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Sat 1 Aug 2009 04:00 AM

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Unmet housing demand

The latest news, tenders and projects from Cairo, Egypt.

Unmet housing demand
An artist rendering of Uptown Cairo.
Unmet housing demand
The first homes within the 6.2 million m2 Marassi development in Egypt are expected to be handed over by the end of next year.

The latest news, tenders and projects from Cairo, Egypt.

Egypt is one of the few countries in the Middle East where history is the main attraction. It is known for The Nile, Egyptian Scrolls and the Pyramid of Khufu – one of the seven wonders of the ancient world. And, while modern structures are rising from the desert sands throughout the GCC and regeneration takes place, old remnants can still be found in Egypt, which date back thousands of years.

The country’s capital city is no exception either. Dominated by Islamic architecture, Cairo has been aptly nicknamed The City of a Thousand Minarets. What’s more, it has provided a home for residents since the tenth century.

“Cairo is a city that has survived for centuries. Natural resources of survival as water and plantation are available in Cairo, which are not as accessible in the GCC,” Green Builders general manager Mohamed Nasreldin told Construction Week.

But when it comes to the latest construction projects will it be out with the old and in with the new? The current development of New Cairo City suggests that the answer is yes, but this is actually an extension of the capital, being built to meet the demand of residential projects due to the rising population.

And, according to general manager of Cairo Festival City Mohamed El Mikawi, demand for housing is extremely high.

“Official estimates suggest that annual production will need to rise to a rate of 820,000 units a year in order to meet demand. At present, average annual production is estimated at 300,000,” he says.

“If we consider that an average of 500,000 marriages take place per year, we are also looking at 500,000 new people entering the housing market. The industry also employs about 11% of the Egyptian population so real estate is actually fuelling economic growth which it, in turn, benefits from.”

Centre for Planning and Architectural Studies business development manager Hoda Fawzi agrees that despite being ancient, Cairo is still a developing city: “Cairo is a new and fresh market for large scale residential, retail, and commercial projects,” he says. “With the economic downturn, more investors are directing their investments to the city.”

Barwa International is one developer that is currently implementing a project in New Cairo City. The development will feature several villages and contain villas, high-rise apartments, schools, mosques and health facilities. The firm has planned to invest US $3.5 billion (EGP20 billion) into the project over the next eight years.

“The project is progressing very well at this stage,” says Barwa Real Estate Company acting president for international developments Tariq Al Jaber. “We are currently at the planning and design stage and should be announcing our plans for the project in the very near future.”

Emaar Misr, the Egyptian subsidiary of Emaar Properties is another investor which has identified Egypt as a key market for growth, and has announced four major projects in Cairo worth a total of $5.6 billion.The developer’s Mivida is a $1 billion residential project in New Cairo City, which is currently under construction and planned for hand over in 2012. The project will feature 5000 homes.

“Mivida offers the advantage of easy accessibility from the city centre and the American University in Cairo, as well as the option of owning ready-to-live-in homes,” said Emaar Misr CEO Sameh Muhtadi. “Emaar Misr has worked with award-winning and international architects and interior designers to offer this residential development.”

Meanwhile, the company is making progress on Marassi, a 6.2 million m2 tourist resort worth $1.74 billion. The land, one of the most favoured beaches in Egypt, was won after Emaar placed a bid for $175 million. The resort will feature 3000 hotel rooms, a marina and a golf course. The first homes within Marassi are expected to be handed over by the end of next year.

Two other projects include Uptown Cairo, a $2.1 billion residential, commercial and leisure development; and Cairo Gate $700 million mixed-use development spread over 670,000m2 of land.

When it comes to mega projects, Cairo Festival City is certainly one of them. It is a mixed-use project being developed by the Al Futtaim Group and spans over 3 million m2.

Currently, the retail mall building of Festival Centre is under way and expected to be completed in late 2011, with the entire project set to finish in 2015.

“Work on the apartment building and commercial offices are expected to start later this year,” adds Mikawi.

Still to work on is the infrastructure for the entire project including electrical landscape, communication, gas, and district cooling, all of which contracts are at tender stage.

With all this construction going on, one has to wonder how the city is affecting the environment. Green building is becoming a standard activity across the globe, and the historic city will not be popular if it goes against this trend. But, as Nasreldin points out, when it comes to sustainability, Cairo is certainly not stuck in the past.

“Sustainability interest has started to arise,” he says. “Green sustainable design and practice is of current interest for the Ministry of Housing and despite there being no clear regulations, there are expectations of fast growing green building awareness.”

Also on the agenda for the Middle Eastern country is the development of a mortgage system, and, although in its infancy, it is growing, on average, at a rate of 32% per year according to Mikawi.

“This is a strong indicator of the unmet housing demand still present in Egypt,” he says. “In fact, potential demand for housing credit is estimated at an annual average of EGP36.5 billion and the liberalisation of the mortgage market is expected to substantially contribute to the continued economic growth of the country and the financial benefit that real estate developers can expect to reap.”

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