Arabtec Holding deal with Egyptian government involves building 1 million new homes
UAE-based Arabtec Holding has confirmed that it signed a memorandum of understanding (MoU) with the Egyptian government on 9 March for the development and construction of 1 million low-income housing units.
MEED earlier reported that the agreement was due to be signed with Egypts Ministry of Defense and Military Production.
The MoU will involve Arabtec Holdings subsidiaries developing and constructing 1 million housing units in 13 locations across Egypt. The overall development value is expected to be £E280bn ($40bn). A definiteitve agreement is expected to be signed by the middle of this year.
Arabtec Real Estate, a recently formed subsidiary of Arabtec Holding, will undertake the development of this project, which will be developed in phases over the next five years.
Arabtec Egypt for Construction, a another subsidiary of Arabtec Holding, will undertake the construction work of the project, which is expected to create more than 1 million jobs for the people of Egypt.
The developments will mostly be funded by Egyptian and foreign banks. They will provide a range of affordable financing solutions that will appeal to a broad cross-section of the Egyptian population and includes long-term repayment of up to 20 years.
The homes will be built in 13 locations in several governorates with an overall land area of more than 160 million square metres with a total built-up area of more than 5 million sq m. The project locations are:
- 10 of Ramadan
- Burj Al Arab City
- New al-Minya City
- New Asyut City
Bani Suwaif Governorate
- Bani Suwaif New City
- Fayyoum New City
- New Taybeh City
- Sadat City
- New Qana City
- New Souhag City
Construction work is scheduled to begin in the third quarter of this year. The first batch of units will be delivered in early 2017, while final delivery of all units will be achieved before 2020.
Egypt has the biggest shortage of affordable accommodation in the region, with an estimated shortfall of about 1.5 million homes. The issue was a key driver of the 2011 revolution, and continued economic and political instability has made the situation worse.
After the revolution, construction work was largely put on hold as developers negotiated land contracts with the new government. In May, the Housing Ministry launched a plan to build 175,000 homes in 25 cities over the coming fiscal year, as part of a programme to construct 1 million new housing units in densely populated areas.
Since then, various government agencies have tendered housing contracts. In late February, the Red Sea Governorate housing directorate in Hurghada issued seven tenders for the construction of 1,000 housing units in the municipality of Ras Ghareb. In December last year, Egypts Housing Cooperative for Employees at Hotels & Tourist Villages in Hurghada issued a tender for the construction of a residential compound in the Al-Ahyaa district in Hurghada.
Earlier in December, Egypts General Authority for New Urban Societies issued five tenders for the construction of 51 residential buildings as part of a social housing scheme in New Minya City. A total of 1,224 homes will be built in the city as part of the development.
In late October, Egypts Housing Cooperative Society for Employees at the Customs Authority tendered the construction of 14 residential buildings under the first phase of a project in the eighth district of New Borg el-Arab city.
In September, the Housing Cooperative Society for the staff of Cairo University issued a tender for a residential scheme at the northern extension of 6 October City comprising 28 residential buildings.
For Arabtec, the deal will further boost its backlog, which before this deal was sitting at about AED60bn ($16bn), making it the largest contractor in the UAE and one of the largest in the region.
In early February, the firm signed an agreement for the largest construction deal in the UAE. The AED22bn deal involves the design and construction of 37 towers across Dubai and Abu Dhabi for Abu Dhabi-based Aabar Investments. In early January, Arabtec won a AED2.6bn contract to build a mixed-use development on Abu Dhabis Reem Island, and in mid-January, it secured a AED5.7bn deal to build Jordans first themed tourist destination, the Red Sea Astrarium.
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