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Egypt�s Promised Lands
E.S. Mckee / Cairo
 (AVI KATZ) |
Piped Mozart flowing from speakers on gold-plated lampposts, golf courses and artificial lakes are among the attractions being offered to tempt prospective buyers in a new residential area in the Sixth of October City, until now a semi-deserted satellite community 35 kilometers southwest of Cairo. The vision would look like ad copywriting hype in suburban Connecticut, but in Egypt, a developing country where some people consider themselves lucky to live in a cemetery, the incongruity is downright bizarre.
TV channels and newspapers have been awash in recent months with lavish advertisements promising Egyptians a life of unprecedented luxury in a plethora of posh new neighborhoods. Another complex going up in the same city pledges 50 on-site restaurants, each offering a different type of cuisine, from Italian to Indian. A third commercial invites Egyptians to buy into what it calls "the world�s first electronic city." Here, the thousands of residential units will be connected to a fiber optical cable offering faster Internet access, on-line shopping and videos on demand.
These pricey residential and leisure complexes boast fanciful names such as Dreamlands, Beverly Hills, The Trees, and The Roses. Mostly still under construction, they are only the most ostentatious manifestations of a property-building frenzy, driven by the private sector but with the government�s blessing. And they constitute perhaps the firmest evidence to date of Egypt�s improving standard of living, seven years into an economic reform program sponsored by the World Bank and the International Monetary Fund.
Over the last five years, the number of Egyptian real-estate investment companies has grown from 28 to almost a hundred, with an estimated investment over the same period of around a billion dollars. According to the Investment Authority, the official body in charge of licensing new companies, real estate is now Egypt's third-largest investment sector after manufacturing and tourism.
So far, only the very rich, those who have been successful in business or those who�ve made enough money in the oil-rich Gulf states could afford to buy into these projects, which remain far out of reach of the vast majority of the population. And yet, unlikely as it seems, the authorities are now pinning hopes on this privately funded, up-scale property building craze as a vehicle to help curb the country�s chronic housing shortage by a kind of vague trickle-down effect.
Egypt�s population totals 63 million and, according to government figures, is growing at a healthy 2.3 percent a year. Some 16 million souls live in Cairo, which is bursting at the seams. Officials at the Cairo Governorate say that a fifth of the capital�s residents live in dozens of shanty-towns on the periphery of the metropolis. Many came in from the countryside to work in factories in the industrial zones planned by the late socialist president Gamal Abd al-Nasser. The urban drift, mainly into Cairo, continues at an estimated rate of 150,000 people a year.
Countrywide, some 12 million Egyptians are believed to be living in unhygienic conditions or slums. Young married couples often wait for years before they can afford a place of their own -- however humble and cramped -- and move out of their family homes. An extreme illustration of the shortage of decent, affordable housing is provided by the million or so Cairenes who live in the "City of the Dead," sharing tombs with deceased ancestors in the sprawling cemetery near Old Cairo.
Past attempts to ease the housing shortage and the urban crush came principally from the government sector, and were none too successful. Two satellite towns within commuting distance of Cairo, the Sixth of October City and the Tenth of Ramadan City, were built during the term of office of the late president Anwar al-Sadat, who had intended kick-starting a movement out of the major cities to bedroom communities in Egypt�s otherwise unpopulated, under-utilized expanses of desert. The government built shoddy, ugly housing blocks that in the end, were mostly used to shelter victims of natural disasters and some of the homeless and destitute -- a factor that deterred the influx of a more "quality" population. Plans to move government offices to the new cities seem to have been quietly shelved.
And so the new cities remained "ghost towns" until recently, when the government took its hands off, according to housing expert Milad Hanna. "These were empty cities that had few employment opportunities during the day, and were scary to live in at night," he said. "People had to come up with their own transport to and from Cairo," he added, because of the limited bus services.
Ultra-luxurious developments of the "Dreamlands" and "Roses" variety might tempt some newly wealthy Egyptians to try life in the wilds of, say, Sixth of October City, but at least for now, they are hardly likely to be the salvation of the masses in need of a roof over their heads. Most of these housing schemes promote themselves as being affordable for the young -- the price per square meter averages at around 1,400 Egyptian pounds, or $450, so that a spacious 150 meter apartment would cost under $70,000. Prices are at least double in central Cairo. But the new projects remain intimidatingly empty and financially off-limits to the majority of the lower and lower-middle classes.
Mortgages, as known in the West, are not available in Egypt, though the real estate companies offer attractive terms for payment in stages. After coming up with a minimum of 15 percent of the price as a deposit, and similar payments on signing and completion of the unit, clients can sometimes pay the rest in monthly installments over 15 years.
"It looks nice at the beginning," said Ahmed Fathy, 26, a graphic designer, leaving the model apartment of Al-Bostan (the Orchard), one of the more reasonable new projects in Sixth of October City. But in the end, he added, "it�s too expensive for me or anyone else. I�d still have to wait for 15 months before I could move in." Fathy makes 1,200 pounds ($400) a month, which is three times the salary of an average government employee.
Nevertheless, the government has eagerly encouraged investment in the luxury housing market, making available much of the land for such development at low rates. The government also acted with uncharacteristic speed in providing infrastructure for these areas. A new beltway connecting the Sixth of October with downtown Cairo, for example, was completed in 12 months at a cost of $94 million. President Hosni Mubarak has made a few official visits to the new promised lands.
Part of the attraction for the government is that all of these projects are going up in outlying suburbs of Cairo and at least contain the seeds for easing the urban crush. At present, Egypt's population is squashed into 5.5 percent of the land. Over the next 20 years, Prime Minister Kamal Ganzouri told the People's Assembly in December, the government plans to increase the area used for residential purposes to more like 27 percent of the land. Between now and 2020, it intends to build 16 new cities all over the country. And the hope is that the private property investors will continue to spearhead development there.
Economists fear that the high profitability rate in the up-scale property market, estimated at 200-300 percent, may lure investors away from other less profitable, but necessary sectors of the economy, like manufacturing and export-oriented businesses. Local industrial heavyweights such as Ahmed Bahgat, who owns International Electronics assembly lines, are investing extensively in Dreamlands. Muhammad Farid Khamis, owner of Oriental Weavers, a carpet export company, has also started his own huge housing projects, including the posh new district of Al-Shorouk in Cairo�s northern suburbs.
The government counters that the building boom will generate a knock-on effect in supporting industries such as ceramics, steel and cement.
Furthermore, there is a hope that the real-estate boom powered by private investors, which now caters almost exclusively to the rich and Egyptian expatriates in the Gulf, will in the end help ease the housing shortage. "It is not the responsibility of the private sector to protect the poor and middle classes," said Ibrahim Fawzy, chairman of the Egyptian Investment Authority. "But once the luxury market is saturated, they (the investors) would naturally move to meet the demands of those sectors." Hisham Mostafa of Alexandria Real Estate said that "the real market remains within the middle class, and will be for some time to come." Alexandria Real Estate, a well-known contracting firm, is building two up-market residential schemes: Al-Rehab, northeast of Cairo, and Al-Rabwa, southwest of the capital.
Some economists doubt that the private sector will ever go down to dealing with the most needy strata of society. "To think that an investor would voluntarily build for the poor is an erroneous assumption," said Gamal Essam, an economist at Cairo University. "What the government should be doing is getting money, perhaps through taxation or a special tariff levied from those companies, that could be reinvested for lower-class housing."
The government itself seems to be catering to other priorities for now. According to the Investment Authority�s Fawzy, current policy is to ensure that the rich and affluent remain in Egypt. "They stay here with their money. Is that so bad?"
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