Investors from the Gulf have continued to pull out of Egypts major real estate schemes, according to several investment banks in Egypt.
A spokesperson from Pharaoh Investments told MEED: GCC investors have pulled out of a number of major schemes announced during the EEDC [Egypt Economic Development Conference, which was held in March 2015]. Initial MoUs [memorandums of understanding] werent upheld and even our mandate to facilitate investments for a number of projects has expired.
During the EEDC, Egypts Housing Ministry championed the announcement of several major real estate schemes, such as the $20bn October Oasis project and the $3.1bn 6 October Urban Oasis scheme, both of which were presented to investors during the conference in Sharm el-Sheikh.
During the conference, several GCC investors showed interest in large, high-end, mixed-use developments being proposed. A year on from the conference, and several investment banks have told MEED that Gulf developers have decided not to invest in Egypts real estate despite the interest shown last year.
The first major blow was the breakdown of the deal between the government and the UAEs Mohamed Alabbar [chairman of Dubai-based Emaar Properties] for the development of the capital city, says a local analyst. [Cairo] has failed to offer a favourable environment for major schemes, and Gulf investors are unhappy with the governments reluctance to allow them to raise fund from local banks.
The New Capital City scheme faced several challenges, following the conference last year. By the end of 2015, the UAEs Capital City Partners, championed by Alabbar, had completely dropped out of the scheme. The Egyptians have since signed deals with Chinese investors, and recently announced that work on the first phase of the project will start in April.
Despite this, other projects have struggled to proceed as Egypt shows no signs of improving its business environment. Local analysts also believe GCC investors have become reluctant to invest in the country amid falling oil prices and tighter budgets.
Earlier in March, Capital Group Properties (CGP), owned by the UAEs Abu Dhabi Capital Group (ADCG) and Al-Ain Properties, said it is planning a $5.1bn mixed-use project in Egypt.
Several major schemes have been announced in the past year, but Egypts need for foreign investment to finance these projects continues. Real estate analysts are expecting legislative changes to encourage foreign involvement.
The development of the New Capital City provides a massive opportunity for foreign developers and real estate firms within Egypt. The master project could help relieve some of the pressure on Cairos existing urban area.
Egypt has seen a total of 7,560 residential units delivered in its capital throughout 2015, compared with the scheduled delivery of 30,000 units forecast by developers at the beginning of 2015. This represents a materialisation rate of just 25 per cent, according to a report by US-based JLL.
|Project||Construction status||Financial status||Value|
|New Capital City||Phase 1 to start in April||MoU signed with Chinese for phase 1||$45bn|
|Public housing||Several ad hoc projects||Deal broke down with UAEs Arabtec and project has become public policy, with private developers invited as well as direct government funding from Tahya Masr fund||$40bn|
|October Oasis||No progress||No progress UAE investors have pulled out||$20bn|
|Zayed Central Park||No progress||No progress unknown foreign investors have pulled out||$400m|
|Zayed Crystal Spark||Study||Saudi and UAE developers still negotiating with government||$1.6bn|
|Sheikh Zayed Residential area||No progress||No progress||$183m|
|6 October Urban Oasis||No progress||No progress||$3.1bn|