Media round-up on the city : February 2013

For 2013, the CEDEJ’s Pole “Cities and sustainable development” wishes to publish its press revue on monthly bases. Besides the usual urban news, each “Media round up” will provide a new “focus on” section, which will concentrates on a specific aspect of the urban life in Egypt. After the urban activists, and the urban government marketing (c.f. previous media rounds up), we will in this issue try to give an overview of the urban contractors’ activities in Cairo.

 

Urban news

 

– Land laws and real estate market

On Qursaya Island in Cairo, the land disputes continue (c.f. previous Media Round Up) – both residents and armed forces claim ownership. Following the events of November – where clashes between both parts occurred – a military tribunal sentenced 12 residents to prison and acquitted 14 others.

 

End of February: the Ministry of Housing (MoH) called for the reinstatement of a controversial land law (law 59), “which allows the government to allocate land directly to investors at fair prices, without putting them up for auction”, as the actual auction system “has caused land prices to soar”. This reinstatement decision was taken to promote big real estate projects, where the State could review the investor’s profile and chose the most capable of developing the land, and this at a fair price. Nevertheless, this decision is highly criticised, as it could imply secret arrangements, lack of transparency and wouldn’t give the same chances to all investors. Khaled Ali, ex-candidate to the presidential elections, thinks that this decision would have a certain impact over the existing corruption, which would simply rise.

 

In relation to this announcement, Al Ahram dedicated its headlines, on 17 February (article in Arabic), to mention the issue of State land’s acquisitions and attribution, as well as the subtleties of the right of exploitation and ownership.

 

The Egyptian IDA (Industrial Development Authority) became dependent on the NUCA (New Urban Communities Authority). This decision would probably “help install facilities and prepare the land for its stage of development”, and “make the land more attractive to investors”. To facilitate industrial investments the IDA presented a new road plan, explained on an interview of Mahmoud Al-Garf, president of the Authority.

 

In this same reasoning aiming to develop investments, the government declared on the 21st of February, a possibility of reconciliation for convicted investors. Meaning cancelling jail sentence and unlocking the investors’ frozen assets, only for convicted investors who have fled the country and whom verdicts were issued in absentia.

 

– Energy and Environment

This month of February was affected by the diesel fuel shortage in Egypt. This crisis is easily noticeable in the everyday life of the citizens. Enormous queues appeared in front of Egyptian gas stations (some claimed that they’ve been waiting their turn for 6 hours!), which brought traffic jam, noise pollution… The situation has also led to the creation of a fuel black market (where the price for a litter of diesel doubled). All these elements just prove the critical situation that the government is facing. In Egypt, the government – who entirely subsidizes this resource (fuel was sold at half of its market’s price) – declared a subsidized-fuel rationing plan through a system of smart cards (for July 2013). A loan of 4,8 millions of dollars is also into negotiation with the IMF, this would help maintaining the subsidies, as the government’s economic reforms plan doesn’t intend to lower the subsidies or adopt austerity measures.

 

Despite the political instability, the cairene society seemed willing to work for a greener and cleaner Cairo. The 1st and 2nd of February, was held an « Ecocities Camp » organised by « Icecairo» and GIZ. The attendees were able to discuss their visions on building a city and a country more sustainable and livable. This event was a great success and both organisations announced their will to hold other camps.

The EECA (Egyptian Earth Construction Association) also organised an event at the beginning of the month, in partnership with the GIZ, Nawaya, and Icecairo. The workshop aimed to show how to build « Earthbag buildings », stressing on its numerous benefits. Earthbag buildings seem to be a sustainable, low-cost, construction technique, besides being fast, easy, and resistant. But moreover, it is a perfectly suitable technique for the country considering the quantity of sand available. It reminded us the vernacular architecture of Hassan Fathy, to whom an exposition was dedicated in Cairo in 2012.

 

Focus on… The real estate and construction market in Egypt and its contractors 

Sources: Internet websites for the contractors companies, and Oxford Business Group report for 2012 – Egypt.

 

Despite the actual political instability and tensions in Egypt, the demand in the real estate and construction market was such that activity has helped the sector from sliding further. However number of large-scaled projects were postponed or cancelled, and investors call for government actions – which are indeed necessary to initiate new projects and strengthen the activity. Thus the “government wanted to share part of the investment cost with private-sector interests by tendering some of the projects as public-private partnerships (PPPs)”. Yet the future of these PPP remains uncertain, “the government may find it difficult to meet its share of any financial burden associated with PPPs, due to a current lack of foreign currency reserves”.

According to the same report (i.e Oxford Business Group – 2012), “after a tumultuous 2011, 2012 is showing signs of recovery”, and hopes have risen for 2013.

 

You will find here below a quick overview of the major contractors companies in Egypt, as well as reminders of their actual projects. We will cover the following group: Consolidated Contractors Company (CCC), OrascomHassan Allam Sons, Arab Contractors (AC), SODIC, and Bahgat Group.

 

Consolidated Contractors Company (CCC) is one of the most influent construction companies in the Middle East. In Egypt, three major projects should be kept in mind:

–        « Nile Corniche Towers » (Saint Regis Hotel) in Cairo. It consists in the construction of two towers of 29 and 30 floors; the project has started in September 2009 and should end in April 2014. Client: Qatari Diar Real Estate Investments

–        Design-Build contract of a 5-star luxury resort hotel in Sharm el Sheikh (September 2009 – October 2013) Client : Qatari Diar Real Estate & Tourism Investment facilities Co.

–        Ain el Sokhna Thermal Power Plant, April 2010- April 2014. Client : East Delta Electricity Production Company (EDEPC)

 

Orascom is an influent Egyptian construction group ranked among the world’s top global contractors. The group is owned by the Sawiris family and is one of the first multinational companies in Egypt. Orascom conducts international-scaled projects, and presents itself as one of the biggest contractor companies of the area. Orascom has a sector more focused on “development”, and leads various projects of power plants, desalination plants, road construction… But recently the company was noticed for its projects in social “low-cost” housing. «Orascom Housing Communities (OHC)» (created in 2006) conducts these sustainable and affordable housing projects, integrated at the regional and international scale according the website presentation, « Haram city » is an example of project.

Orascom doesn’t seem to abandon the “mega projects” market so far. The company signed for a shopping complex project, in Cairo (6th of October area). It consists of a 400 millions dollars project, which will host an amusement park, a 17-screen cinema complex, hypermarkets, 380 shops, and a indoor ski park – the first indoor ski complex in North Africa. However, Orascom isn’t protected from projects’ annulations or tax claims – Egypt’s Tax Authority believes it is owed 36 billion Egyptian pounds in taxes.

 

Hassan Allam Sons is another important Egyptian contractors group. Its founder was a pioneer in the construction market in Egypt.  The group begins to extend its projects in Algeria, Libya, and Saudia Arabi. Hassan Allam Construction has many projets in the energy field at the moment (power plant in Ain el Sokhna, in Caire, and another one in Beheira governorate), as well as in the industrial sector, and the restoration one (Opera in Alexandria, and «Al sultan al Zahir Barquq» mosque in Cairo).

 

Unlike the previous companies, Arab Contractors (AC) is a public one. It is influent in the Middle East and Africa. The company was founded in 1955 by Osman Ahmed Osman – an Egyptian contractor and politician who also was Minister of housing under Sadat government. Arab Contractors contributed to the construction of the High Aswan Dam, and the new “Bibliotheca Alexandrina”.

The main projects in progress are :

–    A 4 floor car park, under Tahrir square (Cairo) 470 millions EGP

–    Cairo – Alexandria Free Highway

–    Helwan Wastewater Treatment Plant

–   «Manshiet Nasser» General Hospital, 242 millions EGP, (which started in 2008)

However this public company is strongly affected by the current political and economic situation of the country. According to the annual Oxford Business Group report, in 2011 its revenues showed a decrease of 25%.

 

Six of October Development and Investment (SODIC). The projects and actions of this group – major actor of the development of 6th of October City – could be divided in two categories :

–        Six of October developments or Westown

–        East Cairo Developments or Eastown

SODIC mainly build residential compounds and « gated communities » at large scale. This residential areas always take occidental names, with strong relation to the American dream : Allegria, Beverly Hills, The Strip, Westown’s Forty West, Westown’s residences… These neighbourhoods house wealthy Egyptian families, and attract them with this idea and dreamy picture of a secure neighbourhood, with golf clubs, swimming pools, and malls nearby. The promotion videos give a perfect insight of the social class targeted by the company. The first projects were finished in 2011, and number of others should end in 2013 and 2014, although the Eastown constructions haven’t even begun in New Cairo area. All these projects are in line of DreamLand –  Bahgat project -, which praises the benefits of residential neighbourhood surrounding Cairo, supposed to be perfectly reachable and integrated in a great road system, equipped, secure, and where life is good and the air is purer.


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