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DOSSIER CONSTRUCTION: Egypt’s new capital

By Amira Salah-Ahmed in Cairo
Posted on Monday, 16 April 2018 08:50

One of the main arguments made for the importance of extending Egypt’s capital is that Cairo was originally designed to accommodate 5 million people. Today, as one of the fastest-growing cities in the world, it has anywhere between 18-22 million people depending on the time of day, as hundreds of thousands of commuters flow in and out of the heart of Egypt. The government’s plan is to build a New Administrative Capital to serve as a link to Cairo and to make it a more manage­­­­able city. The overpopulated capital is plagued by pollution, traffic and informal areas that have mushroomed around it.

“The infrastructure of an old city at some point becomes a spaghetti mess, so untangling that infrastructure of roads and plans made decades ago for a population that has grown rapidly out of control becomes difficult. So you start pushing the boundaries out,” says Wael Ziada, the founder of investment company Zilla Holdings.

Perhaps the most common description of the vision behind Egypt’s New Administrative Capital is that it will be connected to historic Cairo, not a replacement for it. Ayman Ismail, who is the founding chairman of the board and currently serves as its adviser, says: “It’s not that we’re changing the capital of Egypt; it’s an extension of the capital of Egypt.” The project was announced in 2015 and is being built on an expansive 71,400ha, which, as Ismail is quick to point out, is “the size of Singapore or the developed part of Dubai”.

Positioning itself as a regional smart city and Egypt’s economic zone, the New Capital is expected to cost a total $45bn and to contribute $10bn to gross domestic product by 2030. It is located 30km from central Cairo and 40km from the centre of the Suez Canal Zone, itself another of the country’s mega-projects.

PARKS AND SKYSCRAPPERS

At a time when Egypt’s economy has been suffering, critics question whether the money going into the New Capital project is worthwhile. “Is it the best time to be building a city outside Cairo? What else could you have done?” asks Ziada. “Some ask whether we should have put this money into the budget for education or health. But on the other hand, you want employment and you have high population density and poor infrastructure and services, so which should be done first?”

The first phase of the New Administrative Capital comprises 16,800ha of land covering residential neighbourhoods, the Government Park, the City of Arts and Culture as well as an international airport, a financial district and an embassy district.

Capital Residence, the first residential district, is being built on 420ha of land and includes 25,000 housing units currently under construction. Work has already begun on the second residential district.

Government Park will be home to ministries and government bodies, which will all be utilising e-government services and should start moving in this year.

Karim Shafei, chairman of Al Ismaelia for Real Estate Investment, is the powerhouse behind the Downtown Cairo Rehabilitation Project, through which historic buildings are restored and renovated. He says that the move to the New Administrative Capital could be both good and bad. “A lot of government functions drive people to come from outside of Cairo to get their services because it is so centralised,” he says, “so shouldn’t we decentralise instead of building another central system that is more powerful?”

The financial district will include 20 skyscrapers, one of which is set to be the highest tower in Africa. Meanwhile, the City of Arts and Culture will be home to an opera house as well as theatres and cinemas.

The overall project is designed to feature 15m² of green spaces per person, something that is painfully missing from central Cairo and the surrounding districts. And, for the first time, underground tunnels are being built for water pipes and other infrastructure. The hope here is to facilitate maintenance work that would otherwise involve digging up the ground, an all too familiar sight in the heart of Egypt’s capital.

The Administrative Capital for Urban Development, a company established to oversee the development of the city, is 51% owned by the New Urban Communities Authority and 49% owned by the army. The company was set up with a scope of focusing on developing the master plan, developing the vision and strategies for the city as well as awarding key contracts. Talks with some Emirati and Chinese investors have collapsed.

ATTRACTING TENANTS

Ismail was elected to serve as the founding chairman of the board and he was recently replaced with Ahmed Zaki Abdeen, a retired military general who formerly served as the minister for local development. The armed forces play a big role in the Egyptian economy. President Abdel Fattah al-Sisi is a former general and there has been an uptick in army-backed construction projects under his first term in office. One of the first projects to be completed for the new city is Al-Masa Hotel, an army-owned property with a touristic resort, a lake, a conference hall, as well as a mall.

One of the biggest challenges the New Capital will face is attracting at least a million people to relocate in the first phase. To do so, plans include making the city accessible by connecting it to central Cairo with a fast train that can make the trip in about 30 minutes.

“With better planning, which is so far what I have seen in terms of [the New Capital] city’s spines and infrastructure, you will not only lower the population density of Cairo but you will also have an area where density is much better managed with sufficient infrastructure,” Zilla Holdings’ Ziada says. It will also be vital to create enough economic activity for people to want to move to what is now considered significantly beyond the already far outskirts and satellite cities of central Cairo. Officials have highlighted the potential for industries ranging from education, medical tourism, cinema, textiles, call centres and outsourcing. To encourage investments into building the needed level of economic activity, Egypt will rely on a familiar model of free zones in some areas.

PURCHASING POWER

When fully developed, the city should be able to accommodate 5-6 million people. “We are looking at ways to create incentives for people to move,” Ismail says. However, he recognises that socio-economic segments with less purchasing power may have difficulty finding homes if residential areas feature only the more upscale development tendencies of the major real estate companies that have built up East and West Cairo satellite cities.

“In some of those segments, the private sector will not make money building those types of homes. This is where we lean on and work with the ministry of housing,” he adds.

Asked whether the influx of new properties will affect Cairo’s thriving housing market, Ziada said that the effect would be minimal. “It will not flood the market. No matter how big the size, you have still a very sizeable market in the country. Egypt doesn’t have that much investment or savings pockets to offer other than banks […] so real estate as an investment asset class has been attracting most of these investments,” he explains.

The Downtown Cairo Rehabilitation Project’s Shafei says that while the amount of investment being driven into the New Capital is huge, “I have not yet seen a global urban plan for Egypt as a whole that includes the 70% of Cairo that lives in slums or a comprehensive plan for formalising the informal areas, which has been a painful process.”

From the March 2018 print edition

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