Arabtec says building will start this year on $40bn Egypt homes project

The Dubai developer reached an agreement with the Egyptian authorities about financing.

Arabtec’s Dubai-listed shares have gained more than 74 per cent since the start of the year. Silvia Razgova / The National

Arabtec Holding said it would start construction on its high-profile US$40 billion housing project in Egypt before the end of the year, after reaching an agreement with the Egyptian authorities about financing.

Arabtec said that after weeks of high-level negotiations, it was “about to conclude” a final agreement with the Egyptian government to build 120,000 homes in the cities of Obour, Badr and New Minia after it agreed a deal to offer the New Urban Communities Authority completed homes in return for the land and facilities.

The project is part of ambitious plans to build a million homes over five years on 13 plots of land that are currently owned by the Egyptian armed forces.

Until recently, negotiations stumbled on how Arabtec would pay for the land.

Construction of the first phase of the project had been slated to begin in the third quarter but has so far failed to begin.

Egyptian officials said that the authorities there would provide the land for the project in return for a share of the completed homes and public services such as schools, hospitals and mosques.

“The company will not sell vacant land but affordable housing units, then it will deliver public services’ buildings to the Urban Communities Authority, who will in turn transfer their ownership to the concerned authorities,” said Khaled Abbas, Egypt’s assistant minister of housing for technical affairs.

He added that a permanent committee will be formed by Arabtec and the UCA to follow up on the project’s implementation in accordance with the schedule and to propose solutions for any obstacles.

Meanwhile the UCA will be responsible for building major permanent facilities at the borders of the land.

Arabtec said that it would establish a group of companies to conclude contracts for the first phase.

Analysts point out that to build a million homes in the five-year time frame that Arabtec originally proposed, the company would need to build 16,666 homes a month, or 555 homes a day.

“Even if they shipped in flat-pack homes and used advanced building techniques, Arabtec would be very unlikely to build that number of homes in five years,” said Sanyalak Manibhandu, the research manager at NBAD Securities.

Arabtec’s Dubai-listed shares have gained more than 74 per cent since the start of the year.

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