Critics say Cairo plan will make rents too expensive

Renters have paid little over the years because of rent-control laws.

CAIRO // While the ministry of housing has yet to iron out the details behind downtown Cairo's planned redevelopment, some residents and preservationists are criticising it. So far, it is the private sector part of the project - a parallel effort that is informally connected to the ministry's public redesign - that has attracted controversy over what some have described as gentrification and the possible sale of Egypt's contemporary heritage to foreign buyers.

As city planners mull the future of public space in Khedivian Cairo - the name given to the city's once-elegant European quarter - the privately owned Al Ismaelia Company for Real Estate Investments is snapping up properties with plans to renovate and resell. "What I am concerned about is that now one company is owning more than 30 buildings and they ... have an ambitious plan to buy more than one million square metres of built-up space," said Mamdouh Hamza, an urban planner. He said he expects Ismaelia and its prominent investors to earn as much as six times the properties' purchase price.

"In the hand of one entity, they could easily be sold to a foreign establishment or a foreign company, which means we lose the heart and jewel of our capital to foreign hands." But Karim Shafei, a founder and chief executive officer of the Ismaelia Company, said that while his enterprise wants to make a profit, his intentions are noble. "The law in Egypt allows you to sell to foreigners," he said. He said he doesn't understand what Mr Hamza is worried about.

Mr Shafei and his partners, which include Saudi and Kuwaiti investors as well as some of the wealthiest businessmen in Egypt, have purchased 20 buildings, or about 75,000 sq m of space, since they started in 2008. He plans to at least double his holdings. Mr Hamza's worries about foreign buyers are misplaced, said Mr Shafei, particularly considering some of the more legitimate concern such as gentrification that Mr Shafei's redevelopment plan might create.

"I would be concerned about the gentrification of downtown, whether this will impact downtown negatively," Mr Shafei said. "There are some segments of society that may not be able to enjoy downtown." Indeed, gentrification is a concern for downtown residents, many of whose families have enjoyed rock-bottom prices for half a century because of rent-control laws. Spacious, centrally located apartments are passed down from one generation to the next, some of whom still rent for only a few dollars per month.

The system made owning property a losing venture. Many blame the outdated property law for the shabby, decrepit appearance of Cairo's Belle Epoque apartment blocks. "Everybody would like to have an exit from this law, but you know very well that this is a very political and sensitive issue," said Mustafa Madbouly, the chief planner for the ministry of housing. "We don't have a clear timeframe as to when this will be implemented, this abolishing the rent-control thing. It is still under study, whether it is the ruling party or the government, because there is a lot of social consequences if you abolish this kind of law."

In fact, lawmakers have made abortive attempts to abolish or revise the law for decades but have been stymied by tenants. But it is thanks to the law's restrictions that Mr Shafei can purchase wide tracts of downtown space. Many of the building owners are more than willing to part with the losing properties while tenants are often eager to sell their shares of rental contracts that are split among dozens of heirs.

Despite repeated efforts at property reform in parliament, Mr Shafei said he does not expect the laws to change within the next several years. Since the old rent laws are void under new ownership, Mr Shafei's profit will come from renovating and reselling the apartments and business space at market rates. Mr Shafei said his project is in the interest of restoring downtown's glory. For some residents, though, it is the end of an era that began with Gamal Abdel Nasser, one of Egypt's first presidents and the man whose land reforms made downtown apartments accessible to the masses.

"If they renovate and give a facelift, what benefit of that will come to me if I'm making only 20 [Egyptian] pounds [Dh13] profit each day?" said Hamdy Osman, a soft-drinks vendor near the Bab Al Louq Square. "We're already fed up with how expensive things are and we're already fed up with the president. The last thing we need is something like this." @Email:[e-mail]