Egypt needs 500,000 new homes a year to meet demand, the country’s housing minister said yesterday as he revealed that stalled talks with Arabtec on a massive project had resumed.
The talks had been suspended when Arabtec’s chief executive Hasan Ismaik resigned mid-year. Speaking at a conference in Abu Dhabi yesterday, Mostafa Madbouly said: “Of course we have been negotiating, and then the big shift with the company and the change of the board slowed the process.
“But now with the new board we started again negotiations very actively. Last week there was a delegation that started with people in the ministry and they started discussing the prices of the housing units. But they are still doing the final feasibility studies for the project and promised they would come next week with the final numbers,” the minister said. Shares of Arabtec surged 2.1 per cent yesterday to close at Dh3.97 apiece on the Dubai Financial Market.
“I think what happened with Arabtec will only delay things one month or two, but it won’t be a big delay,” Mr Madbouly said at the conference.
Arabtec triggered a market rout in June after Mr Ismaik resigned and hundreds of workers were made redundant. The Dubai Financial Market General Index declined 10 per cent during that period. Arabtec’s housing project emerged amid high-level diplomatic cooperation between the UAE and Egypt after this year’s ascent of the army chief Abdel Fattah El Sisi to the presidency.
The Dubai contractor plans to build a million homes over five years on 13 plots of land that are currently owned by the Egyptian armed forces.
Construction of the first phase of the project had been scheduled to start in the third quarter, but has so far failed to begin.
Furthermore, the minister revealed that there had been confusion surrounding the Arabtec project.
"There was this misperception from day one that the Arabtec project was low-income housing. This project is for middle income. Our main goal was to provide decent and affordable housing on this project," Mr Madbouly said.
“The culture of the Egyptian people is they are used having everything from the government for free. The government should lose and we should win. This has been the case for the last 35 years.
“But we have made it clear that we are not subsidising any more, only social and low income,” he said. “But for other segments of society we are just going to give some help by providing housing units at a much lower cost.”
The ministry is also promoting urban development schemes around Cairo, Alexandria and other locations in Egypt.
New cities such as Sixth of October and New Cairo “have become the new jewelleries [sic] of a new urban context”, the minister said.
Once passed, Arabtec’s project is expected to be presented to the cabinet and will serve as a pilot model for international companies looking to pursue foreign direct investment in partnership with the Egyptian government.
“This government assumed its responsibilities in a scene that was characterised by excessive and ineffective public expenditure, by wasteful energy subsidies, no fiscal discipline whatsoever and complete utter mismanagement of the Egyptian economy,” said Ayman El Kaffas, deputy minister of finance for international affairs in Egypt
“We are trying to take a course of correction by working on infrastructure social projects that create job opportunities and promotes living standards of Egyptian people that responds to the existing problems which are water and power shortage,” Mr El Kaffas said.
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