Sakan Misr project in Upper Egypt - Photo Courtesy of New Urban Communities Authority Sakan Misr project in Upper Egypt - Photo Courtesy of New Urban Communities Authority

All Eyes on Upper Egypt

Mon, Apr. 2, 2018
CAIRO – 2 April 2018: As Egypt begins implementing urban projects across various governorates to meet its goal of relocating 30 million Egyptians out of the more crowded cities by 2050, the government is seeking to revive several areas, including Upper Egypt, that have the potential to become future local and regional investment hubs.

Several real estate developers pointed out the prospects that Upper Egypt carries; “Upper Egypt is filled with mineral resources that could be used to create construction materials.

The region should also be the future source of renewable energy, and should be connected with the Red Sea region, as per tourism development goals,” explained Magdy Qorqor, architecture and urban planning expert and professor at Cairo University, to Egypt Today. CEO of TatweerMasr, Ahmed Shalaby, also believes in the potential of the region. Upper Egypt encompasses 10 governorates, including Aswan, Qena, Luxor, Sohag, the Red Sea, Assuit, the New Valley, Minya, Beni Soueif and Fayyoum. These areas accommodate around 35 million citizens.

The Ministry of Housing and Urban Communities launched an ambitious plan to build new modern cities in those governorates, in cooperation with the New Urban Communities Authority (NUCA), an affiliate of the Egyptian Housing Ministry. With a total investment of LE 13 billion from NUCA, the new cities will include: New Fayoum, New Aswan, New Assiut, New Thebes City, New Luxor, New Beni Suef, New Qena, New Akhmemand, and New Sohag.

Assistant to the head of New Cities and Development Sector at NUCA, Alaa Abdel Aziz, informed Egypt Today that the areas in Upper Egypt with the most opportunities are Western Qena, Assiut governorate, and areas in Aswan.

“Offering diverse investment opportunities in different governorates in Upper Egypt will act as a main drive to the local economy, creating new job opportunities as a result of relocating communities from seven governorates,” Ayman Sami, country head of JLL, previously stated during the Cityscape breakfast event in January. He had also mentioned that the new cities will offer around 190,000 square meters for constructing commercial projects.

Real Estate Development

The Ministry of Planning and Administrative Reform mentioned in a statement released in July 2017 that investment in Upper Egypt amounts to a total of LE 32.989 billion from the state investment budget for the fiscal year of 2017-2018. The total number of achieved investments represents only 17.1 percent of the total budget set for projects in Upper Egypt, according to the ministry.

Furthermore, NUCA has implemented LE 7.8 billion worth of projects in Upper Egypt during fiscal year 2017-2018 by offering 66,000 housing units with 40,000 more units under construction.

“We are trying to offer various residential options, including 90-square-meter units, and Sakan Misr’s units with floor-plans ranging from 115 to 150 square meters, which consequently increased citizens’ demands for NUCA’s residential projects,” Abdel Aziz explained.

Although NUCA representatives, like Abdel Aziz, remain optimistic about launching new residential projects in Upper Egypt amid their claims of rising demand, Qorqor doesn’t believe that real estate projects will help to develop Upper Egypt. “Agriculture and mineral investments should be the number one priority, as they will provide many job opportunities,” Qorqor argues.

Although the housing sector attracts the lion’s share of investments, there have been several other key projects across the region, including NUCA’s new Abu el-Rish Hospital branch that is currently under construction in Beni Suef, as well as plans for Al-Omran Hospital in New Sohag City. Three Nile Schools will also be built in some of the governorates.

Although the majority of development projects are carried out by the state, some of the mega real estate developers have a keen interest in expanding their portfolios in Upper Egypt, including Saudi-Egyptian Company SECON and Orascom Holding which implemented Byoum Residence in Fayyoum. Orascom’s projects offer villas, twin villas, apartments and serviced apartments. Orascom Holding is also building a luxury hotel in Aswan on Amoun Island over a total area of 22,000 square meters, surrounded by pools and a private library.

Investing in Upper Egypt
The governorate of Beni Suef has plans to construct a mega project of urban industry and agriculture catering to medical plants on an area of 69,000 feddans, according to Beni Suef’s governor, Sherif Habib. The governor also added in his speech during Cityscape event that the major urban agricultural national project will result in several export opportunities following its completion.

However, urban planning expert, Qorqor, thinks that there is more to be done.“Upper Egypt is not really attractive to Egyptians due to the lack of diverse investments and job opportunities, making it one of the most unattractive areas for accommodating larger populations. The region needs to undergo special urban development planning by state, and be assigned a separate private budget,” states Qorqor.

Despite Qorqor’s concerns, several projects are set out to develop the region during the next few years, including a project to abolish all slum areas in Assiut and relocate residents to a fully integrated developmental area spanning over 200 feddans, according to an announcement by Mohamed Abdel Gelil, secretary general of Assiut.

Another 200 feddans in the governorate will be used for investment projects that include new branches for Carrefour, and the Saudi-German Hospital and housing projects. Approximately 760 feddans in Assiut will be used as a logistical area for handcrafts projects and storage zones.

Waleed Abbas, assistant to Housing Minister Mostafa Madbouli, announced that the authority is developing facilities and roads in 15 new cities in Upper Egypt at a total cost of LE 7 billion. Several state-owned projects will continue to lead the future of Upper Egypt, including the launch of the ministry’s housing program “Ebny Beitak” (Build Your Own House) and a number of Nubian houses inaugurated by President Abdel Fatah al-Sisi in Aswan.

Developing projects in Upper Egypt is a national goal that will offer numerous job opportunities and reduce citizens’ immigration to the capital in search for jobs, stated CEO of SECON, Darwish Hussenein, at the Cityscape breakfast. SECON for Real Estate Development has a packed portfolio filled with developing company projects in the region. It first began launching investments 20 years ago in Assiut and is now developing new projects in New Assiut City. The company implements its projects from joint capital arising from both Egypt and Saudi Arabia.

Ahmed al- Nazer, head of the Sohag Chamber of Commerce, told the state-owned newspaper Al-Ahram that other development opportunities include four industrial zones in Sohag, amid the expansion of other new industrial projects,. He added that solar plants will also be established alongside a number of factories and a mega amusement park.

Although Sohag is witnessing prosperous investments according to Nazer, a report released by the World Bank called “Doing Business 2016” notes that Sohag is ranked number 12 out of 15 Egyptian cities in terms of ease to start a business, emphasizing that it is hard to launch a business in the governorate compared to other cities. Sohag also ranked ninth in terms of obtaining construction permits, and sixth in registering property ownership.

“For citizens to move their lives from the capital to Upper Egypt, not only should investment incentives be provided, but the government should also reduce bureaucratic procedures when providing construction permits with attractive payment plans, alongside opportunities for investors to conduct their studies across lands in Upper Egypt,” Qorqor added.






West Assiut City
West Assiut City- Photo Courtesy of New Urban Communities Authority


Attracting investors to the region
In efforts to develop opportunities in Upper Egypt, the Ministry of Antiquities is offering various investment incentives to drive investors' interest, including providing land on the spot following the submission of studies conducted on those lands by developers, in order to create an ease in the process of purchasing lands and commencing the initial steps of construction.

Other incentives and guarantees are also provided to investors to help revive the area. According to a statement from The General Authority for Investment (GAFI), the authority offers investors unregulated access to land in Upper Egypt, protection against expropriation, the right to repatriate profits, and access to resolutions to any disputes administered by GAFI committees.

The new investment law released in 2016-2017 has added more incentives to attract foreign investors to all areas of the country, including Upper Egypt. The new provisions of the law include permitting 100 percent foreign ownership of ventures, right to own land, maintaining foreign currency bank accounts and hiring Egyptian staff, among others.

Despite the promising window of opportunities that Upper Egypt features on an investment front, a number of challenges continue to keep developers from expanding their business portfolios in the southern governorates. Tatweer Masr CEO, Ahmed Shalaby, had previously mentioned that Upper Egypt lacks development in the medical sector, as it requires the availability of 5,700 beds to cater to resident’s health needs.

Hussenein mentions that infrastructure is lacking in many cities in Upper Egypt, which is a vital trigger for investor interest. He adds that the government has been working hard to build suitable infrastructure required for supporting new developments.

“Hassan Allam for Construction is working to develop a strong infrastructure in Assiut Plateau, while Talaat Mostafa Holding Company is developing projects in Western Qena,” stated NUCA representative Abdel Aziz, announcing the inauguration of new water treatment plants in Minya in March.

To address the lack of infrastructure, Madbouli and Sisi have inaugurated 22 rural sanitation and water projects in Beni Suef in January. They have also announced that 15 more projects will be open in the upcoming months across Beni Suef and Assiut. The new projects are expected to serve 300,000 to 600,000 citizens.

“When we decide to launch a new development plan in Upper Egypt, we assure investors that at least one electricity station and one water station will be available, in addition to public services. This is in attempt to create fully serviced communities featuring schools and hospitals, thus filling the void of integrated communities in Upper Egypt,” Abdel Aziz said.

 
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