Invest-Gate Magazine, May 2017 Issue

REAL ESTATE NEWS, REPORTING & ANALYSIS

May 2017 - 40 Pages - Issue 2

www.invest-gate.me

H.E. ASHRAF SALMAN

Former Minister of Investment

EGYPT IS ON TRACK TO COMBAT BUSINESS OBSTACLES AND BOOST ECONOMY

EGYPT’S COASTAL AIN SOKHNA BREAKS SEASONAL TOURISM TREND DEVELOPERS AT CITYSCAPE DWELL ON CHALLENGES FACING EGYPT’S REAL ESTATE MARKET

EGYPT’S DEVELOPERS URGED TO SMARTEN WASTE MANAGEMENT TECHNIQUES RUSSIAN DEVELOPERS GIVING PUSH TO SCZONE WITH NEW MAJOR INDUSTRIAL PARK KARMBUILD, AZZA FAHMY BRING ARTISTIC FLAVOR TO SOLAR-BASED ARCHITECTURE IN EGYPT

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EDITOR’S LETTER

General Manager Yasmine El Nahas

WELCOME TO INVEST-GATE

Editor-in-Chief Farah Montasser

Hello again, Our research and investigation of Egypt’s the real estate although market continues with the launch of our second issue. This time, we highlight yet another mega-project, the Suez Canal Economic Zone, the government’s ongoing infrastructure project aiming to encourage investment inflows through the country’s eastern shores.

In our May issue, as we explore the canal, Invest-Gate focuses on the importance of sustainability and how most public and private projects currently are depending on wind and solar energy despite one developed country denouncing the global warming phenomenon.

We speak to two dynamic market experts, namely former Minister of Investment and current CEO of Aur Capital for Development Ashraf Salman as well as Chairman of the Ain Sokhna Tourism Investors Authority (TIA) and board member of El-Sherouk for Touristic Development Mohamed Roshdy.

To fight climate change, overcome Egypt’s heat, and save on electricity bills given that it is no longer subsidized by the government, Invest-Gate turns to developers and young architects utilizing renewable energy and the projects implemented. We speak to SolarShams, KarmShams, as well as internationally-acclaimed Egyptian Jewelry Designer Azza Fahmy, who has used her signature Arabic and ancient Egyptian motifs to design KarmSolar’s panels.

Salman gives Invest-Gate a comforting status of the current Egyptian economy and highlights the hits and misses of the government’s reform plan. In an interview with InvestGate, Roshdy highlights developments to the SCZone and how it is to affect Ain Sokhna city as a touristic destination and future hub for foreign investors. He also highlights the authority’s ongoing research and proposals to help bring prosperity to the city and some legislative obstacles along the way.

As the Voice of Real Estate, Invest-Gate aims to cater to all needs, from homebuyers to big property investors. We bring you stories covering Egypt’s most vibrant sector as it changes under the current economic environment.

With the sentiment on Egypt gradually improving, we are delighted to explore how that impacts the historically favored investment outlet.

Enjoy!

Managing Editor Yasmin El-Beih Associate Editor Menna A. Farouk Staff Writer Fatma Khaled Leena Eldeeb Nayrouz Talaat Market Researcher Hagar Magdy Database Executive Taghreed Mounir Operations Manager Liz Hurley Business Development Manager Safaa Abdel Bary Web Master Ayman Rady Art Director Omar Ghazal

With more on the SCZone, Invest-Gate looks into the current potential investments coming in, including the Russian Industrial Park soon to be implemented.

Graphic Designer Ahmed Sabar EDITOR-IN-CHIEF

3D Visualizer Maged Makram Events and Logistics Manager Abdallah El Gohary Distribution Officer Mahsoub Kenzi Mohamed El-Sayed

Inside this issue p.12

Egypt On Track To Combat Ostacles, Boost Economy p.22

Russian Developers Giving Push to SCZone with New Major Industrial Park p.28

p.16

p.20

Egypt’s Coastal Ain Sokhna Egypt’s Real Estate Developers Breaks Seasonal Tourism Trend Weigh In Starting Housing Projects in SCZone p.26

p.24

Developers At Cityscape Dwell On Challenges Facing Egypt’s Real Estate Market p.30

Egypt’s Developers Urged To Smarten Waste Management Techniques p.32

IN PARTNERSHIP WITH

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Whether you are seeking relaxation or excitement, Laguna Bay Sokhna was designed to keep your mornings and evenings entertaining and filled with plenty of things to do.

Publisher MOHAMED FOUAD All rights to editorial matters in the newspaper are reserved by Invest-Gate and no article may be reproduced or transmitted in whole or in part by any means without prior written permission from the publisher.

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Egypt’s Young Architects Seek to Karmbuild, Azza Fahmy Bring Turn Construction Industry Green Artistic Flavor to Solar-based Architecture in Egypt 4 | INVEST.GATE | May 2017 - ISSUE 02

Meet The Man Revolutionizing Egyptian Cities’ Urban Landscape

13D Sherif Salama St. - Laselky Extension - New Maadi, Cairo, Egypt Tel.: +202 25164776 +202 25172052 +202 27547569 Fax: +202 25172053 Email: info@invest-gate.me 22X30.5 Invest Gate Mag.indd 1

4/26/17 3:38 PM

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EGYPT REAL ESTATE

CHALLENGES AND OPPORTUNITIES

INTRODUCING

FULLY-FINISHED VILL A S

STRATEGIC ROUNDTABLE

OCTOBER 2017 6 | INVEST.GATE | May 2017 - ISSUE 02

19333 alburouj.com

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NEWS

UPDATE

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EGYPT PROPERTY SHOW KICKS OFF GLOBAL ROADSHOW IN DUBAI Egypt Property Show (EPS), the first Egyptian real estate global roadshow featuring premium development from Egypt’s top developers, is kicking off in Dubai from May 5 to 7 at the Dubai World Trade Centre, Invest-Gate reports.

The show aims to bring an array of luxury properties and turnkey solutions to Egyptian home buyers living abroad and international real estate investors.

The event is the first in a series of exhibitions, which will also be held in many cities in the region and around the world.

“Egypt’s real estate market remains one

of the most robust in the region and we would like to take this opportunity to reintroduce to the world this vast untapped market particularly to Egyptians living abroad and key investors keen on expanding their property assets in the MENA region’s largest real estate market,” CEO of Spectrum Consultants and head of Egypt Property Show Wahid Attalah says, according to a released statement.

SOUTH AFRICA’S TANA AFRICA CAPITAL TO EXPAND BUSINESSES IN EGYPT

SODIC CLOSES Q1FY2017 WITH EGP 1.2 BN NET CONTRACTED SALES Egypt’s real estate developer SODIC closes Q1FY2017 with contracted sales bookings worth EGP 1.2 bn, demonstrating 64% growth, Invest-Gate reports.

“This has been a good start to the year with a very fluid economic situation in the backdrop, once again reflecting the resilience of the Egyptian real estate market and the depth of genuine demand,” SODICS’s CEO Magued Sherif comments.

This growth is based on three inventory launches worth EGP 1.7 bn in February and March 2017. These are One16, a premium apartment offering in SODIC West, October Plaza, a 30-acre land plot in 6th of October and a new phase of Eastown Residences in New Cairo.

The three launches displayed solid performance with sales growth, reflecting both volume and price increases. The company reported the contracting of 340 units compared to 227 for the same period last year.

In addition to upped volumes, a 20% to 30% increase in pricing post devaluation boosted sales for the quarter. Cancellations remained low at 5%.

MISR ITALIA OFFERS FEASIBLE PAYMENT METHODS AT MOUSA COAST South Africa’s investment company Tana Africa Capital expresses willingness to pump more investments into Egypt and expand their business in the country, Invest-Gate reports.

government is keen on encouraging businessmen to double their investments in Egypt and overcome challenges facing some projects as well as push forward development in various sectors.

The chief director of the South African investment company highlights such willingness at a meeting with Minister of Investment and International Cooperation Sahar Nasr.

The Tana Africa Capital was established in 2011 as a project seeking to increase support for investment businesses on the African continent. So far, the company has invested USD 250 mn in Africa, according to the company’s officials.

At the meeting, Nasr says that the

EL SHAMS CITY REPORTS TOTAL INVESTMENT OF USD 4 BN Sales General Manager of Egypt’s real estate company Realmark Karim Mamoun confirms the total investments of El-Shams Tourist City stand at more than USD 4 bn, Invest-Gate reports.

Mamoun adds that El Shams Tourist City is an attractive site, spanning an area of 557 feddans and overlooking the Giza Pyramids.

He also says that the city will have nearby residential project entitled “2020”, featuring international hotels, shopping malls, and administrative buildings.

OHD REPORTS NET LOSS OF EGP 499.5 MN Egypt’s real estate developer Orascom for Hotels and Development has turned from profits to losses in 2016 due to the EGP flotation in November, Invest-Gate reports.

OHD reports a net loss of EGP 499.5 mn in 2016, compared to profits of EGP 206.1 mn in 2015, according to the company’s latest financial statement.

The company’s earnings also hit EGP 396.15 mn in 2016, compared to 759.66 mn EGP a year earlier, the statement shows.

8 | INVEST.GATE | May 2017 - ISSUE 02

Egypt’s real estate developer Misr Italia is offering feasible payment methods for its Mousa Coast project, where it is delivering beachside chalets instantly following a 5% downpayment, Invest-Gate reports.

The company’s payment methods also allow buyers to provide installments over six years, according to a released statement.

Mousa Coast is located in Ras Sedr, 90 minutes away from Cairo. It has delivered approximately 2,500 units thus far and features several amenities such as swimming pools and landscapes.

The company plans to turn the project into a fully-integrated community on the Red Sea coast, according to its official website.

As for Alexandria Governorate, two sewage projects worth EGP 113 mn will be completed to serve the areas of Thalathini Street and the surrounding areas, as well as the area of “Five-Hundred” in the district of El-Muhagireen.

MAJID AL FUTTAIM SEEKS TO RELY ON RENEWABLE ENERGY IN 7.5% OF POWER CONSUMPTION Emirati leading shopping mall, communities, retail and leisure pioneer Majid Al Futtaim is aiming to rely on renewable energy sources in 7.5% of its electricity consumption, Invest-Gate reports.

Majid Al Futtaim’s targets for its new developments, including City Centre Almaza, have become increasingly reliant on renewable energy in consumption as greater focus is being given to market and legislative mechanisms for investing in renewable energy globally.

City Centre Almaza, due to open in 2019, is one component of Majid Al Futtaim’s significant investment plan in Egypt worth USD 1.4 bn (over EGP 23 bn). The plan also includes the newly-opened Mall of Egypt and the expansion of City Centre Maadi, in addition to four neighborhood centres in new residential cities in Cairo and the development of four new shopping malls in greater Cairo.

22 INVESTORS IN UPPER EGYPT RECEIVE FIRST INDUSTRIAL LANDS FREE OF CHARGE

EVENTS UPDATE

A total of 22 investors have received land plots free of charge in the country’s southern cities of Sohag and Assiut, Invest-Gate reports.

The land plots, spanning an area of 34,000 square meters, are the first allocated to investors since the Supreme Council for Investment has agreed to offer industrial zones for free to investors in Upper Egypt.

In a released statement, the Ministry of Trade and Industry says that the land plots will be allotted in Sohag for 13 projects, covering the industries of food, chemicals, and engineering. Meanwhile, other land plots will be earmarked in Assuit for nine projects covering the fields of construction materials, engineering projects, and food factories.

Minister of Trade and Industry Tareq Qabil says that the ministry is currently working on preparing equipped industrial zones, in the governorates of Qena, Beni Suef, Aswan, Sohag, Luxor and Minya.

AL AHLY FOR REAL ESTATE DEVELOPMENT TARGETS EGP 4 BN CONTRACTUAL SALES Egypt’s Al Ahly for Real Estate Development Company Chairman Hussein Sabbour says that his company is targeting contractual sales of EGP 4 bn (USD 220.3 mn) in its different projects during 2017, Invest-Gate reports.

According to Thomson Reuters Zawya website, the Egyptian investor has started implementing the Green Square project as a part of his Mostakbal City located in New Cairo.

“We target beginning works in L’avenir Mostakbal City project by early April 2018,” Sabbour says. The total housing units of the two projects stand at 5,000, including small villas and apartments, he says.

Earlier, contractual sales of Al-Ahly for Real Estate Development stood at EGP 3 bn by the end of 2016.

SAUDI ARABIA UNVEILS PLANS FOR ‘ENTERTAINMENT CITY’ NEAR RIYADH Saudi Arabia unveils plans for an entertainment city on the edge of Riyadh, which will be 50 times the size of Gibraltar once complete, InvestGate reports.

HOME DESIGN SHOW Egypt has witnessed remarkable growth in its real estate sector and an equal demand by investors for luxurious and deluxe housing units. Home Design Show, taking plan 10-12 May 2017 at Dusit Thani Hotel, fulfills a fundamental need and all of that in one place. The event will bring together leading local and international companies offering ultimate home design ideas as well as innovative and novel approaches in the field of decoration and finishes solutions.

DATE: 10-12 MAY VENUE: DUSIT THANI - LAKEVIEW CAIRO WWW.HOMEDESIGN-SHOW.COM/

CITIES’ IDENTITY THROUGH ARCHITECTURE AND ARTS (CITAA) Cities’ Identity became a pressing issue for many countries nowadays.

Every city has its unique and valuable identity; this identity is revealed through its physical and visual form, it is seen through the eyes of its residents and citizens. The city develops over time, and its identity evolves with it. Reflecting the rapid and constant changes the city is subjected to, Architecture and Arts are the embodiment of the cultural, historical, and economical characteristics of the city.

Urban Identities: the conference will present & discuss examples and tendencies in dealing with urban identities as well as the transformation of cities and urban cultures mentioned in terms of their form, identity, and their current art. IEREK aims with this conference to offer the researches from different perspectives and views how Architecture and Contemporary arts are developed. Also, IEREK aims to emphasize on the basis of urban development and identities as well as investigate the various approaches made in the field of both Architecture and Contemporary Arts. The conference will be held at the Cairo Opera House.

The 334-square-meter attraction will offer cultural, sporting, and entertainment activities, including a Six Flags park and a safari park.

The announcement boasts it will be the first of its kind in the world. Building will begin early next year and the first stage finished by 2022.

The entertainment city – about a fifth of the area of Riyadh in size – is the latest to be announced.

DATE: 11-13 MAY

Authorities say the hope is not only to attract visitors, but “achieve a healthy and harmonious life, and provide more entertainment, joy and fun” for those who live in the capital.

VENUE: CAIRO OPERA HOUSE WWW.IEREK.COM/EVENTS/CITIES-IDENTITY-THROUGHARCHITECTURE-AND-ARTS/

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NEWS

UPDATE

MARKET

SOUTH KOREAN FIRMS TO BUILD USD 4 BN SMART CITY, KUWAIT A consortium of South Korean construction companies are to start building an eco-friendly residential city in Kuwait by 2019, Yonhap News Agency reports. The consortium is led by POSCO A&C and Hyundai Architects and Engineers Associates Co., the news agency adds.

“It is the first export of the‘smart city’project which has been strongly pushed by the South Korean Ministry of Land,” a ministry statement reads.

The South Korean government voiced its plans to help form the consortium in 2018 and set up a special purpose company in 2019 to push forward the USD 4 bn project.

The project is planned to accommodate a range of 25,000 to 40,000 households, as construction is scheduled to begin in 2019.

DUBAI’S REAL ESTATE MARKET EXPECTED TO BOTTOM OUT BY END OF 2017 The Dubai real estate market is expected to bottom out by the end of 2017 with a downtrend across all sectors of the market, Invest-Gate reports.

Factors such as increasing supply, changing demand in employment market, and hikes in rent moderation will impact the residential market in 2017, according to a report released by prominent property market research company Cluttons.

Office rents recorded stability in 2016 and achieved growth within 12 to 18 months.

However, the resilience of rents are negatively impacted by the delay of shortterm expansion projects especially that of international companies.

EVENTS UPDATE

KUWAIT HOUSING & RESIDENTIAL DEVELOPMENT Approximately 100,000 people in Kuwait are awaiting housing to be supplied by the Public Authority for Housing Welfare (PAHW). In an era of low oil prices, the Kuwaiti government has been forced to consider a number of reforms which includes the removal or reduction of subsidiaries on energy. The enormity of this problem has prompted the PAHW to construct 5 new cities on the outskirts of the Kuwaiti capital. As such, at the Kuwait Housing & Residential Development Forum, consultants, contractors, architects and government ministries will gather to discuss best practice design and engineering strategies for the sustainable and cost-effective development of these 5 new cities.

VENUE: RADISSON BLU HOTEL, SALWA, KUWAIT WWW.HOUSINGKUWAIT.IQPC.AE/DEFAULT

1,741 NEWLY-ESTABLISHED LOCAL COMPANIES IN MARCH – REPORT

1,200 metric tons per day of granular urea, 4,300 metric tons per day of urea ammonium nitrate and 900 metric tons per day of diesel exhaust fluid, with a combined sellable capacity of 1.5 to 2 mn metric tons per annum of products.

ARAB TOURISM CONTRIBUTES BY 36.3% TO EGYPT’S TOURISM INDUSTRY Arab tourism to Egypt accounts for 36.3% of the country’s tourism industry, InvestGate reports.

Tourism Minister Yehia Rashed makes such remarks during the leading tourism exhibition in the Middle East Arab Travel Market (ATM), currently being held in Dubai. The minister says that the number of Arab tourists visiting Egypt in 2016 exceeded one third of the total number of foreign tourists.

During ATM, a number of Egyptian

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DATE: 23-24 MAY

PRODUCTION AT IOWA FERTILIZER COMPANY STARTS, USA Egyptian construction company Orascom is announcing that production and sales at its construction project Iowa Fertilizer Company is starting.

It is the first world-scale greenfield nitrogen fertilizer plant to be built in the USA in more than 25 years, Invest-Gate reports.

Orascom has built this state-of-theart complex, highlighting the group’s capability as a major engineering, procurement and construction (EPC) player in this segment in the USA and worldwide.

Furthermore, Orascom’s wholly-owned U.S. subsidiary, The Weitz Company, expanded its industrial capability through significant involvement in the project.

The plant has a nameplate capacity of 2,200 metric tons per day of ammonia, 2,200 metric tons per day of urea synthesis,

STATS

exhibitors, including EgyptAir, the Egyptian Tourism Federation, representatives from tourism companies in the Red Sea and Alexandria, as well as hotel and tourist agencies, showcased their offers.

Meanwhile, the number of tourists visiting Egypt during Q1 of 2017 increased by 51 % compared with the same period last year, according to official sources in the Tourism Ministry. The Egyptian government also aims to attract 12 million tourists by the end of 2017.

10 | INVEST.GATE | May 2017 - ISSUE 02

The General Authority for Investment (GAFI) says that 1,741 new companies were established in March at total investments worth EGP 3.6 bn, Invest-Gate reports.

The periodic report published by GAFI shows that the 1,048 companies have been established, in accordance with Law 1997 No. 8.

Meanwhile, 693 companies have been established in terms of Law 1981 No. 159.

The capital of the newly-established companies is divided among Egyptians, Arabs and foreigners, totalling EGP 3.2 bn, EGP 294 bn, EGP 89 mn respectively, according to the report.

TALAAT MOSTAFA PURCHASES LAND FOR DEVELOPMENT AT NEW CAPITAL Talaat Mostafa, Egypt’s largest listed real estate developer, has purchased 500 feddans (acres) for development in the country’s New Administrative Capital, Invest-Gate reports.

“Talaat Mostafa received the land two weeks ago after it came to an agreement with the administrative capital company on all the conditions,” a housing ministry source told Reuters.

About 15 Egyptian companies, including Talaat Mostafa, submitted bids in March to develop land for the capital’s first phase of construction, but no official announcement has yet been made as to the winning bids.

Egypt’s plan to construct a new city 45 km (28 miles) east of Cairo was announced in March 2015 at a Sharm al-Sheikh summit held to attract foreign investors.

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Real Estate Market Snapshot

ANALYSIS

AREA

Real Estate Snapshot REAL ESTATEMarket MARKET SNAPSHOT

Powered By

Current Status of the Residential Real Estate Sector Top Searches on Real Estate Websites (Residential)

Cityscape Egypt 2017 Residential Overview

Districts

Summary

30%

70%

New Cairo

Increase in traffic than 2016

30%

90%

Mortgage Financing

increase in prices than 2016

Europe

of units target classes A and B+

2

privileges

1

El Shorouk

Giza

of October 6th

2

Nasr City

90% of customers who locked deals or inquired about units in New Cairo or El Shorouk were Heliopolis, Nasr City, and Maadi residents

New Cairo

Maadi

2

3

Sheikh Zayed

90% of customers who locked deals or inquired about units in 6th of October or Sheikh Zayed were Giza residents

Heliopolis

1

3% 12% 15%

1 New Cairo

Relocation Transactions Sheikh Zayed

Properties for Rent

5%

Internal Immigration

Most of the transactions that took place in Cityscape were relocation deals; the majority of clients preferred to move away from downtown of Cairo to the New cities, such as New Cairo and 6th of October

Properties for Sale 3% 2%

Demand on units in

of sealed deals were in off-plan projects

marks the highest in demand in terms of relocation

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Maadi

70% 90%

Apartments

Land

Villas

Commercial

Apartments

Vacation

Commercial

Villas

Developers Officials’ Insights on the Current Status of the Market “The shortage of land supply from one side (the government) was the main reason behind the increase in the land prices and therefore the final product. While if the number of parties that supply land increased, this will lead to the required abundance that will consequently cause price reduction. Moreover, the private sector will be able to provide land with cheaper prices as a result of its decreased cost” Sabbour Al-Ahly Managing Director – Apr 9th , 2017

“Real estate sales have been negatively affected as a result of the inflation, but in an acceptable way. Sales are continuing and in large quantities, but slower compared to the period prior to the floatation.

The real estate sector is unlikely to reach the stage of sales bottleneck due to the accumulated annual shortage in the housing sector” Sabbour Al-Ahly Managing Director – Apr 9th , 2017

Client Priority Areas/Cities Preference for a First Home

Trending Expansion Given the expansion to Future City and the New Capital Administrative City in addition to higher combined population in districts close to New Cairo compared to that close to 6th of October, New Cairo came first in terms of demand

1

2

New Cairo

Sheikh Zayed

Preference for a Second Home

1

3

2

4

6th of October City

El Shorouk

“The Egyptian market is witnessing a large number of closed residential units, which are purchased with the purpose of investing, which is negatively affecting the sector”

Sahel (North Coast)

Capital Group Properties Chief Projects Officer – Apr 11th , 2017

3

Sokhna

“There are many unused properties and their development will come at a very high cost given their large capital requirements which the market could have benefited from economically later on. This prevents many classes of the society from investing in these properties, which brings us to real estate funds whose role is to engage investors into real estate investment opportunities again” Naeem Holding CEO – Apr 11th , 2017

Hurghada

Convention Prices/m2 (in EGP ‘000) New Cairo

6th of October

18.2

15.4 15.3 15.2 15.0

12.8 12.5 12.5 12.0 11.8 11.5 11.5 11.0

14.0 12.0

Core & Shell

12

Down payment

Most projects tried to compete with the 0% down payment introduced by MHND last year in their projects Taj City and Sarai; however, given the challenging attempt, all developers limited the offer to Cityscape convention only

10.6 10.1

31%

EGP Floatation

40% in Selling 25% Increase Prices

Blumar Hills

Jebal Resort

Cairo Convention in Unit Prices 30% Increase Compared to 2016

↓ decrease in local demand on properties despite partial purchases to hedge against the floatation and slight demand due to population base ↑ increase in demand from Egyptians living abroad on all property types as prices halved for them or for local citizens who are paid in dollars

Developers struggled between dealing with cash flow losses (driven by drastic increase in construction costs on the back of a hike in the prices of building materials by 20% to 100%) and proposing better payment terms to avoid the hike in prices effect on clients

Decrease in Purchasing Power Compared to 2016

Fully-Finished

Payment Terms Years Installments

8.9

3.5

Blue Blue

Rock Eden

Joulz

Cleopatra Square

October Plaza

Chillout Park

Pyramids Hills

Grand Heights

Pyramids Heights

Palm Valley

Semi-Finished

Installments years reached 12 years to keep up and challenge the 10 years installment trend that was also introduced by MNHD back in 2016 driving real estate companies, such as, City Stars to utilize the 12 years installments

© Coldwell Banker Commercial Advantage 2017

12 | INVEST.GATE | May 2017 - ISSUE 02

Woodville

One 16

Zizinia El Mostakbal

L’Avenir

Green Square

Park Corner

Galleria Moon Valley

Sarai

Capital Gardens

Madinaty

I-City

La Fontaine Province

Eastown

Palm Hills New Cairo

Lake View

4.4

0%

12.5

£

Increase in Construction Cost

8.0

Azha

9.0

11.0

Il Monte Galala

14.0 13.9

16.5

18.0

Haram Life

15.0

$

22.0

Murano

23.0

The Floatation Effect Cycle

Sokhna

Discount on Cash

In a means to attract buyers, given the low demand on buying and the aftermath of the EGP flotation, developers tried to broaden their discounts on cash payments to reach 31% (30% in Cairo and 31% in Sokhna)

15

Years Mortgage Financing Other developers who are convinced that the key is providing better payment terms rather than lower prices collaborated with the Egyptian Arab Land Bank (EALB) and National Bank of Abu Dhabi (NBAD) to introduce mortgage financing privileges to clients to reach 15 years installments

Most developers did not reach their targets despite their efforts to propose better payment terms; however, most of the new terms were already circulating in the market before the convention meaning there were no special deals offered Given the continuing rise in demand from Egyptians abroad and decrease in demand from locals, top major developers in Egypt are participating in EPS (Egypt Property Show), held in Dubai as its first destination

Dubai Convention

17

of the Top Major Developers in Egypt Next Destinations in Kuwait, UK, and USA

© Coldwell Banker Commercial Advantage 2017

THE VOICE OF REAL ESTATE | 13

VOICE OF THE EXPERT

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In a one-of-its kind interview, with a sophistication of a graduate-level economics lecture, Invest-Gate sits with ASHRAF SALMAN, former minister of investment and current CEO of Aur Capital to discuss the Egyptian economy and to highlight the company’s plans with ARCO Developments and its ongoing take on the real estate market of Egypt. Generously, Salman shares his insights on the industry as a whole and pinpoints the hits and misses of the Egyptian government’s reform plan, aiming to reach the Modern Egypt of the future… hopefully the near one!

WHAT IS YOUR ASSESSMENT OF THE EGYPTIAN REAL ESTATE MARKET TODAY? Let us first begin with assessing the macro picture of Egypt as many people fear the future following the float of the local currency and its direct relation to the real estate market. We look at the current world economy and, despite the situation here in Egypt, we still witness a GDP growth of 3.8% per annum.

Some of the developed or advanced economies have negative growth; other young developing economies have only reach GDP growth somewhere in the 2.5%3% per annum range. African markets too, which once had a double-digit growth, are now achieving 6% to 7% GDP growth per annum. So given all what Egypt faced during recent years and GDP growth still able to reach 3.8% in 2016, to me, as an economist, this is very positive.

Now that the purchasing power in Egypt is decreasing and worrying to some extent due to the many reforms beginning by the devaluation, I do not consider it a reform as much as it is taking everything to its correct price. At the end of the day I do not worry about prices as much as considering the availability.

When currency is made available, prices become automatically transparent, taking us to stability.

The current reform taking place in Egypt is not only the float of the local currency, but also the removal of subsidy on electricity and control of oil prices, leading us to a more free market.

PEOPLE WOULD ASK HOW IS IT A FREE MARKET WHEN THE GOVERNMENT AND THE ARMED FORCES ARE STILL INTERVENING IN MOST PRODUCTION AND PROJECTS? I say this is bound to happen given the transitional or reform period we witness today. If we look back at the big financial crisis of 2008, we find that the US administration, for example, interfered tremendously in helping all key players; the federal reserve too had helped a lot of banks to overcome the crisis. To me, this is the case now in Egypt and such governmental

H.E. ASHRAF SALMAN

interference is legitimate. It is a sort of a stimulus plan.

The Egyptian government with all its entities is working hard on the “Emergency Plan” by investing in social housing, infrastructure, the Suez Canal and the Suez Canal Economic Zone, the New Administrative Capital, etc. So, going back to the general picture of where we are today, in a two-year span, I believe the results of this “Stimulus/Emergency Plan” will show and we will see it reflecting on the GDP of Egypt. At that time, leading revenue growth to Egypt’s GDP will be the real estate sector.

BACK TO REAL ESTATE MARKET, WHERE DOES IT STAND TODAY? Worldwide, there has always been a concern regarding real estate price increase. We hear experts saying that it is a bubble like the case of Dubai. I believe not for a number of reasons, including the supply and demand. Demand for real estate in classes A, B, and C is there and it is increasing. We have witnessed 17% y-o-y growth in the industry. And this means that this industry is pushing to a super growing sector in the Egyptian economy. The demand increases naturally with the increase of Egypt’s population.

On a side note, the frequent population increase must be addressed and controlled immediately. It is eating up everything, despite of its positive reflection on real estate demand.

With the increase in demand, supply is not enough.

The propaganda surrounding the industry with the focus on a number of developers’ projects here and there makes it sound like supply is more than enough but numbers show otherwise. For example, Class A units across many, if not all developers, do not exceed 100,000 to 150,000 units with a delivery of 10% out of these offered units; and we are a population of nearly 100 million today! There is no way that the supply, even across class A, is enough. I can confirm that the demand on class A alone is more than double of those numbers I am giving you.

Then, we move to the mortgage market in Egypt, it barely exists. Up until last month, with all public and private banks offers, initiatives, all what is booked so far did not exceed EGP 20 million for a single residential compound.

Among those initiatives, we have the real estate finance law, which prohibits home equity loans like those of the USA as it is allegedly against the Sharia Law. Home equity laws like that of the USA and other countries, allow mortgage banks to increase home financing according to the market; so when the value of your property increases, mortgage banks give you another grant to spend but once the market is hit – like what happened in the USA in 2008 – you become in debt to the bank. Hence, the bank sells your home as foreclosure as you are unable to pay back and you lose all your savings.

Finally, to evaluate our real estate market today, we take a look at the surrounding markets, namely Saudi Arabia, the North Africa region, Jordan, Lebanon, and ending by Dubai (as our high-end quality market). In Tunisia, the average price of a class B unit has reached USD 3000 per square meter, Algeria is USD 2500 per square meter, Morocco USD 4000, Dubai USD 40005000 per square meter, leaving Egypt the cheapest of all with USD 1500 per square meter at the most prestigious projects targeting class A. This is accompanied by a strong reform program happening in the country for the very first time in years, investing in energy, housing, decreasing the deficit, and removing subsidies on electricity, oil and gas, and increasing its foreign reserves; and most importantly the growth in current GDP at 3.8% y-o-y. So, I confirm, there is no real estate bubble. This bubble comes from foreclosure, which we do not have. We are a cash market.

For the future of real estate in Egypt, the growth will exceed the 17% we already have, but by studying the latent needs.

Former Minister of Investment

EGYPT IS ON TRACK TO COMBAT BUSINESS OBSTACLES AND BOOST ECONOMY

BY FARAH MONTASSER

14 | INVEST.GATE | May 2017 - ISSUE 02

Prices still lag behind recent economic changes. What developers did was meeting the latent needs of owning a house by offering flexible payment methods

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WHAT ARE THE LATENT NEEDS IN THIS BOOMING INDUSTRY? The real estate market is, and will be, the leading sector for the coming three years at least. From an expert point of view, and an economic point of view, I do not see any risk in that sector. This risk is in the secondary market that is still liquid and that is due to the lack of mortgage. The interest rates for mortgage plans are still very high.

Studying the currency exchange float, the inflation rate of 30% m-o-m, inexistent increase in income per capita, should theoretically speaking double the property price but it did not. Of course, prices of properties have increased to an average of 20%, but still not doubled. So, if a unit’s price was EGP 3 million, it is now sold at EGP 4 million only. Prices still lag behind the recent economic changes.

What developers did was meeting the latent needs of owning a house by offering flexible payment methods, extending the payment installment plan from seven to 10 years compared to the popular five years of before. So, with every price increase, developers are bound to make the payments fit for the consumers’ needs and conditions.

GIVEN THE UNREALISTIC INCREASE OF UNITS IN LIGHT OF REFORM, HOW DO YOU AS A DEVELOPER MAKE PROFIT WHEN UNITS ARE OFFERED AT A HIGHER PRICE BUT NOT DOUBLED AS PER THE THEORETICAL MARKET PRICE INCREASE? In this case, developers offer what is called a “product mix”, mainly tailoring payment plans according to consumer needs. We create less unit sizes with of course reasonable prices. Now, you see 120 square meters on a-160- square meters lands available. Such dimensions were never available in Egypt before. The common trend is being again offered on installments depending on the amount consumers can afford every month. We go easy on payment methods and flexible plans to sell units, from seven to 10 years.

Flexible payment plans are part of the needs to cater to. I presume that the installment plans, when I speak about ARCO, are capable of reaching payment plans that reach 20 years. Meanwhile, we innovate and offer more appealing products.

The real estate market is lagging behind this frequent price increase on all commodities in the market – it is bound to face another increase next year and yet another in 2019. Then, our issue will be affordability when consumer demand is there. And the

Nothing happening in Egypt is exceptional. We have seen reform everywhere else; we just need to be on top of the game on both levels public and private sectors.

affordability you, as a developer, provide is flexible payment methods.

SO IF THE FLOAT HAS AFFECTED EVERYTHING IN EGYPT AND YET SEEN HOPEFUL FOR THE REAL ESTATE MARKET WHEN COMPARING EGYPT TO ITS NEIGHBORING COUNTRIES AND ACROSS THE REGION, HOW DID IT AFFECT AUR CAPITAL AS AN INVESTOR? As we invest in ARCO Developments, we acknowledge of course that everything has a price. Developers have to be more sophisticated to overcome the challenges of the float. We started off with some diagnostic strategies and brand polishing. We sought after innovative instruments such as hedging to reduce the risk of adverse price movements in some of the construction materials such as cement. ARCO has projects that need cement for the upcoming three years so if the one ton of cement today is equal to EGP 700, ARCO managed to fix price to EGP 800 for those three years and not to be bound to the further expected cement price increase. This hedge instrument we apply on all construction materials to be able to meet our development deadlines.

The float, of course, did affect ARCO, but not to an extent of not taking risk or generating profit.

WHAT IS YOUR PERSPECTIVE ON THE LATEST LEGISLATIONS SUCH AS THE INVESTMENT LAW AND CONTRACTORS’ COMPENSATION LAW? I find that is being part of the reform, the government is currently applying. Such laws are already in the parliament and will soon be enforced. Some will, of course, lead to revenue loss along the way; but ways are paved for future investments. We are on the right track and we take those business risks as we move forward. Nothing happening in Egypt is exceptional.

We have seen reform everywhere else; we just need to be on top of the game on both levels public and private sectors.

No. I do not see it easily. I tend to be rational; so, for a community to develop it needs an average of 10 years. It is easy to deliver a compound in three years, but to make people move in, you need to create life. ARCO is now a community developer to provide facilities, landscape, and security in its already developed and sold projects before investing in new projects. I needed to build community. This has to be applied in new cities let alone a city like Ain Sokhna that is in proximity to the SCZone. I do not see it becoming a first home in the upcoming seven years… maybe later.

HOW HAVE THE GOVERNMENT’S LARGE-SCALE PROJECTS SUCH AS THE NEW ADMINISTRATIVE CAPITAL AND THE SUEZ CANAL ECONOMIC ZONE AFFECTED ARCO’S OUTLOOK? ALSO, DABAA ON THE NORTH COAST?

HOW DO YOU SEE THE FUTURE OF EGYPTIAN COASTAL DESTINATIONS GIVEN ALL THOSE PROJECTS IN THE REBUILDING OF NEW EGYPT? DO YOU SEE EGYPT EVER COMPETING ON THE WORLD TOURISM MAP?

Direct investment is a long-term plan and I hope people stop analyzing those projects on a daily basis.

Both projects are crucial for this period and the reform plan. They are what we call “Alternative Investments” for a long-term direct investment, and it is calculated as IRR over the course of seven to 10 years.

The question is: do we cater to the tourism industry and follow the modern trends that shape our tourism flow?! We do not. We need to stop talking about our heritage, having the different and diversified civilization, obtaining how many of the world’s ancient artifacts and archeological sites, etc. Enough with all that! Yes we do have the best beaches, yes we have the remains of the greatest civilization of the world, but neither do we cater to it properly or do we follow what the modern tourist needs today.

I find the government’s ongoing investment in infrastructure, especially that of the SCZone, is the future of new Egypt. When the world trade market recovers, it will reflect on Egypt and thus generating the revenues such mega projects were built for. We just need to be realistic and give it the time it deserves.

We are currently rebuilding the infrastructure of Egypt to be ready for direct investment to pore into our country when the depression and world trade recovers, examine the situation in Europe, the USA, and even China before we judge the situation in Egypt. We have to be ready when the FDI reviews Egypt as a potential investment market of all sectors.

As for the New Administrative Capital, I believe it is the development of a New Cairo. We had to develop the desert for more investments and projects. We have a well-planned expansion in the desert. We, ARCO, are now seeking first-home projects in our upcoming strategy plan across the New Administrative Capital and western Cairo in Sheikh Zayed and the 6th of October.

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DO YOU CONSIDER AIN SOKHNA TO BECOME HUB FOR FIRST-HOME BUYERS?

Developers have to be more sophisticated to overcome the challenges presented by the float 3%, Europe 4%, and the GCC 8%.

WHAT IS ARCO’S CONTRIBUTION TO SUSTAINABLE LIVING? If we are looking into ARCO’s Crystal Lagoons of the North Coast, we have provided a developed, technological summer life for your second home.

We have installed solar panels and I can say that it is the only community of all the North Coast solely depending on solar energy as means of electricity.

Crystal Lagoons have developed and patented a sustainable cooling system for industrial processes, such as thermal power plants, data centers, foundries, paper and steel mills, among others, where a

sustainable cooling lagoon is built in connection to an industrial process in a closed-circuit system in order to provide high-quality cooling water for its cooling stage. Furthermore, we have developed water-filtering systems in our public areas, including landscape and swimming pools to save on energy and guarantee the quality of life in a sustainable clean way.

ARE YOU HOPEFUL? After analyzing the Egyptian reform plans, including the major development and infrastructure projects, the still-growing economy as I mentioned earlier, and the real estate sector, yes, I am very much.

The tourism sector must anchor the ropes to attract tourists of today. We need to innovate and upgrade our marketing strategies. Archeological administration need a major update and follow those who succeeded.

GIVEN THE NEW PROJECTS, WILL WE SEE FOREIGN INVESTMENTS COMING IN AS A N T I C I PAT E D ?

Yes of course. Projects like Dabaa Nuclear Plant in the North Coast and the SCZone on the Red Sea, you are catering to foreign investors’ needs and speaking their language for sure. Here, the devaluation of the pound played a huge role in making a country like Egypt very attractive due to the cheap cost. Also, the current IRR of Egypt today is exceptional. Unlike the rest of the world, the country’s current IRR now is an average of 24% to 30%; this is not available at anywhere around the world today. In the USA, it is THE VOICE OF REAL ESTATE | 17

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What was special about Cityscape this year?

Despite the declined flow of attendees compared to 2016, Cityscape 2017 featured serious buyers.

Only those eager to invest came to the exhibition and actually purchased units across many projects located in Egypt’s major destinations.

In 2016, we could get those interested in investing in several projects, but developers actually generating profit were debatable. This year, on the other hand, we received only the serious buyers who actually bought units during the three-day exhibition. We can say that Cityscape 2016 was stronger than that of 2017; however, this year, the exhibition was much more stable.

How so, with the economic conditions the country is suffering as well as price increases on all commodities?

The real estate market in Egypt, unlike that of GCC countries, for instance, is stable. It may suffer, but never deteriorates. We say real estate can get ill, but will never die. Illness entails that the market’s frequent price changes affects supply-demand dynamics, and that transactions lead to instability. But [the sector] will never die.

Yes, the living conditions of Egyptians suffer following the float and expenses have increased alongside skyrocketing prices, but real estate has become their haven. Your money is safely invested when put in properties.

This year, developers have made it even more attractive, with the feasibility of payment methods and installment plans.

Another important factor we must look at is bank’s investment certificates and deposits supplied by the end of 2016 known as Sisi Deposits (Wadaye El Sisi) with attractive interest rates reaching up to 20%.

Those saving plans have now dropped to 14-16%; I found that this also triggered the property market.

It diverted people’s attention back to real estate to save the value of their money. Real Estate is the only source to combat inflation.

Do you see 2017 more stable and would we see the flourishment experts and officials have been bragging about since last year?

Yes, I am very hopeful. Egypt’s current economic plan, strategy, and adjustments are correct; therefore, 2017 would be more stable and more promising.

Given the float, how challenging is it for real estate investors? Would the new laws help in any way?

EGYPT’S COASTAL AIN SOKHNA

BREAKS SEASONAL TOURISM TREND With recent economic reform measures, Egypt seeks to pave the way for additional investments in its coastal shores after years of a standstill. Invest-Gate seizes the opportunity to have a thorough conversation with Chairman of the Ain Sokhna Tourism Investors Authority (TIA) Mohamed Roshdy. Roshdy also serves as board member of El-Sherouk Touristic Development, the real estate company behind the sought-after Laguna Bay in Ain Sokhna, along with Capital Developments. The conversation sheds light on the current investment climate of Ain Sokhna with the progress achieved and the obstacles within.

electricity wires, ceramics, or the materials used to produce ceramics, to name a few. Hence, prices of property units have increased. The market today is not yet stable; this is normal and should not scare us. With any new economic strategies, things get fluid and then they become stable. We are on the right track economically and everything would be increased compared to what was before but will eventually stabilize.

Again, if we analyze Cityscape this year, we would see only serious buyers attending unlike before as I said; and this is a very important sign of stability.

The new laws are good on papers, but in application, they contradict one another leading us to obstacles and setting investors back. The whole legislative system needs a proper review and update to fit in today’s demands and pave the way for a prosperous future.

Speaking of Ain Sokhna, some people believe that supply in terms of projects is far more than the demand. What do you think?

This is by all means not true. As a matter of fact, I see the total opposite – demand is far higher than the supply. Ain Sokhna is the coast of Greater Cairo for its closeness to the capital. It enjoys year-round beautiful weather and is a small coastal area in comparison to the North Coast. However, some believe that the numerous projects along the Ain El Sokhna shores are far more than that it actually encompasses.

Because of its small shores, the Ain Sokhna developments are already sold; there are no lands for future investments. It is a small area of land divided amongst already-established projects and those to be completed on a number of phases; those expanding I mean.

Is the Ain Sokhna Sector attractive to only locals?

Or foreigners too? Can this “Coast of Greater Cairo” be open and active year-round?

It is already sold abroad…

But we do not see them?

Allow me to clarify... As Chairman of the Ain Sokhna Tourism Investors Authority, I can confirm that we constantly receive several requests from foreign investors of different nationalities aside from the GCC countries, including British, German, and Dutch to name a few. Their main objective in the area is to buy retirement homes by the sea. Investing in houses by the sea in Egypt can cost USD 50,000, which is

equivalent to EGP 1 mn.

The British, for example, love Egypt and because of the political changes of recent years in addition to the negative propaganda used against Egypt, such interests were put on hold.

Today, the wheels have changed to our favor.

Foreigners are coming back and are asking about Egyptian destinations as well as looking for ways to invest in the country, whether as corporates or individuals. I believe that, following President Sisi’s recent visit to the USA, we will receive more requests and see actual investments in the sector.

Now that the USA declaring Egypt safe to visit, will we see Ain Sokhna on the touristic world map?

I believe so. The Cairo- Ain Sokhna Road along with the small city itself are safe. As a matter of fact, the whole nation is safe. The world is gaining Egypt’s trust back bit by bit on the security levels. I can confirm that Ain Sokhna has seen a flow of foreign tourism and this flow, we expect, will increase in the near term.

What is seen profound from the government to enrich Ain Sokhna?

We have the Industrial Zone of Ain Sokhna with a lot of foreign investments coming in, including the gigantic China Holding Company, Ford, and Siemens to name a few. This, I reckon, is the biggest advertising campaign for Ain Sokhna in Egypt. Let alone, the expats from all over Egypt and especially those residing in Cairo. Where will they go for short breaks rather than Ain Sokhna?!

For the record, most residential projects in Ain Sokhna are already occupied by some of the young foreigners working in Cairo. Following the events of 2011 up until recently, those people have left the country but none of them sold their units, unlike the case of Dubai. With its economic crisis, most expats sold and left the country for good, causing the suffering of its real estate industry. For sure, foreign tourism is coming back to Ain Sokhna.

Where is Clean or Renewable Energy taking place in Ain Sokhna?

One of the best decisions taken by the Tourism Development Sector is demanding 25% of the infrastructure of any project in Ain Sokhna to be based on clean and renewable energy. Ain Sokhna has two sources of clean energy: wind and sun.

It is very challenging indeed, with price increases on everything given reliance on imports. Most construction materials are imported, including steel,

I am very hopeful.

Egypt’s current economic plan, strategy, and adjustments are correct; therefore, 2017 would be more stable and more promising.

BY FARAH MONTASSER

18 | INVEST.GATE | May 2017 - ISSUE 02

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Ain Sokhna has a wind plant as well as a solar one. We will incur costs for the development and implementation in the beginning, but at zero cost in the future. Our wind speed in Ain Sokhna is 25 kilometers per hour, making it an efficient wind plant on the Red Sea. Both sources of energy must be further enhanced and emphasized across the entire nation.

What are the challenges investors face in Ain Sokhna?

To have the “tourism” we see in other countries, investors have demands that are still not granted although Egypt has completely reformed its economic strategy. To have the International Tourism Bourse adding Egypt on the map, there are a number of demands that have to be met now, including completing medical services in the area. Today, the closest hospitals to Ain Sokhna are those of Cairo and Suez -- ambulance services are not available, in addition to a number of outdated and conflicting laws prohibiting investors from entering Ain Sokhna.

The laws include upped land prices following the float of the local currency which hinders investments.

In addition to the high land prices on offer and the accumulating interest rates following the float, the lands themselves are deserted and require infrastructure development, adding to further expenses and price increases on consumers.

With the sector’s high labor force, Ain Sokhna further lacks accommodation and means of transportation.

Most importantly, the government with all existing laws up until this minute still fails to facilitate investments with its imminent legislation.

We need to have a number of hotels, schools, a university, and an international airport. These are all the facilities of a city; and that, by the way, I see coming with the new industrial zone and the Galala Mountain project by the Armed Forces Engineering Authority.

Are there not enough hotels already there or in the pipeline?

The International Tourism Bourse requests a number of rooms (approximately 3,000 rooms) in a destination to put you on the map and generate tourism. Today, we are way lower than what actually Egypt has to offer.

The Ain Sokhna Tourism Investors Authority works directly with the Tourism Development Authority, whom I believe to be the best governmental entity in Egypt, dealing with local and foreign investors alike, resolving all their issues as well as perceived promises to deliver Egypt how we want it to be.

However, hospitality investments in Ain Sokhna are becoming a bit of dilema. According to the Tourism Development Authority articles, for every

The way I see it is that because of its closeness to Cairo and now with the New Administrative Capital, Ain Sokhna is becoming a habitat for many and so it needs its facilities.

one residential unit in a touristic destination, the developer is to provide one hotel room.

How is that feasible?

It is not, because such a project requires a lot of investment capital with an unguaranteed frequent occupancy rate. Hospitality investment requires around 50-70% occupancy at a very frequent rate to generate targeted profit levels within the first eight years. This cannot be applied in Ain Sokhna. TIA has been studying and submitting proposals to the tourism development sector, among which “Vacation Homes” and the Spanish Riviera is our best example.

Spain is one of the top worldwide tourist destinations, providing around three mn vacation homes and a lower number of hotel rooms. To ease the pressure on developers in Ain Sokhna, we find it best to adopt the Vacation Homes method in Ain Sokhna, too.

Other suggestions are to include a number of neighboring residential developers on the Ain Sokhna shores to jointly develop one big hotel serving their projects, and also the common running trend nowadays is having serviced units within our existing projects. We need to think out of the box.

We are also working on another proposal , the “Good Citizen”, to present to the government soon aiming to have private investors work in alliance with the governmental authorities to speed up such public and infrastructure developments meeting the International Tourism Bourse criteria.

According to the New Administrative Capital plan, is it to acquire an international airport serving Ain Sokhna, too. Is this not enough?

a great project for redesigning Egypt as a whole and an international airport by all means is a plus; however, it is not enough to serve Ain Sokhna as a main hub for the flow of tourism we seek to achieve.

Ain Sokhna needs its own airport and its own city. Already, residents of Laguna Bay are residing permanently in Ain Sokhna. The way I see it is that because of its closeness to Cairo and now with the New Administrative Capital, Ain Sokhna is becoming a habitat for many and so it needs its facilities.

Your Laguna Bay project... What makes it special among the many developmental projects in Ain Sokhna?

Well, Laguna Bay is a fully-serviced community on the shores of Ain Sokhna and this, I believe, is social security. Its uphill-leveled design gives all units equal sea views at wider angles, too. It features a one-andquarter kilometer sea shore. Properties only consume 12% of the total land area, with the rest is divided among courts, landscapes, and swimming pools.

We delivered six phases of the project already and are finalizing the seventh to be delivered in 2018.

Are you hopeful?

Investors are fighters and we are all Egyptians. With the economic reform Egypt has finally set, we are hopeful to change all laws limiting the investment climate in general. Egypt is on the right track and we are amending the obstacles. This is bound to happen everywhere in the world and we believe in the prosperity that is to follow. There is change within the government, who are – for the first time – listening, open to suggestions, and taking some actions as a start.

Not at all. Yes, the New Administrative Capital is 20 | INVEST.GATE | May 2017 - ISSUE 02

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s the Egyptian government is moving ahead with several industrial projects in the Suez Canal Economic Zone (SCZone), real estate developers are seeing a great potential in starting fully-integrated housing projects in the promising area. Invest-Gate sheds light on how real estate developers view the Suez Canal Economic Zone as a residential destination hub.

Egypt’s Real Estate Developers Weigh In Starting Housing Projects in SCZone

“The area is a great opportunity for all developers to create cities that accommodate citizens’ needs,” Ahmed Shalaby, CEO of Tatweer Misr for Real Estate Development, says.

Shalaby adds that there is an urgent need for fullyintegrated community projects to relocate residents in Cairo and the Suez Canal zone can be an attractive residential hub.

Tatweer Misr is among the many developers currently investing in the zone by building residential projects such as Il Monte Galala in Ain Sokhna, aiming at establishing fully- integrated communities rather than stand alone compounds like those existing in their other projects.

BY FATMA KHALED

“If we manage to develop fully-integrated communities around the entire SCZone, that would be a great opportunity for all developers to invest in housing, retails, offices, schools, and hospitals,”Shalaby believes. “Once the demand is there, developers will go,” he adds. A fully-integrated community, according to Tatweer Misr, should include housing catering to all social classes, namely expats, executives, middle management and workers.

The SCZone is one of the country’s strategic zones which has projects worth over EGP 100 bn and due to be finalized within the next 18 to 48 months.

The SCZone has so far signed contracts to develop 23 mn square meters in the area, according to the authority’s statements. SCZone, with six major ports, aims to be among the most investment-friendly destinations worldwide by 2035.

The area, spanning an area of over 461 kilometers, plans to operate as a trade, residential, and commercial destination. It is divided into four categories including East Port Said, Qantara, Ain Sokhna, east and west Ismailia.

East Port Said will include a residential project that will be built on a smart basic foundation, incurring high revenues. Those basic foundations include gas, water, surveillance, and electricity among other facilities.

Fathallah Fawzy, Chairman of MENA Group, says that despite the overall benefits of investing in the SCZone, developing residential projects and selling them may be a challenge.

“Residential projects’ contracts are given through a 50-year usufruct system, which is a business model that will be suitable to build houses and rent them to workers in the zone,” he tells Invest-Gate.

He adds that housing developers cannot build high-end and medium houses and sell them there currently because developers can not abide by such a business model. They are used to the selling and buying business model, thus “the benefit of investing implies that a developer should build units and rent them only,” says Fawzy.

According to the SCZone Authority, the zone has the potential of becoming a residential destination hub. Ahmed Darwish, Chairman of the Suez Canal Economic Zone, says that Qantara and east Ismailia are suitable for residential projects, whereas Ain Sokhna is more suitable for heavy industries and small and medium enterprises. “Other areas of the

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zone are considered appropriate for petrochemical projects,” Darwish tells Invest-Gate.

well; however, further information about the project was left unannounced.

Areas of Zafrana and Suez Road are to feature residential projects, one of which will span over four mn square meters. Potential investors are allowed a usufruct system which provides investment benefits over either 50 years or 30 years if they will invest in ports too.

“The SCZone is among the best destinations for investments at the moment,” says Chairman of MENA Group Fawzy. “It operates as service provider in trade and other sectors because it features a clear business model having no bureaucratic procedures. Each party in the contract have clear roles and commitments.

The pricing is fixed and clear, you could finalize the contract and permits from there,” he adds.

“The fully-integrated residential communities will be constructed based on the highest standards and will include schools, universities, hospitals, and entertainment areas. The sustainable project will be one of the sought-after destinations by 2035,” Darwish believes.

Darwish also highlights ongoing major projects in the two of the most important areas: East Port Said and Ain El Sokhna. “East Port Said is one of the promising areas in the zone, with around nine local contractors currently working together to develop projects under the supervision of the Egyptian Armed Forces Authority,” he confirms.

Darwish further illustrates other giant projects in the zone, including a USD 7bn petrochemical project that is currently being developed in Ain Sokhna and an EGP 300 mn logistic city for cars spanning an area of 260,000 square meters.

“Other crucial projects in the pipeline include a medical manufacturing city spreading over four mn square meters, two steel companies, and Gold City, which is a separate project that will be announced soon,” he adds.

SCZone continues to attract several investments as Egypt awaits signing of project protocols with England, Spain, Poland, Russia, China, and Singapore.

“There are ongoing negotiations with Singapore Ports Authority to operate ports in East Port Said, assessing quality and reviewing financial earnings,” announces Darwish.

Current developments also include the construction of approximately 5,000 square meters of quays in East Port Said, including ones for vehicles and others for shipments and containers. The projects are developed in collaboration with the Singaporean Authority and Emirati investors.

As Egypt seeks to uplift the SCZone, most projects being developed are going green. “Smart green SCZone is needed in the masterplan to help create more sustainable communities,” Tatweer Misr CEO Shalaby notes. Green projects’ techniques do not only apply to houses, according to Shalaby, but also factories, offices, spaces, and retails.

The zone is also offering special processes to establish companies in the area. According to Darwish, the registration process will only take three days. These companies will receive permits within five days along with additional services and will be able to avoid bureaucratic licensing procedures. “Additional benefits for investors include exemption from custom taxes except if the investor will provide commodities to the local market,” he clarifies.

“We have the Industrial Zone of Ain Sokhna with a lot of foreign investments coming in, including the gigantic China Holding Company, Ford, and Siemens to name a few. This, I reckon is the biggest advertising campaign for Ain Sokhna in Egypt,” El Sherouk Touristic Development CEO Mohamed Roshdy tells Invest-Gate.

An opportunity to drive investments in and increase industries, SCZone will be a main contributor to gross domestic product, according to Shalaby. “This is a golden opportunity for local and international investors to come and invest now and a great chance for Egypt to increase its exports and hence help in the country’s economic development,” he explains.

With further plans and projects yet to be announced, the SCZone is viewed as a prosperous investment hub and one of Egypt’s substantial projects that aim to push forward economic development.

Furthermore, the authority’s future projects to take place in SCZone include Chinese investments in Ain Sokhna, spreading across seven mn square meters as THE VOICE OF REAL ESTATE | 23

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RUSSIAN DEVELOPERS GIVING PUSH TO SCZONE WITH

NEW MAJOR INDUSTRIAL PARK

BY MENNA A. FAROUK

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USSIAN developers are planning to give a major push to Egypt’s Suez Canal Economic Zone by clinching an agreement with the Egyptian government this month, May 2017, paving the way for starting major projects, including the assembly of Russian trucks, cars, agricultural tractors, construction equipment, furniture making, concrete products and chemicals. Invest-Gate digs deep into the projects to be carried out in Russia’s new industrial zone in the Suez Canal.

DUBAI, DUBAI, ABU ABU DHABI DHABI RIPE RIPE FOR FOR TENANTS, TENANTS, HOMEBUYERS HOMEBUYERS

“The industrial park will open the door for attracting foreign investments in various sectors in Egypt, especially infrastructure and construction,” Mohamed Montasser, member of the British-Egyptian Business Association, tells Invest-Gate.

BY BAYUT.COM

Montasser adds that Egypt needs to increase its productivity levels and export rates and the establishment of the Russian industrial park will fulfill such goals.

“Egypt’s production rates total USD65 bn per year, which is very low in comparison with other countries like Turkey, whose production stands at USD195 bn and South Korea, whose production hits USD325 bn,” Montasser says.

The real estate expert also notes that Egypt’s exports stand at USD19.5 bn while its imports total more than USD70 bn. “The zone will increase Russian investments in Egypt and will push up hard currency in the country,” he says, highlighting that the new industrial park will also help promote Egyptian products in Russia as well as export locally-made products to countries in Europe, Africa and the Middle East.

In February 2016, Egypt and Russia signed a memorandum of understanding to establish the industrial park in the east economic zone of Port Said with total investments worth USD 4.6 bn.

The park is planned to be built on an area of two million square meters and is expected to generate at least USD 11.6 bn in revenues, as well as create 77,000 jobs, according to data released by the Russian Ministry of Trade and Industry.

Almost 60 Russian companies are taking part in the project, mostly private companies including GAZ, Gazprom Neft, Kamaz, UAZ, Transmashholding, Tatneft, InterRAO, among others.

The project, which is expected to be finalized and fully operational by 2035, will have a friendlier tax regime for resident Russian firms. The tax rate for businesses in the project and personal income tax will be 10% while sales tax will be abolished.

“I think that it is a very promising project. There will be major new investments, new jobs, and use of the logistic potential of Egypt,” says Chairman of the Federation Council Valentina Matvienko at a meeting with Egyptian Prime Minister Sherif Ismail early in March 2017.

According to estimates presented at the International Industrial Exhibition Innoprom 2016, construction works at the Russian industrial zone will start in June 2018. The managing company of the Russian 24 | INVEST.GATE | May 2017 - ISSUE 02

Industrial Zone in Egypt will be set up in August 2017, while the project planning of the first stage, 80 hectares in size, will start in December 2017, the Innoprom report confirms.

The park will also include a living sector on an area of 220,000 square meters as well as a hotel, offices, and an exhibition zone. It will encompass a recreation area and rely with about 50% of its consumption on renewable energy sources as well.

a new level and will push forward development in the Suez Canal zone,” he confirms.

In 2015, Egypt inaugurated the New Suez Canal, a 37-kilometer waterway dropping to a depth of 24 meters and running parallel with the existing 145-year-old Suez Canal. Originally, the project was planned to be completed in three years but later it was reduced to 12 months.

UAE Market Report February 2017

January to AED 1.32 mn in February. Average rental yields topped out at 6.6%.

The UAE real estate sector appears to be becoming attractive for both end-users and renters looking for well-priced properties. With the addition of new units over the past few months, the market is becoming more affordable for both buyers and renters.

Two-bed units in the emirate commanded an average rent of AED 137,000 in February. Selling for a mean price of AED 2.25 million, the units gave owners a rental return of 6.1% per annum.

According to real estate portal Bayut.com, apartment rental rates in Dubai saw minor increases in February while there was significant fluctuation in rental rates in Abu Dhabi. Average rent in Dubai saw a minor increase from AED 114,000 to AED 115,000. However, rental rates in Abu Dhabi decreased by 8%, settling at an average AED 110,000 for the month of February.

Let’s take a detailed look for the second month of 2017.

The average sale price of a three-bed apartment in Dubai shed 2% of its January value to land at the AED 3.5 million mark in February. The rental yield for threebed units averaged 5.37%. There was a similar 2% drop in the average rent for three-bed apartments, the value recorded at AED 188,000 in the outgoing month. The average rent for the four+ bed category remained AED 314,000 in February, while the rental yield was recorded at 4%.

The SCZone Chairman Ahmed Darwish said that the Russian industrial zone will be built under a usufruct right for 50 years. “The Russian side will get a land in the zone under usufruct right for 50 years and will develop the land in line with a general plan approved by the board of the authority,” Darwish announces at a meeting with Russia’s First Deputy Minister of Industry and Trade Gleb Nikitin. Darwish adds that the SCZone has come a long way in the negotiations with the Russian developer as of November 2016.

Dubai

In Dubai, the changes in values have been more pronounced in areas in or close to the city centre, as a newer lot of quality structures keep pulling tenants and buyers out to the city’s suburbs.

Saad Teima, head of the Transport Committee at the country’s House of Deputies tells Invest-Gate, “The construction of the new Russian industrial zone would not only increase Egypt’s exports and production, but it could also be a bellwether for resuming flights between the two countries after about one-year hiatus.” Russian flights to Egypt’s Red Sea resort town of Sharm el-Sheikh were suspended following the October 2015 downing of a Russian aircraft over the Sinai.

The average price for a studio apartment remained steady at AED 667,000, returning an impressive rental yield of 7.95% to owners. Suburban localities offered rental yields well above the 9% mark, with Dubai Silicon Oasis, Dubai Sports City, Arjan and International City providing the best returns.

“We consider Egypt as a regional hub and we should have several of such regional hubs with our businesses,” Russian Minister of Industry and Trade Denis Manturov says in press statements carried by the Russian news agency TASS. This mechanism, according to him, is used by China to develop their exports, the news agency adds.

The Russian zone should be the first of several zones to be established around the Suez Canal with plans already underway for Chinese and Italian industrial parks.

“The new park will take Egyptian-Russian relations to

The project attracted USD 8.5 bn in six days and is expected to produce USD 12.3 bn in revenues each year to double the canal’s current revenue intake by 2023. The vessel traffic is also expected to increase by about 50% to take the daily transit volume to 97 from 49.

As one of President Abdel Fattah El Sisi’s flagship megaprojects, the Suez Canal Economic Zone is poised to become a global logistics and industrial hub. Officials hope that it would eventually contribute about a third of Egypt’s gross domestic product.

As a number of units in the pipeline are gradually making their way into the market, renters are generally happy. The market is supplying more bargains and some landlords are willing to negotiate on rent. However, the average yield is still an impressive 6%, outperforming real estate investments in comparable cities.

For one-bedroom apartments, the average rent was down 3% from the previous month and was recorded at AED 87,000. Interestingly, the sale price for apartments increased 4% from AED 1.27 mn in

This is a positive development. Central areas like Dubai Marina, Deira and JLT – that have borne the brunt of expat demand for long – will see an easing pressure and the little remaining inflationary effect on prices and rental values will also likely be phased out. On the other hand, the move to the suburbs will not only see the residents’ number rising in other parts of the city, but quality and amenity-laced structures will benefit the occupants immensely by providing more value for each dirham spent on housing costs - a win-win for everyone.

Abu Dhabi While rents in Dubai mostly held their ground, values came down noticeably in Abu Dhabi. An overall

adjustment of 8% meant the average yield for rental apartments also dropped to 6.1%. The greatest downward movement was observed in rental rates of studio units. Average rent for studio apartments was recorded at AED 44,000 in February, down 8% from the January average of AED 48,000. The rental yield for the category was 6% in the outgoing month.

One-bed units shed 5% of their rental value in February to settle at AED 81,000, while two-bed apartment rents averaged AED 118,000. Rental yield for both categories was 6.6%. The average rent for three-bed units in the UAE capital was AED 164,000 per annum, according to data analysed in February.

Meanwhile, the yield averaged 6.3%. Bigger units in the four+ bed category also saw a rental price decline of 3%, with rental cost averaging AED 217,000 during the course of the month. The rental yield for the category was recorded at 5.3%.

Our Take Considering the global headwinds most economies are braving, and the effect on liquidity as a result of the ongoing oil price crunch, the performance of real estate markets in the two main cities of UAE appears satisfactory. While many regional realty markets remain in a nosedive, Dubai and Abu Dhabi have held their positions well.

The adjustments in prices are a natural phenomenon in markets that are directed by demand and supply and should not be cause for concern. The massive infrastructure expenditure planned in relation to the Expo 2020 is yet to gather momentum and push real estate activity into top gear. And that might be one reason many players are still observing the market from the sidelines, resulting in a reduction of demand, and subsequently, prices.

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DEVELOPERS AT CITYSCAPE DWELL ON

CHALLENGES FACING EGYPT’S REAL ESTATE MARKET

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In Cityscape’s Sixth Conference in Egypt, Invest-Gate speaks to leading researchers and developers about the outlook of Egypt’s real estate market and the challenges the business faces amid economic fluctuations and recent reform measures.

BY LEENA ELDEEB AND FATMA KHALED

HOSSAM ABOUL FOTOUH, FOUNDER AND CHAIRMAN OF ABOUL FOTOUH GROUP Why did you expand from automotive-oriented production to real estate?

WOUTER MOLMAN, CITYSCAPE GROUP DIRECTOR, INFORMA EXHIBITIONS, UAE What do you see in store for the real estate market in 2017?

The market is going through a transitional phase at the moment. The government has implemented major structural reform measures, including floating the EGP, gradually slashing subsidies, and increasing tax rates. These decisions would have had a more significant impact on everyone if taken earlier. No country has even witnessed such reform in this short period of time. The government’s reform steps have had a positive impact so far with regards to increasing foreign reserves. Despite the challenges that this phase poses on Egyptians, the government’s move was necessary.

I expect market performance to improve in the upcoming months and hopefully in the upcoming years as the hospitality market has been struggling due to security issues. Egypt is more affordable to tourists today than it was previously. The government is also assisting hotels with incentives and low interest rate to renovate the older hotels; however, we are not even close to the peak levels we saw in tourist inflows during 2009.

CRAIG PLUMB, HEAD OF REAL ESTATE AND PROPERTY RESEARCH AT JONES LANG LASALLE (JLL) IN DUBAI, ABU DHABI, AND MENA REGION Some argue that grants and funds from different countries and institutions could backfire in terms of sanctions if Egypt could not pay back, or that political and ideological influences would be imposed. We are sure you have seen cases like this during your work in JLL, how do you argue against or with this rhetoric?

History would suggest that countries need to attract foreign investments and I think that is definitely the case with Egypt at the moment. I think again many of the bigger developers here at Cityscape have recognized the need to perform joint ventures and attract investors, particularly from other countries in the GCC. The UAE and Saudi Arabia would like to invest in Egypt at the moment but they are put off by the regulatory framework. So, there is a number of aspects to that.

At the governmental level, with tariffs and capital repatriation, the ability to get the capital out of the country are still a problem. So I think there needs more to be done to make it easier for easing the flow of money in and out of the country.

Another factor is that some Egyptian developers are still a bit reluctant to enter into partnerships with overseas investors.

We have seen a number of investors from Dubai and Abu Dhabi who came to work with families or with developers here in Egypt and they have not been able to do that because they have not been able to agree on financial terms. International developers would say they are being a bit inflexible in terms of what they are willing to give up.

MOHAMMAD ABU BASHA, VICE PRESIDENT OF RESEARCH AT EFG HERMES When we talk to real estate developers, they tell us that the EGP devaluation followed by the flotation encouraged foreign purchasers and investors to buy from the Egyptian market. Is that true?

Generally in Egypt, we do not see much of purchases from foreign buyers. There used to be purchases in niche markets like El Gouna and the North Coast but these are not pushers to the market; it is not a trend. So, I believe it greatly remains the same.

The segment that witnessed a great boost in their purchasing power is that of the Egyptian expatriates. This is the segment that the real estate companies are aiming to target.

The media, side-by-side with the government, are making it clear that the Egyptian economy is currently relying on the grants and funds getting injected into the Egyptian wallet. On the other hand, how are production rates in the recent period?

Eventually, the size of the decline that happened in the currency improves the attractiveness and competitiveness of the economy of that currency, especially since no country has had a 60-70% decline in its currency in the last two years. That is a huge number that immediately reflects on the gains of businesses. In fact, four to five months is a very, very early stage to judge production rates. It is moving in the right direction but not with the magnitude we are aiming for. I do not think we will find a great magnitude in the relative terms before 2018.

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Real estate is considered immortal, unlike cars. It was inevitable as I am originally an architect and my father founded the first company in 1940 in Egypt, which became among the top three leading development companies in the country. We later worked in Saudi Arabia and entered into partnerships with several Saudi investors, including Prince Mohamed bin Abdel Aziz and Prince Abduallah Faisal at that time.

How can we guarantee sustainable construction?

Our M2 Building System in Aboul Fotouh has been experimented globally, proved to be sustainable and was able to previously renovate areas affected by the famous Tsunami. This construction system is strong enough to tolerate earthquakes and stands strong in tolerating 30 tons of dynamite explosions. The system also saves 30% to 40% of the traditional construction costs. M2 Building System can be used to develop anything and we plan to develop major projects in the upcoming period with this system.

ESSAM HAFEZ, RETAIL COUNTRY MANAGER OF AL-FUTTAIM GROUP What are the challenges and opportunities in the retail sector?

We are not optimistic about 2017, mainly because of the new custom taxes. We have retail brands that have not been registered since June 2016 until this moment due to the complexity of registration processes and the long time they take for no reason. This implies that there is no one rule or law allowing you to predict the future of a certain business, which made us put our plans on hold until further notice. However, opportunities this year include brands that we will introduce in different sectors such fashion, accessories, food and beverage among others.

How would you describe commercial activity now?

There are two factors that have been affecting us since 2015, including the increase in custom taxes and curbing imports according to Law No. 43 with around 16 commodities were obliged to acquire registration. The complexity of submitting such documents constituted a major obstacle in commercial activity and was hard to provide. Such difficulties decreased the size of the retail market. The other problem is the dollar crunch. The more a certain company grows, the more it cannot function because of the custom taxes and import curbs. These challenges also resulted in companies cancelling their expansion plans. The flotation of the EGP caused a shock to clients but this shock will fade away over time. These situations happened before in Turkey and Lebanon. The retail market will revive again when companies learn how to work with market dynamics.

KARIM HELAL, DIRECTOR OF COLLIERS INTERNATIONAL, A LEADING REAL ESTATE COMPANY OPERATING IN 68 COUNTRIES How would you describe the commercial sector following the flotation of the EGP? The impact of the EGP flotation on the commercial sector has been very negative. There is tremendous pressure on rents valued in USD. This has created a massive problem to tenants, especially if they are among the large malls who own great space of shops or offices. These tenants’ costs have been tripled so they go back to the landlords and renegotiate. Therefore, developers are making substantial reductions such as decreasing the price rate of USD to reach a fixed rate of EGP 12 or EGP 13 rather than EGP 18. The overall situation in the end includes increased costs for tenants and reduced revenues for the developer.

Do you think real estate prices will stabilize in the upcoming period?

I do not think I can generalize and say ‘real estate prices’ because I believe real estate contains several sectors and each sector has specific characteristics. For example, people seem to be obsessed with high-end gated compounds offering unreasonable payment terms. The prices of these properties have been increasing due to cost increases. Therefore, developers try to compensate the increase by offering extended payment terms; some are offering terms without down payment and these decisions have affected the prices. The real question, though, is how the transactions are actually being made, what was actually sold or bought at this level? If you think about low-income and middle-income housing, for example, we have a huge demand and no supply. Schools and hospitals have a very strong demand and no supply as well. Prices reflect on that; therefore, it depends on sector.

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EGYPT’S DEVELOPERS URGED

TO SMARTEN WASTE MANAGEMENT TECHNIQUES

BY LEENA EL DEEB AND MENNA A. FAROUK

When people become committed to separating garbage, they contribute to creating and preserving a healthy environment. This also benefits us with recycled products and energy that we are all in need of,” says Abdallah Gamal, a dentist and one of Madinaty’s residents

E

xperts are urging the country’s real estate developers to smarten up their techniques on urban waste management and set out a vision enabling the development of flexible, green, and adaptable cities. Invest-Gate looks into developers’ attitude towards waste management in Egypt amid recent government and individual initiatives to turn the waste disposal process green.

“With most projects in Egypt, not only real estate, we do have an issue with waste management,” Noor Noor, executive coordinator at Nature Conservation Egypt tells Invest-Gate. Noor adds that most buildings and developments in Egypt lag behind in the environmental impact assessment measuring the negative and positive consequences of a plan, policy, program or concrete projects on the environment.

“There is a legal system attempting to enforce that environmental impact assessment. However, there is not much weight given to its enforcement,” Noor reckons. “The legal system in its general framework is very weak when it comes to ‘environmental priorities’ so there is not much of an adherence to it.”

Waste has been a problem throughout Egypt as private companies -commissioned by the government to clean the streets- failed to do their jobs. The government confirms that tens of millions of tonnes of garbage are accumulated on the streets, turning some Egyptian neighborhoods into rubbish dumps.

According to a World Bank report, Cairo produces more than 15,000 tons of solid waste each day, with only 60% managed by formal and informal sectors combined. The remaining 40% is left on the streets and at illegal landfill sites, the report notes. About 5% of the rubbish that ends up on the streets every day is recycled, data released by the Egyptian Ministry of Environment indicates.

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However, some experts believe that it is not all the case in many places across Egypt. “For instance, Aswan, Nubia, and Siwa are more aware of this topic.

It is the most densely populated areas that have a waste problem,” argues Presidential Advisor on sustainable development Sarah El-Batouty,.

El-Batouty says that the way waste is dumped in Egypt “poses a risk on the entire community’s health.”

El-Batouty is also the founder of the environment consultancy firm ECOnsult, currently working on the establishment of a smart village in Bahariya Oasis.

“We are building a village that is the only Tarsheedrated awarding building in Egypt. We managed to save up to 30% of water and up to 50% of energy,” El-Batouty says. Tarsheed is a simplified rating system applied in Egypt classifying green buildings in the country. It has been developed by the Egypt Green Building Council, globally certified by the World Green Building Council in 2015 and finally published the following year.

ECOnsult uses responsible segregation of garbage and greywater treatment in their village. Greywater is the domestic wastewater produced, excluding sewage. If well-treated, greywater can be used for laundry, toilet flushing, and plants irrigation. Treated greywater can be used to irrigate both food and nonfood producing plants.

“We need to create a dual system of awareness and incentives but we also need fines,” the presidential advisor says. “Segregation of waste into organic and plastic should become a culture in homes and the workplace with the government creating incentives to do so,” she suggests.

Earlier in March, the government opened two kiosks in the upscale district of Heliopolis, encouraging residents to earn money in exchange for their recyclable materials. The kiosks were purchasing glass, paper, cans, and different kinds of plastic

from the public. Shortly after the opening, dozens of residents enthusiastically gathered in front of the kiosks to dispose household waste to earn extra income.

In Madinaty, residents are given three colored refuse bags to separate plastic, paper, and organic materials.

The residents do so voluntarily without any pressure from the developer.

According to Cairo Governorate Spokesman Khaled Moustafa, this project aims to make use of garbage, so instead of throwing it out people can benefit from it – whether in generating energy or producing paper. “At the same time, such a strategy would help the government clean the country’s streets from the millions of tons of garbage accumulated over the years,” he tells Invest-Gate. There were reports, saying that the initiative had stopped. However, the government denied that.

“When people become committed to separating garbage, they contribute to creating and preserving a healthy environment. This also benefits us with recycled products and energy that we are all in need of,” says Abdallah Gamal, a dentist and one of Madinaty’s residents.

The project was originally proposed by two members of parliament, who had launched similarly successful initiatives in other cities on a smaller scale. Similar kiosks were opened in the Nile Delta governorate of Kafr el-Sheikh and Fayyoum, near Cairo, as part of the project. The kiosks compress and sell the material to factories for reuse. On the front of the kiosks, prices of each recyclable item is posted on a large green sign. A kilogram of empty cans goes for EGP 9 (USD 0.5011), while a kilogram of plastic is sold at EGP 1.

Gamal adds that having this developed technique in collecting garbage distinguishes the developer of Madinaty from others as the technique is an addedvalue.

Dina Ahmed, another resident and a housewife, says that the idea of having colored bags for waste makes it very easy to separate garbage at households. “The idea also raises awareness among people about the

significance of getting rid of and collecting garbage,” she adds.

Mohamed Montasser, a real estate expert, describes Madinaty’s waste management strategy as “promising”. However, he adds that further incentivising techniques like the one the government has introduced can be more encouraging as they prompt residents to maintain the practice.

Montasser suggests that developers install machines giving residents recycled toilet paper as gifts when they dispose their garbage. According to the expert, given the fact that organic materials can be used to generate electricity, developers too, in cooperation with the government, could cut the energy bills of the residents, who keep separating their refuse.

“There are many other rewarding methods which I think can encourage many residents to collect their waste,” Montasser suggests.

Montasser is also optimistic that real estate developers in Egypt will apply such techniques in their projects because such methods make their developments much more competitive, attractive, and meet world-class standards. There has to be more cooperation between the government and developers as well as “growing awareness on the part of individuals about waste management to make this happen,” he reckons.

“Awareness is a huge part of the process; it is a cultural problem across all sectors that throwing rubbish is acceptable. People need to feel that the cleanliness of their environment reflects better health, education, and ethics,” El-Batouty concludes.

It seems that, with recent individual and governmental initiatives, Egypt is steadily moving in the direction of turning its construction sector green and sustainable.

“The idea of this project is perfect for Egypt. Of course, there are other ideas that can prompt citizens to get rid of garbage in an environmentally-friendly way.

But we think that this is best for Egyptians, especially amid hard economic times,” Nadia Henry, one of the parliamentarians, who spearheaded the project, tells Invest-Gate.

“With launching this project, we hope that citizens will begin to feel responsible for their safety and cleanliness of the country’s streets,” she adds. Henry also states that the idea is not new to Egypt as it has been applied in developments like Madinaty in northeastern Cairo, but residents do not get money in exchange for their recyclable garbage.

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no electricity,” he confirms. Among clients interested in El-Sayary ideas is Al Sarh Real Estate Company.

Mohamed El Rafei is, yet, another young architect, who contributed to modern construction by inventing the ‘compressed earth blocks’, an alternative to the traditional cement bricks used in the building process. The new bricks are made of desert soil blended with 12% of water content, in addition to stabilizers made of gear and cement.

The mixture is later compressed to be used as a building material. “This type of bricks is appropriate for certain types of projects such as residential projects located in desert areas and does not need pillars for support. It may only need a wall potentially made of stone to apply heat insulation,” explains El Rafei at BATIMAT Projects Summit 2017. At the conference, he announces that Sicom for Natural Herbs Company has adopted his method.

According to an Ain Shams report titled Alternative Building Materials and Components for Affordable Housing in Egypt Towards Improved Competitiveness of Modern Earth Construction, Egypt’s construction sector ranked 36th globally in 2000. In Egypt, the report notes, natural building materials suitable for modern construction are mostly found in certain projects such as hotels and eco-lodges as well as natural protectorate areas supervised by the Ministry of Environment, and remote areas.

“Architecture is a cultural product expressing the nature of a society and its needs,” comments Seif Abu el Naga, head of the Egyptian Architects Authority.

According to the architecture guru, the basic characteristics of a successful construction includes collective awareness, proper decisionmaking, successful experiments, and simplicity.

EGYPT’S YOUNG ARCHITECTS

SEEK TO TURN CONSTRUCTION INDUSTRY GREEN

E

gyptian young architects are coming up with smart solutions and innovative ideas to modernize today’s construction sector and turn the country’s industry green. Some of those architects gathered at the BATIMAT and Projects Summit 2017 exhibitions earlier in March 2017 to reveal their contributions towards creating a green construction sector. Invest-Gate highlights the modern environment friendly techniques in construction nowadays.

Samer El-Sayary, an award-winning architect, believes that Egypt is capable of applying modern construction methods distinguishable by green and sustainable building materials. However, “the application may be stumbled by obstacles, including people’s lack of awareness of the benefits of green construction, economic challenges, and of course legislation,” he tells Invest-Gate.

“The concept of modern construction requires people’s acceptance of new technological methods,” El-Sayary tells Invest-Gate, citing the fact that modern construction is mainly applied through new technology.

The young architect also notes that Egypt is the first country in the Arab market to utilize building information modeling, equip architecture, engineering, and construction professionals with

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BY FATMA KHALED

the insight and tools to more efficiently plan, design, construct, and manage buildings and infrastructure.

Nonetheless, he adds that there is no legislation in Egypt that imposes its application, “We need the legislative authorities to support the application of modern construction and speed up the development process.”

The Egyptian Green Building Council, a government affiliate, on the other hand, has created the Golden Pyramids Rating System, an Egyptian-based green building code system. However, the system was never official. Despite the unofficial codes that are used as reference, companies, wishing to register their buildings as green, need to acquire certification from the council, Invest-Gate previously reported.

El-Sayary adds that one of the many benefits of modern construction is that it can be applied to upgrade the rampant slums. “Construction works can be carried out through scientific research, renovation, reconstruction, and modular design architecture,” he states.

El-Sayary is a renowned architect, who previously used modern construction and architecture techniques to develop Zero Energy Houses as well as the El Suhimy old house project in 2011. El Suhimy won three awards, including the Hassan Fathy Award.

Both projects were developed through covering

homes with glass surfaces and solar panels in a way that can have a positive effect on the psychology of residents.

El- Sayary’s other visionary projects include Noah’s Ark, a smart spaceship that is considered selfsustaining and environmental housing project.

The vessel is meant to create human life on Mars, containing solar sails that use radiation pressure from sunlight on large surfaces.

Noah’s Ark is equipped with a nuclear reactor used as a control panel and also features recycling and water usage strategies. This space project aims to create interconnected underground residential units that are constructed on different levels, according to a report published by French architect-oceanographer Jacques Rougerie.

Among the other techniques El-Sayary uses to maintain sustainability are wind flows. But according to him, such a method was only suitable for projects located in the city of Borg El Arab on the outskirts of Alexandria.

El-Sayary’s revolutionary methods have been adopted by some real estate investors in Egypt. “ Zero energy homes have attracted a host of the real estate developers in Egypt due to the fact that they require minimal infrastructure planning with having

“But developing a certain model that gradually grows through generations rather than a traditional model remains a challenge,” he asserts, emphasizing that modern construction needs a perfect strategic plan and a suitable timeframe to guarantee positive results.

Another green development that has been carried out in Egypt is the headquarters of the Credit Agricole Bank in New Cairo, on the outskirts of Greater Cairo.

The bank, built by the Engineering Consultant Group (ECG) in 2014, was granted the prestigious Platinum Certificate of Green Construction for its sustainable architecture and less consumption of natural resources.

The design of the bank also won the Leadership in Energy and Environmental Design (LEED) certification, which is a rating system devised by the United States Green Building Council (USGBC) to evaluate the environmental performance of a building and encourage market transformation towards sustainable design. In accordance with the LEED rating system, the construction took into account sustainable site selection, water efficiency, energy atmosphere, building materials, indoor environmental quality, and design efficiency.

Credit Agricole construction features 35 open spaces and recycles rainwater for future use. The building holds heat insulation and reduces light consumption through a motion sensor that turns the light on and off as employees approach or leave their offices.

“Credit Agricole is the first Cairo-based entity to be granted the platinum accreditation, which is the highest rating in the LEED rating system in Egypt and North Africa,” says Dalia Anis, an architect at ECG. “Prioritising clean energy, the Credit Agricole management provided on-site shuttle buses for

employees, aiming to reduce gas emission pollution.

Furthermore, the bank encouraged employees, back in 2009, to cycle to work by establishing bicycle paths on-site to promote green living,” adds Anis.

Several methods and techniques have been applied

in Egypt from architects and construction firms alike, aiming to provide citizens with healthy living.

Experts, including Abu El Naga, believe that it must take its time for the people to adjust to a new norm that improves quality of life and sustainability.

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KARMBUILD, AZZA FAHMY BRING ARTISTIC FLAVOR TO SOLAR-BASED ARCHITECTURE IN EGYPT

BY NAYROUZ TALAAT

K

armBuild, a subsidiary of solar energy company KarmSolar, has teamed up with Azza Fahmy Designs Company to add an artistic flavor to the designs of solar panels and solar technology-based architecture in Egypt.

Invest-Gate explores such a unique partnership, aiming to integrate between the Egyptian heritage designs and sustainable, eco-friendly architecture.

“Looking back to our heritage, we will find that architecture designs were reflecting our culture.

But today, architectural designs of buildings everywhere and especially at the most upmarket areas no longer fit the Egyptian environment,” Ahmed Zahran, CEO and co-founder of KarmSolar, tells Invest-Gate.

KarmBuild is an architectural design and build firm focusing on energy efficiency and environmentallysustainable building designs. Since its launch in 2011, KarmSolar and its subsidiaries have been mainly focused on the notion that Egypt can have

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its own technology in the field of solar power.

The company is keen on bringing solar power solutions for those in dire need to find alternatives to high costs of energy consumption, especially in areas far from the capital.

Seeking to create a mixture between Egyptian heritage and the innovative technology in the field of renewable energy, the company has cooperated with renowned heritage expert Azza Fahmy. Fahmy, a prominent jewelry Egyptian designer, has managed to showcase Egyptian heritage and culture in her jewelry designs that are recognized internationally.

Commenting on her partnership with KarmBuild, Fahmy says, “I found that my 50-year- experience will be a perfect addition to KarmBuild’s idea.”

“I spent 50 years doing nothing but reviewing designs of the Egyptian architecture in different civilizations, namely Islamic and Ancient Egyptian,” Fahmy adds.

The artist has long been working with KarmBuild team in order to add her artistic vision to their architectural designs. One of the joint projects currently underway is KarmSolar Sahl Hashish Campus, along with a number of touristic and residential projects in Marsa Allam and Bahariya Oasis.

“Azza Fahmy’s business continues to grow, relying on the artist’s design methodology, which gives value to the character of the design and translates culture and heritage into modernized designs. She continues to expand and implement that design methodology not only in jewellery but also in other design-related sectors,” Zahran says.

“Using such methodology, the KarmSolar Sahl Hasheesh Campus Headquarters features inspirations with using various elements, such as the Palmetto plant, which has Ancient Egyptian and Roman origins,” he adds. The plant design is a mixture of ancient Egyptian and Nubian

architecture. “The ceiling of the plant is a mix of Ancient Egypt and Nubia, showing traditional architectural motifs,” he notes.

Zahran also confirms that the company has been working hard to make designs, where inhabitants totally depend on the sunlight to lighten their houses. “The designs also decrease temperatures in high-temperature houses,” Zahran clarifies.

“Using renewable energy will not be optional in the near future,” says Omar Mansour, KarmSolar CTO. “The company’s projects are focusing on building houses that ‘literally breathe’, meaning that the buildings will be coping with the outer atmosphere with no need for the usage of artificial lightning and air conditioners,” Mansour tells Invest-Gate.

Mansour also says that the company’s main goal is to encourage ordinary customers to possess solar panels that generate power and have an artistic design.

“In order to achieve our aim of engaging customers

to have solar panels in their homes, we have come up with Azza Fahmy Mountings, a project that seeks to highlight Egyptian heritage in solar technology-based architecture,” Karim Kafrawi, Principal Architect at KarmBuild, says.

Kafrawi adds that the solar panel still looks so odd in the urban city; so the project will help change such odd designs with ones that reflect the Egyptian culture.

Ranging from agriculture, tourism, industrial, and commercial sectors, KarmSolar along with its subsidiary KarmBuild are carrying out a number of projects across Egypt, including Sahl Hasheesh in Hurghada, Marsa Allam, and Bahariya Oasis.

After its large exposure in the Egyptian market, KarmSolar is now running eight projects while its subsidiary KarmBuild is managing another three.

KarmSolar’s current projects are designed to provide solar power to Enmaa Farm, a cater to Egyptian beverage and yogurt company Juhayna,

in Bahariya Oasis, as well as to touristic client Red Sea Diving Eco-lodges and Wadi Sabara in Marsa Alam.

In Marsa Alam, KarmBuild is also working on Tayebat Workers Village, spanning an area of 2,400 square metres in Bahariya Oasis as well as the expansion of Seil Boutique Hotel, encompassing 1,200 square metres, and Wadi Sabbara residential development spreading on an area of 2,200 square metres; to another project being implemented in Sahl Hasheesh, the Red Sea. Other four solar power projects are also under way in Bahariya Oasis.

According to the company’s data, KarmSolar has also helped seven clients power their houses by solar energy, mitigating the emissions of 22 tons of carbon dioxide and saving 7971 liters of diesel per day.

Photos are courtesy of KarmSolar

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MEET THE MAN

REVOLUTIONIZING EGYPTIAN CITIES’ URBAN LANDSCAPE

BY YASMIN ELBEIH

A

firm believer that “the quality of architecture could impact the quality of life”, Ain Shams University Architecture Professor and founder of architectural consultancy firm Cube Consultants Ashraf Abdel Mohsen works from a brightly-lit office, featuring his oil paintings of discrete landscapes.

Invest-Gate speaks with the soft-spoken, humble man, who smiles warmly as he explains his vision on changing Egyptians’ lifestyle through his designs.

Cube Consultants is one of the five member companies forming the 5+UDC consortium appointed by the Egyptian government to design and plan the new Administrative Capital megaproject, but their impressive portfolio includes numerous developments in Cairo, Luxor, Sharm El Sheikh, Gulf countries, among other international locations and Egyptian embassies abroad.

In 2005, Abdel Mohsen began working on proposals to resolve Cairo’s urban issues. “I thought to myself, the city is in such an intolerable state…how could we be teaching students about sustainability, quality of life … when we live in a city that is left the way it is? How can Downtown Cairo once again become what it once was? How can the city’s major squares return to their former beauty?” he wonders.

At the time, he had not yet pitched his ideas to the government, but was merely creating progressive redesigns of the city out of personal interest. The General Organization for Physical Planning (GOPP) eventually heard of the man making a hobby out of redesigning Cairo’s urban planning and hired Abdel Mohsen to create a redevelopment plan for Giza’s Remaya Square. However, Abdel Mohsen went back to them with a redevelopment plan for all of the Giza city, encompassing his envisioned Khufu Avenue running from Dokki all the way to the pyramids.

The GOPP was so impressed by Abdel Mohsen’s passion for revamping the Giza urban planning that they scheduled a meeting between him and then34 | INVEST.GATE | May 2017 - ISSUE 02

Prime Minister Ahmed Nazif and five other ministers to arrange further discussion. According to Abdel Mohsen, Nazif was impressed, particularly with the inspiration from Egyptian heritage, and spent over ninety minutes asking follow-up questions. From there, the Cairo 2050 Vision came into being, aiming to develop the city into one more green, global, and connected, according to the Cube Consultants website. The project will reportedly expand Cairo by 10,000 feddans.

“The people of Cairo and Giza should be the richest [given the assets at hand]…the Luxor Obelisk in Paris is quite something…why we not have something similar in one of our major squares?” he questions.

Abdel Mohsen notes, “Our vision was to wipe off the dust from forgotten riches…and use that to generate revenue for building new metro lines, parks, and sports clubs — building an entirely different lifestyle from scratch.” He adds that Cairo was one of the most beautiful cities in the word in the 1930s, and that the plan is for it to restore its

previous glory.

The people of Cairo and Giza should be the richest [given the assets at hand]… the Luxor Obelisk in Paris is quite something… why we not have something similar in one of our major squares?

After five consecutive years of work on Cairo Vision 2050, the revolution took place, and the project was stigmatized for alleged ties with Gamal Mubarak, former President’s Hosny Mubarak’s son. “Even though I would never even met the guy,” he laughs.

“The public misunderstood the project vision of expanding Cairo on an additional 10,000 feddans, as well as, our vision of enhancing citizens’ quality of life, and instead we were smeared as a pure investment.”

Abdel Mohsen and his team have also worked tirelessly towards a vision they dubbed Egypt 712 7 Cities, 7 Capitals, aiming to expand the concept of major hubs nationwide from merely the Nile Valley.

Three capitals would be newly-built in the desert, one being the currently under-construction New Administrative capital, while four others are already in existence and to undergo further developments.

“Alexandria the Capital of Knowledge, Cairo the Capital of Culture, Luxor the Capital of World Heritage and El Salloum the Capital of Aerospace Research

Our vision was to wipe off the dust from forgotten riches…and use that to generate revenue for building new metro lines, parks, and sports clubs — building an entirely different lifestyle from scratch.

are the old cities to be developed according to the vision,” he says, before outlining that the new cities would be constructed from scratch.

“Seneen in North Sinai would be built as a Capital of Business & Trading, Nefertari the New Capital in the Western Desert 200 km from Cairo, and Toshka Egypt’s new delta,” he clarifies. This vision was put in place by gathering experts across various disciplines, who held workshops to examine the needs of Egyptian citizens and diversify the main centers of attraction across governorates “as opposed to everything being based in Cairo,” he comments.

“For me, the New Administrative Capital is a dream where all the principles we have been speaking about should be implemented — it should be green, smart, and sustainable,” Abdel Mohsen tells Invest-Gate. He and his partners from 5+UDC are often hired to put the strategic masterplan for the New Administrative Capital, including different zones such as the area dedicated to government administration buildings. The 700-square-kilometer megaproject runs with a green river at its spine, alongside several surrounding parks each larger than New York’s Central Park.

Their mission was clear, putting into consideration creating a sustainable city, combining a natural environment, a healthy community, and economic vitality. The New Administrative Capital was designed as a smart city, with many utilities, services, and various transportation networks. It reportedly encompasses a network for walking areas and bicycle areas, working towards creating a livable city through new destinations and improving connectivity, with a wide variety of shops, cafes, schools, religious institutions and public parks for residents, workers and visitors alike. Abdel Mohsen also runs a non-profit organization with the same aims, the Remal Foundation for Urban Development.

For me, the New Administrative Capital is a dream where all the principles we have been speaking about should be implemented — it should be green, smart, and sustainable,

Egypt or travelled abroad for long-term work or academic assignments except for leisure or business trips, as he was determined “from day one” to serve and help his country succeed.

Abdel Mohsen founded Cube Consultants in 1990, four years after graduating atop his class from the Ain Shams Faculty of Engineering, initially working from his grandfather’s old apartment. After another four years of tackling numerous projects independently, he finalized the company paperwork. Cube’s projects include the Palestinian Embassy in New Cairo, restoration and development works to the National Theatre, and the Vortex Dubai Gateway, among other projects nationwide and regionally.

Abdel Mohsen tells Invest-Gate that he never left THE VOICE OF REAL ESTATE | 35

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startup to grow and move fast. “The state is not encouraging SMEs at all; they cannot be financially backed from banks unless you have a positive ‘Profit and Loss’ account for the last two years, which is ironic because by definition, a startup means that is still building up... so how would I have a ‘Profit and Loss’ account that would be positive for the last two years!” Eissa sarcastically comments. “It does not make sense.

Moreover, no company in the world starts off as a winner,” Eissa states.

Despite the aforementioned forks in the road, SolarShams has managed to cross some milestones ever since its establishment in 2014, including the national project initiated by the Egyptian government in Aswan two years ago, which aims to have the biggest PV in the world generating up to around 2,000 MW. They qualified international companies to work on this project, and SolarShams were among the very few Egyptian companies that received qualifications.

“Our mission is that everyone would be able to afford this solution, not only in terms of money, but also engineering, applicability, and availability,” Eissa concludes.

SURVIVING ECONOMIC MAYHEM IN EGYPT

THROUGH SOLAR, WIND ENERGY

BY LEENA ELDEEB

W

ith the growing population and the turbulent economy, Egypt is struggling to provide for the people it shelters. Wrestling with the circumstances, a company specialized in solar energy applications is striving to survive the situation – and thrives. Invest-Gate looks into the solar energy as a mean to sustainable Egypt.

In situations like these, there is only one answer: renewable energy. “I always say that when God gave the Gulf States petroleum, he gave Egypt two things: solar and wind energy,” Energy Engineer and COO of SolarShams Faissal Eissa tells Invest-Gate.

SolarShams is a startup that works with wind and solar energy to provide solar water heating and solar electricity generating. It is a specialized engineering company in solar application businesses operating for both institutions and individuals.

Eissa continues to explain how Egypt could benefit from these energies just as the Gulf benefited from petroleum.

“We could use the energy to generate electricity and export it, just like Saudi Arabia exports petroleum and gains good income in return,” he suggests.

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“Solar panels are affordable if you calculate it correctly.” Eissa points out that it is a capital-intensive piece of equipment, almost like paying for the energy you consumed all at once. With the price of a single solar heater you can buy several electric ones, “so everyone thinks it is more expensive, but they do not take into account the electricity that the electric heater will consume and that they will pay for eventually,” he says.

If consumers calculate it economically, on the long run of 15 to 20 years with zero-running cost, they will find that solar heaters are far less costly than the electric ones.

“The use of renewable sources of energy should be a priority. This includes the use of energy generated by wind and solar – photovoltaic (PV) and concentrated solar panels,” Senior Advisor to the Minister of Environment Hussein Abaza tells Invest-Gate. “This will go a long way in resolving Egypt’s energy problem,” he adds.

Germany has been adopting the renewable energy solution for years now. Eissa finds Germans so

successful at how they implement this solution in real life; and Egyptian energy engineers in both private and public sectors consider the country the model of the field. “Germans have systems and incentives in solar and wind that could turn each and everyone to an investor,” Energy Engineer Faissal Eissa tells Invest-Gate.

According to the German administration, young entrepreneurs in the field are offered a decrease in taxes and an ease in making the project work and succeed. “If you are a farmer, and you put a wind turbine, they will give you an incentive and lower taxes on the vegetables you sell,” Eissa says.

He further explains that it all pays back to Germany on the long run; since they became experts in this field, if anyone needs consultancy, machinery, equipment, training or even lawyers for the contracts – since these contracts are very technical – they turn to Germany for help.

Enterprises and startups, like SolarShams, face many challenges in Egypt. On the macro level, the situation in the country is very difficult environment for a THE VOICE OF REAL ESTATE | 37

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Making ‘New Cities’ Habitable S

BY YASMIN EL-BEIH

atellite cities have emerged nationwide, and on the outskirts of major cities in particular, since the late 1970s and early 1980s. With a focus on social housing initiatives primarily catering to the middle- and lower-income segments, Invest-Gate takes a look at the varied types of communities influenced by the urban sprawl and how their lifestyles have been affected.

Professor of Architecture and Urban Theory at the American University in Cairo Basil Kamel is baffled by why billions of dollars are being invested in the New Administrative Capital when, historically, “new cities” have often turned into ghost towns.

FOR REAL ESTATE DEVELOPERS:

HOW TO BE

GREENER

BY LEENA ELDEEB

“If you look at cities like Sadat City, 10th of Ramadan, 15th of May…major investment has been made in all of these places, yet they are left to decay although they are young cities-[not to mention], the mechanism of economic structures is poor,” he says. “There are major problems in these cities, and in my opinion they are easy fix.” “[The National Housing Initiative] is good, and I think there needs to be something like that to provide better prospects and what not, but please do not tell me that people living in very tight-knit communities want to go live in 12-storey towers, where they do not even know their neighbor—it has failed, it will not work. We should look at how people live and build for them, as opposed to enforcing a certain way, thinking that this way is what will upgrade their life, this is not true,” Kamel comments.

Moreover, Kamel believes that launching any more new cities is no longer sustainable, particularly as they only make life more difficult for those who have jobs in the informal sector. The informal sector, Kamel adds, constitutes over 50% of the Egyptian economy and “nobody cares to make use of it”. As such projects are incompatible with the “the needs of the people”, be it the dissolving middle classes or the masses, it becomes clear that satellite cities perhaps do not adequately cater to all the communities they are home to.

As Cairo has expanded dramatically during the last three decades, the government has improved transportation in the form of a subway network and motorcars.

Additionally, the government has built ring roads, which led to the creation of planned urban settlements on the periphery of Greater Cairo, notes a report in the Journal of Housing and Built Development entitled, The Role of Advertisements in the Marketing of Gated Communities.

Gated communities for the wealthy and social housing blocks initiated through government projects flourished as mass transportation grew and offered more extensive routes.

Authored by Rana Tawfiq Almatarneh and Yasser Mohamed Mansour, the report also states that population growth, suburban growth, and economic growth are considered the determining factors that contributed to the continued, housing demand in Egypt.

The pollution and heavy congestion of the city, as well as the traffic congestion, crowds, dust, and noise would seem to attract huge numbers of consumers to the idea of moving outside the city. Marriage rates, among the stated factors, contribute to raising the total demand for housing in Greater Cairo to 600,000 per annum. Demand for housing in up-scale gated communities amounts to approximately 85,000 of that figure.

In spite of all the arguments for migration to the outskirts, several residents of new cities, particularly in the social housing blocs targeting the middle and lower-income segment, echoed Kamel’s view that the makeup of these areas is far less compatible with their lifestyles.

One resident of the social housing blocs in Sheikh

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Zayed on the West of Greater Cairo says transportation networks to the area are so ineffective that, in times of crisis such as a health emergency, she has no method of transportation to the nearest hospital. The microbuses and other methods of public transport only run on the main roads, an entire 25-minute walk from the apartment she shares with her husband and three children, introducing herself as Umm Ahmed, a house cleaner in her thirties. However, when she lived in the city, it was easier to lean on neighbors or other contacts for help, not to mention that tuktuks were readily available at every corner. Umm Ahmed tells InvestGate the horrifying story of how, towards the end of her pregnancy with one of her children, she almost gave birth at home with little assistance from a neighbor or a makeshift doula.

Zeinab, a housewife in her late forties residing in the same area, adds that the hospitals in Sheikh Zayed are few and far in between, particularly the public hospitals.

“Also, there are no small privately-owned clinics in the area, and even in terms of schools, we have limited options. My son attends the only elementary school here, which is a 15-minute walk from our home,” she sadly notes. “Incidentally, rents here spike far more than in the city. My rent has gone up to EGP 1,200 from EGP 700 in mere months.”

Basic services such as food and transportation are also more expensive for the less privileged classes in the satellite cities as opposed to areas in the city center, where subsidized goods are more readily available.

“Foodstuffs, cooking oil, and related products are very expensive here, and when you complain, they tell you that it is because of transportation costs added to the prices of products…and there are not any associations selling them at discounted prices as there are in Shoubra or near Downtown,” according to Zeinab.

In response, NUCA’s Director of Public Relations says there is “little” the authority can do to limit vendors’ “greed”. “We ca not do much to control the market dynamics of supply and demand; vendors want to cover their costs and achieve margins. [The authority] tenders the stores, and the vendors later set prices based on their view of the surrounding community’s purchasing power. Consumers should speak to the authorities responsible for subsidized goods or report to the Consumer Protection Agency if prices are being exaggerated.”

Safety is yet another issue; “I would never let my daughters leave to go buy something or play downstairs

D

as they did in Imbaba…there is barely any lighting in the streets at night,” Mohamed, a schoolteacher and resident of the social housing bloc in Sixth of October City says.

“In any case, there are few spaces for entertainment such as football fields or youth centers here.”

“Our strategic vision is very much based on the needs of the community in question, and our model is flexible,” says Deputy Head of Development of New Cities at NUCA Alaa Abdel Aziz. “When we think of services, these are very much based on what is best for the community.

If one of the new cities requires additional schools to be built, we put that in place. With that in my mind, a new presidential decree was issued this year to extend Sixth of October City and Sheikh Zayed.”

The satellite cities of Sixth of October and New Cairo have only attracted about a quarter of their targeted populations, although they remain far more popular than those further away from Greater Cairo such as the 10th of Ramadan City or Obour City. With the quality of services and transportation in need of amendments while the government is preoccupied to build additional megaprojects, one ca not help but wonder: what plans, if any, are being made to amend the problems in place and fix them going forward?

eciding to become a green real estate developer takes courage and real determination. Results may not show up overnight, but when they do they will last for a lifetime - sparing you money and effort, while garnering a great profile to boast about among the real estate tycoons in the international market.

like windows and balconies. Smart buildings should place clientele as their top priority since the primary objective is to make them more comfortable and thus more productive; make sure your architect is fully aware of that. In that sense, make your architect ditch any kind of art that would not be used effectively in the favor of your building or the people involved in it.

Thanks to Egypt Green Building Council, as of 2016 Egyptian buildings can be rated by a local green buildings rating system, TARSHEED, that is more affordable than LEED, the international rating system.

TARSHEED’s rating is set off in three branches of criteria; energy, water and habitat.

After finalizing and studying the design of your building, call your contractor in to discuss how you are going to implement these illustrations and calculations on solid ground.

Countries worldwide compete against one another towards a greener lifestyle, with green buildings and cities going along with it. With some quality research and a conversation with Egypt Green Building Council’s Vice President Karim Farah, Invest-Gate compiles a list of steps on how exactly to do that.

Step One: Scout for Answers So you have decided you want to go green? Here is how to start; first you have to work with your marketing team to figure out who your target clients are. Based on that, you shall find your answers concerning where you want to build your project, which is a quite important answer since it is going to affect your building’s construction something you will learn about in step three. You will also determine what smart features you want to install in your building, the goals you want to achieve, and the impacts you want to have on the environment as well as society.

After you have figured out all that, draw a vision in the back of your head to make you motivated to proceed to the next step.

Step Two: Design your Building Find a good architect to divide your building into smart spaces without leaving any unused. The building should have a good variation of natural lighting features.

Engineers have provided many innovative options for that, without needing to resort to old solutions

Step Three: Build your Building “Build your architecture from what is beneath your feet,” said renowned scholar and architect Hassan Fathy. It does not only spare you time, money, and workforce to import or transport foreign building materials, it also makes your building more enduring against natural phenomena. Speaking of which, “rammed earth” is an ancient technique that is being modernized and reused after finally realizing that it is a very sustainable way to build walls. In this technique, sand, rubble, and mud are used as main components to build one wall at a time without having to build it brick by brick. Research in New Zealand indicates that monolithic earth walls, like those built by rammed earth, perform better under earthquake conditions than walls made of separate bricks or blocks.

After you are done with building the outside, remember, the inside is what really matters in green buildings.

Step Four: Interior Every little feature you add has an impact on environment. It is your choice whether to make this impact positive or negative. As we pointed out earlier, TARSHEED’s rating system covers water, energy and habitat. So, the interior has to cover smart and green features that have to do with the three branches. The Egypt Green Building Council’s CEO gives us a few examples on what to install; to start with, water taps must have a discharge rate of eight liters per minute, toilets must have a dual flush and shower heads must

have a discharge rate of 10 liters per minute.

Moving to energy, it is a good idea to have the rooms equipped with electricity sensors that would turn off the lights when no one is occupying the room, or if the sunlight is enough to illuminate the area. It would also be a good idea to have sensors that would open the windows if the room temperature is getting too high, giving the consumers a better alternative to air conditioners, which also have specific criteria to go along with the green architecture.

We just named a few examples here that would strengthen your position when taking a TARSHEED evaluation test. However, there is a greater obstacle when coming to introduce these technical details to those who will be using it; which brings us to the fifth step.

Step Five: Orient You need to orient two groups of people; first, the contracting team; starting with the contractor himself until the youngest worker, making sure they understand very well what they are building and the materials they are building with. Second, you will need to orient the consumers; those who will be using the building.

If this orientation did not occur efficiently, your money, time, and effort would all go in vain.

Step Six: Market You are done with all the above, there is nothing left other than the way you are going to introduce your project to the market. That would not only be a great chance to boast about your Community Social Responsibility Scheme, but it would also be a great chance to start on orienting your potential clientele with how your product is respondent to both the environment and their needs. Make sure your marketing team, public relations, or advertising agency are also aware of how your project works and how it impacts the environment it is built in.

That way you have guaranteed a smart, green, and TARSHEED-certified building.

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