THE EGYPT CONSTRUCTION PROJECTS MARKETAnalysis of market potential

Everything Infrastructure & Construction. Building the New Egypt.

2015 2016 2017 2018

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Value of contracts awarded in Egypt all sectors, 2015-18 ($m)

Egypt is in the midst of a construction boom. In total, more than $20bn worth of real estate and civil infrastructure projects valued $50m or above have been awarded over the past two years alone.

Everywhere across Cairo, huge billboards advertise dozens of new real estate developments demonstrating vividly the scale of opportunity.

The Egyptian construction sector is enjoying an unprecedented boom as the real estate market benefits from an improved economy, high demand for new housing to back substantial population growth, and government incentives to stimulate the market.

Egypt is in fact the only country in the Middle East & North Africa (MENA) where overall spending on projects has grown in the past two years, and it has overtaken Saudi Arabia as the second largest single projects market in the region as a whole, recording in 2018 more than $33bn of contract awards.

MARKET SIZE

EGYPT ECONOMIC INDICATORS, 2018

Nominal GDP ($bn), 2017 299

Real GDP growth, 2017e (%) 4.2

Real GDP growth, 2018f (%) 5.2

Non-oil real GDP growth, 2018f (%) 4.2

Oil real GDP growth, 2018f (%) 22.8

Crude oil production (million b/d) 0.6

Natural gas production (billion cf/d) 5.1

Fiscal breakeven oil price ($/barrel) 55.0

Fiscal balance (% of GDP) -10.0

Government debt (% of GDP) 91.2

Current account balance (% of GDP) -4.4

Official reserves ($bn) 35.5

CPI inflation (%) 10.4

Unemployment rate (% of labour force) 11.1

The drivers for this construction renaissance are clear. With the Arab world’s largest population of around 100 million people, Egypt already has a considerable latent demand for housing and social infrastructure. But population growth of more than 1 million each year, a population density rate of 46,000 per square kilometre in Cairo, and the fact that more than 50% of the population is below the age of 25, these are the perfect ingredients for a sustainable construction boom for years, if not decades, to come.

The market has been favored by strong economic growth of more than 5% in 2018, and a construction-focused government which is prioritising delivery of projects and industrialisation strategy. Egypt’s rapid repositioning from a net gas importer four years ago to net exporter today, thanks to the fast-tracked development of the offshore Zohr gas field, has helped underpin this economic recovery and support the state’s projects drive.

KEY DRIVERS

The key and perhaps best-known active construction project in Egypt is the new Administrative Capital to the east of Cairo. Involving the creation of a totally new from the ground-up city, the multi-billion-dollar project will host the government when it is complete as well as tens of thousands of new residents. Work on the massive project is well under way, with hundreds of individual contracts already awarded.

Other significant active real estate and civil infrastructure contracts include the huge new New Alamein City on the North Coast, the new Egyptian Grand Museum, a host of new hotel and tourism developments, and the expansion of the existing Cairo metro network.

PROJECT VALUE ($M)

ACCUD - The Capital Cairo: Central Business District 3,000

ACCUD - The Capital Cairo: Central Business District Phase 2 2,800

NUCA - The New Mansoura City 1,350

NAT - Cairo Metro Network: Line 3 - Phase 3: 1,244 El-Thawra Line Civil Work

NAT - Light Rail Transit : LRT Line (66 kms) 1,240

NAT - Cairo Metro Network: Line 4: Phase 1: 950 Civil Package 1 (CP 401)

Hassan Allam Properties - 800 El Mostakbal City HAPTown Residential Complex

MHUUD - Rod El Farag Highway 790

Madaar Development - Azha Ain El-Sokhna (Phase I) 750

Almarasem Development - Fifth Square 745

SCZONE - Al Sokhna Port Second Basin Development 600

NAT - Cairo Metro Network : Line 3 - Phase 4: Package 4B 535

NAT - Cairo Metro Network: Line 3 - Phase 3: 530 Electromechanical Works

Palm Hills / Madinet Nasr : Capital Garden 500

MAF - Almaza City Centre 450

Egypt National Cancer Institute - National Cancer Institute 400

2018 SELECTED EGYPT CONTRACT AWARDS

In terms of the leading clients, the rankings highlight that the market is comprised of both government and private sector developers, unlike other markets where state bodies dominate.

The local projects market has become increasingly attractive to Gulf real estate developers, like Emaar and Al-Futtaim, as the GCC market slows and because Egypt has considerable long-term potential.

TOP CLIENTS

Egypt selected top construction and infrastructure clients by value of work under execution ($m)

SUEZ CANAL AUTHORITY

EGYPT MINISTRY OF HOUSING UTILITIES & URBAN COMMUNITIES

EL MOSTAKBAL URBAN DEVELOPMENT

EMAAR MISR

EGYPT MINISTRY OF TRANSPORT

CITYSTARS

AL FUTTAIM GROUP

CAPITAL GROUP PROPERTIES

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It is a similar story among the leading contractors. Both local and international firms have been able to take advantage of the opportunity which again demonstrates the openness of the local market. Chinese contractors which have been able to bring financing have in particular been successful in the market.

TOP CONTRACTORS

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CHINA STATE CONSTRUCTION & HASSAN ALLAM CONSTRUCTION

PETROJET

SIAC CONSTRUCTION

AL MARASEM INTERNATIONAL

CHINA HARBOUR ENGINEERING

VINCI

CHINA RAILWAY

ERYUAN

Egypt selected top construction and infrastructure contractors by value of work under execution ($m)

Egypt has a project pipeline larger than any other regional market after Saudi Arabia and the UAE which is over $300bn of known planned and un-awarded projects. Construction is by far the largest future market in the country with more than $120bn worth of planned projects and growing.

FUTURE PIPELINE

Value of Egypt planned and un-awarded contracts by sector ($m)

ConstructionChemical Gas Oil Transport

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120,000

There are hundreds of future construction and civil infrastructure contracts across Egypt ranging from large-scale real estate and tourism projects to high speed railway and metro schemes. In all, there has never been a better time to invest in the Egyptian market.

FUTURE SELECTED EGYPT PROJECTS

PROJECT VALUE ($M)

MFTI - Golden Triangle Mining and Urban Development 29,000

MoHUUD – Egypt’s Social Housing Program 16,600

Al Habtoor Group - Al Habtoor City in Cairo 8,500

Palm Hills Developments - 6 October City: Badya 8,494

MOT - Alexandria-Aswan High Speed Railway Line: 6,335 Cairo to Luxor

MOT - Luxor-Hurghada Railway Line 4,730

Saudi MOT / Egypt MOT JV - 4,000 King Salman Causeway (Tiran Causeway)

NAT - Cairo Metro Network: Line 6 4,000

Heliopolis For Housing & Development / SODIC - 3,800 Mixed Use Project in Cairo

NAT - Cairo Metro Network: Line 5 3,500

Egypt MOT - Alexandria: Max New Port 3,378

NUCA - 6th October City Residential Community 3,000

FUTURE SELECTED EGYPT PROJECTS(CONTINUED)

PROJECT VALUE ($M)

NUCA / Mountain View / Sisban Holding JV - 2,000 Mountain View I-City 6th October

Jumeirah Real Estate / Sakan Developments JV - 1,680 Jumeirah Bay Ras El Hekma

MoH - JANNA Housing Project Egypt 1,500

Atraba Integrated Holding – 1,000 Integrated Medical City Project in Cairo

MoHUD – Alamein City Hotels Development 1,000 Program at Matrouh

DPA - Second Container Terminal (DEPCO) 1,000

SOME ACTIVE PROJECTS

NEW GRAND EGYPTIAN MUSEUM

GIZA, GREATER CAIRO

01.

NEW EL-ALAMEIN CITY

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MARKAZ AL ALAMEIN

NEW ADMINISTRATIVE CAPITAL

GREATER CAIRO

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HIGH-SPEED RAIL PLANS

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ROD AL-FARAG AXIS

CAIRO

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BADYA PALM HILLS

06.

GIZA GOVERNORATE

RAS ELHEKMA

JUMEIRAH BAY RAS EL-HEKMA

07.

MARCH 2019Prepared by Ed James Director of Content & Analysis, MEED ProjectsEdward.james@meed.co