Construction & Real Estate
From The Report: Egypt 2018
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Construction remains one of the most important contributors to the domestic economy. In 2016 the sector’s output increased by 10.3%, a significant uptick after growing at an average of 5.3% in the preceding four years. This growth trend was largely maintained in 2017, expanding by 7.3% in the first nine months of FY 2016/17. The Egyptian real estate market has proven itself remarkably resilient to the political and economic tensions experienced previously in the country. However, while the industry has historically been seen as a safe bet in uncertain times, economic headwinds – especially strong in late 2016 and the first half of 2017, stoked by government reform efforts – are proving to be a tougher proposition.
This chapter contains interviews with Hassan Allam, CEO, Hassan Allam Holding; Osama Bishai, CEO, Orascom Construction; Magued Sherif, CEO, Sixth of October; and Ashraf Dowidar, CEO, ARDIC.
Articles from this Chapter
Social constructs: The state is focusing on the sector as a key driver of economic growth, with various projects in planning or implementation
Ample opportunities: Hassan Allam, CEO, Hassan Allam Holding, on the construction boom in Egypt and the future of the industryOBGplus
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…
Laying the foundations: Osama Bishai, CEO, Orascom Construction, on ongoing developments in the construction sectorOBGplus
Interview:Osama Bishai How crucial are the ongoing large-scale infrastructure projects for local contractors? OSAMA BISHAI: Current projects have stimulated the market directly, creating opportunities for investment and job creation. More importantly, they have also created new expertise. For example, the tunnels under the Suez Canal are the first time this type of project was done by a fully Egyptian labour force, after the decision to prioritise local companies. Proficiency generated in…
Response to reform: Changes to tax and fiscal policy create a challenging business environmentOBGplus
Contractors in the Egyptian market have been among the hardest hit by the government’s ambitious reform agenda over 2017. While Cairo’s efforts to put the national economy on sounder footing will likely bear fruit, there has been short-term pain in the form of high inflation and increased cost pressures on construction firms. In this period of uncertainty, many contractors have not only found it difficult to price risk, but also suffered losses as a result of unexpected increases in input…
A place to call home: Government bodies are working to mitigate the housing deficitOBGplus
Egypt’s construction pipeline is stocked with a wide variety of projects, from highway expansion to hospitals and schools. However, a primary source of future contracts is likely to be the housing segment, as the government has committed to alleviating the country’s chronic and long-standing housing deficit. Furthermore, despite recent economic uncertainty, the residential real estate industry shows no signs of slowing down in Cairo and beyond. As such, construction firms can expect plenty…
Pros and concretes: Sector development heavily reliant on the cement segmentOBGplus
As Egypt is poised for rapid construction growth, the cement industry will become increasingly important as the bedrock of the sector. While the industry has plenty of capacity, it remains vulnerable to energy availability and pricing. As the last year has shown, a spike in fuel prices can hit the cement industry, and thus the whole construction sector, particularly hard. The cement segment is an important component of the domestic economy. In 2016 it was the 12th-largest cement industry…
In high demand: Magued Sherif, CEO, Sixth of October for Development and Investment, on the challenges facing the housing marketOBGplus
Interview:Magued Sherif What are the main drivers behind growth in Egypt’s residential market? MAGUED SHERIF: The main driver is demographics. Over half of the population is under 25, and there are over 900,000 marriages every year. The shortage is across all residential segments. We estimate the demand for higher-income segments to be around 30,000 units annually, of which less than half is met. Naturally, the demand grows the wider the segment is, and demand for middle and lower-income…
Setting sale: The sector remains robust amid a challenging economic climateOBGplus
The Egyptian real estate market has proven itself remarkably resilient to the political and economic tensions the country has experienced over the 2011-17 period. However, while real estate has historically been seen as a safe bet in uncertain times, economic headwinds, especially strong in late 2016 and the first half of 2017, stoked by government reform efforts, are proving to be a tougher proposition. All segments of the market have been affected by rising costs and stifled demand. Although…
A changing landscape: Ashraf Dowidar, CEO, ARDIC, on the widespread possibilities for the sectorOBGplus
Interview:Ashraf Dowidar What are the largest projects driving the Egyptian real estate sector? ASHRAF DOWIDAR: Currently, the government is focused on two large-scale national projects: the New Administrative Capital and the Suez Canal Area Development Project. We are in the early days of the New Administrative Capital, which present enormous opportunities for the entire real estate sector, and is currently enjoying widespread support from both the government and residents. However, it…
Mortgaging growth: Government authorities work to address structural issues in the home finance marketOBGplus
While Egypt’s formal real estate market has become a crucial and high-performing segment of the economy, it has struggled to tackle the challenge of affordable housing. Egypt suffers from a chronic housing deficit of up to 3m homes, with annual demand for new homes reaching as high as 500,000 units. Previous administrations have sought to address this through large-scale building programmes. While these have sometimes engaged the private sector, they have largely fallen short of demand,…
Property for two: Niche segments benefit from currency depreciationOBGplus
While the decision to float the Egyptian currency in November 2016 had a mixed impact on developers and the new-build residential market, it had a singular consequence for the resale or secondary market. Indeed, in terms of new units, the market has continued to progress, with extended payment terms and a slower release of off-plan units ensuring that transactions keep ticking over. However, the situation for existing homes has not followed suit: the market has ground to a halt and become…
Law of the land: Efforts to reform the legislative framework underpin property rights, ownership and taxesOBGplus
The Egyptian property market is constantly undergoing reform. While mortgages are difficult to obtain and disputes can be complex, the system as a whole is remarkably effective. People regularly buy and sell real estate, and a functioning market exists despite the lack of a best-practices system of recording. 5000 Years The concept of property ownership goes back centuries, and usufruct – the legal right for people to enjoy the advantages of property that does not belong to them – and…
Sustainable urbanisation: Smart and ecological cities are growing throughout the worldOBGplus
In 2008, for the first time in history, more than half of humanity was living in urban areas. Perhaps the most remarkable observation is the speed at which this happened: as recently as 1900, urban areas accounted for 13% of the global population. Towns and cities are seen as the crucibles of opportunity for many rural dwellers. The UN estimates that by 2030 urban areas will host 60% of the world’s population – up from 54.5% in 2016 – with the pace of urban growth especially rapid across Africa and parts of Asia. Urban areas are home to more than 470m people in Africa, accounting for 40% of the continent’s population, up from 14%…
