The growing confidence in the Egyptian economy in general and the real estate market in particular has resulted in a number of major investment projects with the backing of Arab governments from the GCC.
The latest and largest of these projects to date is the proposal by AD based Eagle Hills to develop a new administrative capital on a site of 700 sq km to the East of Cairo. This ambitious project (valued at over USD 45 billion) was the highlight of last week’s investor conference arranged by the Egyptian government at Sharm El Sheikh.
While the details of the project are yet to emerge, 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 success of this new city will be dependent upon developing suitable transport infrastructure (which has failed to materialize with past such major projects in Egypt). A fast train is being planned which will be a key perquisite for the development of the new city. The site is also bounded by two existing highways, which will further support connectivity with Cairo itself. 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.
The new city will extend the existing shift of Cairo to the East. This will be of direct benefit to the existing area of New Cairo, which has attracted the lions share of the new development over the past 5 years. With limited new development land options in New Cairo and continued traffic congestion within the old city, extending Cairo further to the East marks a natural long term progression for the city.
The new Capital city is just one of many new real estate projects being proposed around Cairo. To balance the growth, Palm Hills and the UAE government owned Aabar have announced plans for October Oasis (42 Million square meters) on the Western Outskirts of the city. 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 stabilizing 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.