Egyptian Construction Goes Suburban

Egyptian developers have recently started to reverse a trend steeped in centuries of urban expansion. No longer is Cairo’s sprawl continuing only to spread solely along the banks of the Nile, but instead, suburban developers are also setting their sights on areas away from the river.

The move to newer, gated communities started in a few years ago when in 2004, Prime Minister Ahmed Nazif began to undertake numerous liberal measures aimed at simplifying bureaucratic red tape and working toward the privatisation of many aspects of daily life that previously had been the sole domain of government. Part of this movement also led to the liberalisation of housing regulations.

Tarek Shahin, a construction analyst based in Cairo, sees this move to suburban construction as not only a sign of the modernisation of the industry but also as representing a shift from smaller, locally based builders to larger companies with better economies of scale. The fact that these companies now have greater control over both the size and types of properties offered means that average Egyptians now have options that they never previously imagined.

"Suddenly there's the option of living in a villa, [owning a] garden and a swimming pool, away from the pollution," Shahin said. With these new possibilities, Egyptians are now keen to take out their savings or even borrow money to pursue the new Egyptian dream.

Even with mounting fears of a worldwide recession, many analysts believe that Egypt’s property market has the capacity to remain sheltered. Their claims are based upon the fact that Egypt has an extremely healthy domestic level of demand, that it remains a heavily cash-based economy and that the most common form of off-plan contracts used in Egypt demand more money from the buyer, leading to lower levels of speculation.

James Gonzalez, Market Analyst at Obelisk, also believes that the property boom in Egypt can be sustained throughout a downturn. “Although the registered growth may not match that of years gone by, Egypt is still seeing rising wages and a robust population growth rate. No matter what occurs in terms of foreign investment, the internal demand for quality homes should be enough to fuel a reasonable level of expansion for some time to come.”

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