solutions that would contribute to the development process. He also suggested holding an industrial conference to discuss the challenges facing this issue.
Ahmed Radwan, the advisor to the head of the Industrial Development Authority, said that the state allocated an area of 22.9 million sqm for industrial lands. Radwan added, “Since 2007, attention has been paid to industrial developers who worked to receive, implement, and develop the land. The idea of the industrial developer is based on a partnership between the state, developer, and investor. Its purpose is to establish an industry on lands that are not connected with utilities and services.” He explained that developer targets investor, whether local or foreign and that developer contracts with investor. He said that some conditions and controls are applied to investors to make projects successful.
Radwan highlighted the growth in areas allocated to industrial developers. He said that it was agreed to amend contracts between the Industrial Development Authority and industrial developers regarding the licensing of industrial lands. He also said that new land areas would be allocated to developers. He noted that lands that industrial developers received must be operated and developed first so that the authority can provide new lands to them.
Bassel Shoirah, General Manager at Polaris Parks, said that the government is offering industrial lands, but most of the offering is directed to brokers because the offering is based on unreal prices. He said that this does not apply to industrial developer, who relies on real prices. He said that there is no room for brokers to intervene. Shoirah added that industrial zones that were established by industrial developers enjoy integrated utilities and services. He said that industrial developer has flexibility in meeting the needs of investors and providing utilities according to their actual needs. Shoirah pointed out the provision of ready-to-operate units with an area of approximately 400 sqm. He said that this model is successful in some cities, and unsuccessful in others. He said that clusters must be chosen close to residential areas or existing industrial zones. He said that the government alone has developed 17 successful complexes in this manner.
Mohamed Khamis Shaaban, chairperson of the 6th of October Investors Association, said that industrial developer has a role in developing industrial lands. He said that the Industrial Development Authority does not aim for profit, but most of the industrial lands go to brokers. He said that the system for land allocation must be modified and there should be strict control over operation to ensure the operation of the industrial zone after a period of receipt.
Mohamed AlKammah, CEO of ElSewedy Industrial Development, said that the state has allocated plots of land for industrial purposes but they were not exploited. He said that this was an obstacle from the state to developers. He added that industrial developers can work through the usufruct right, which requires a certain type of investors. He added that Egypt has good potential for industry, so the government should provide support to general and industrial developers who have complete political and social studies for industrial development. He called for providing land to developers, provided that it is fully connected with services, as utilities and services are the core of the industry.
Moataz Baha El-Din, CEO of CPC Industrial Development, said that the government has lands that it sells for EGP 6,000 or EGP 7,000 per meter. He said that it also demands industrial developers to provide water and electricity, which represents a major obstacle facing the industrial development process. He said that the developer does not sell less than 5,000 sqm due to the cost of utilities. Baha El-Din added that every million sqm of industrial land generates direct investment for industry in the country amounting to EGP 15bn and 12,000 job opportunities.
Ahmed El Refaey, Managing Director of ERA Real Estate, said: “Market is a matter of supply and demand, so when we look at industrial development, we find that it appeared in Egypt in 1998, and there are currently 7 industrial developers in Egypt and about 20 industrial zones. So we face a problem in increasing this number.”
El Refaey added that industrial development in Egypt only occurs in four cities: the 6th of October, Ain Sokhna, the 10th of Ramadan, and Sadat. He said that it is important to start looking into industrial development and having a plan to develop land. He also said that concessions should be granted to developers to create industrial developments in some areas. He said that industrial development can occur in smaller areas.
