EGYPT ON A NEW TRACK
On the back of growing confidence in the Egyptian economy, investors are pouring much needed capital into the real estate market.
Egypt’s real estate sector has been injected with confidence.
According to the latest JLL report on the Cairo real estate market, all sectors have witnessed positive performance and improved sentiment during the first quarter of 2015.
According to JLL, this confidence is most clearly illustrated by the recent mega real estate project “Cairo Capital,” announced during Egypt’s three-day Economic Development Conference (EEDC) held in Sharm El Sheikh in March.
During the conference, foreign investors (mainly from the Gulf region) announced several large scale real estate projects, reflecting the return of confidence in the Egyptian market which, due to strong market fundamentals, is said to offer plentiful opportunities.
Cairo Capital is the proposal by Eagle Hills – an Abu Dhabi based company with Emaar Chairman Mohamed Alabbar as its board member – to develop a new administrative capital on a site of 700 sq km to the East of Cairo, valued at over USD 45 billion.
According to information from JLL, the initial proposal envisages a population of 5 million people (housed in 1.1 million dwellings across 21 districts), with a 5.6 sq km business district with 1.8 million sq m of mall based retailing, 40,000 hotel rooms, supported by religious buildings, schools, universities, hospitals a theme park and a new airport.
The new proposed city will extend the existing shift of Cairo to the East. According to JLL, this will be of direct benefit to the existing area of New Cairo, which has attracted the lion’s share of new development over the past 5 years. With limited new development land options in New Cairo and continued traffic congestion within the old city, JLL believes that extending Cairo further to the East marks a natural long term progression for the city.
However, says JLL, the success of this new city will be dependent upon developing suitable transport infrastructure (which has failed to marterialise with past such major projects in Egypt). Furthermore, to ensure that the city is well connected the government will need to overcome many infrastructural and transportation challenges and promote a cultural shift to encourage people to live closer to their workplace.
“With the new Capital stretching further east to New Cairo, the whole transport network needs to be very efficient and this should include major highways and fast rail connections. The initial master plan for the new Capital does include a fast rail project and major roads connecting with New Cairo and other major highways to link into the old city,” says Ayman Sami, Country Head, JLL Egypt.
“I believe that this will materialise in some form or another as the success of the new Capital will be very much dependent on the transport infrastructure,” Sami adds.
Other real estate projects
The new Capital City is just one of many new real estate projects being proposed around Cairo.
“Other major projects that were announced [during the EEDC] were the October Oasis project, a 42 million square meter project in 6th October (the west side of Cairo). This is intended to develop into a fully integrated mixed-use project with housing, retail, recreational activities and hotels,” Sami says.
Given the new Capital will create a bigger magnet for business towards the East of Cairo, the West will need to reposition itself differently (probably as a tourist and entertainment area).
JLL are convinced that the government is seriously seeking to expand the development footprint of Cairo to improve the quality of life of its citizens and promote more sustainable economic growth.
“To do this will require current legal, infrastructure and transparency issues to be addressed. The current plans appear very ambitious, however, with such a fast growing population and a severely limited supply of quality real estate, it is clear that releasing new land to satisfy the current shortage is essential in stabilising rising sales and rental prices and improving the quality of the urban environment and the quality of life for the citizens of Cairo over the medium term,” JLL says.
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