Interview: Hassan Allam
How will the development of upcoming new cities help solve Egypt’s housing deficit?
HASSAN ALLAM: There is a housing deficit in the country. This requires building accommodation with the necessary infrastructure, as well as sufficient transport to allow citizens to move to these new and often remote locations. Hence, the country’s construction effort is being led by the government, under the leadership of President Abdel Fattah El Sisi, to not only build affordable housing, but also to make these places habitable as soon as possible.
Previously, the government set out on multiple construction endeavours to build accommodation for the average citizen. However, the building of necessary infrastructure did not follow suit. This in turn led to the existence of ghost towns.
On the other hand, the mortgage market in Egypt is almost non-existent. Therefore, mortgage implementation is definitely a necessity. The affordability of houses can also be met with much lower land prices. It’s the government’s role to ask for premiums with respect to land sales and land prices because it directly affects the affordability of the unit. A regulator could be put in place by the government to ensure that prices are managed, and if developers get hold of cheap land, they must in turn offer affordable housing.
What impact has the devaluation of the currency had on the ability of local construction firms to import housing materials?
ALLAM: There is very little material related to the housing industry that cannot be sourced from Egypt. Affordable housing has never been a problem. Most of the basic commodities are available here, including cement. Imported materials are generally associated with upscale housing, and more complicated and sophisticated buildings. Construction companies working in that segment have faced issues related to the float of the currency, however, the market is currently stabilising.
How will planned infrastructure and transport projects impact the local construction sector?
ALLAM: The construction sector employs a significant percentage of the workforce, and the current government’s expenditure in infrastructure and housing is very important. Concurrently, there is plenty of work for most local contractors, who have been specifically targeted.
In fact, it is a mission of the government and its agencies to allow local companies, rather than regional and international ones, to benefit from this construction boom and employ local labour and resources. This benefits the country enormously. Most companies have seen massive growth with doubling revenues, and this has significantly increased employment in the sector.
What opportunities can neighbouring countries offer to Egyptian companies?
ALLAM: Eventually the construction market here in Egypt will start normalising, not because the economy isn’t healthy, but because you can’t continue maintaining an infrastructure boom forever. By 2019 the government’s infrastructure expenditure will stabilise, and more focus will be given to industrialisation. Egyptian companies will then be faced with two clear opportunities: the first is that they will benefit from the growth of industrial construction work, and second, they will benefit from the rebuilding of neighbouring countries damaged by recent wars. Egyptian companies will likely move and expand their portfolio in construction efforts in countries like Libya, Syria, Iraq, Yemen, among others. Hopefully the same will happen in sub-Saharan Africa, not because they need rebuilding, but because they are developing and growing.
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