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New capital or new real estate project?

The state operates on the logic of real estate investment and land trade, says Yahia Shawkat


By Mohamed Darwish

The dispute surrounding the project arose due toits surprise announcement, without any explanations regarding studies conducted on funding, implementation periods, road networks, and the facilities required for the new location so that the original capital’s facilities would not bear the burden.

Just as President Abdel FattahAl-Sisi asked Chairman of the Suez Canal Authority Mohab Mamish to reduce the duration of excavation operationsfor the New Suez Canal project from three years to just one, the president also rejected Emirati businessman Mohammed Alabbar’s plans to implement the first phase of the project over 10 years.

In March, the government signed a memorandum of understanding (MoU) with Alabbar to develop the city, which is planned to be constructed 60 km away from Eastern Cairo.Alabbar’s Eagle Hills was set to take on responsibility for development and providing funding from abroad.

As yet, the MoU has yet to become a final contract, in the midst of disputedover funding, the state’s share in the project, and implementation periods. Meanwhile,studies regarding the importance of the project have failed to provide further clarifications.

Urban researcher YahiaShawkat told Al-Borsa that past experiences with major projects announced by the state that were never implementedjustify doubts regarding whether the new administrative capital project will be completed. This would represent a repeat of Sadat’s failed attempt to move the capital in the ‘70s, he said.

He added that the Ministry of Housing’s criteria for success involves rezoning and selling land to investors, which resulted in the new cities created over the past 30 years suffering weak occupancy rates,with the exception of those located near the capital, such as New Cairo, Sheikh Zayed, and 6thof October City.

Shawkat explained that the Ministry of Housing considers the administrative capital to be part of a large real estate exhibition, and is ignoring important considerations,such as providing a comprehensive urban policy, as well as economic and social development. Instead, the ministry is content with successful land trading, Shawkat said.

He noted that rezoning one square metre of land requires between EGP 400 and EGP 500, while the price per metre in bids offered by the ministry in New Cairo may reach EGP 4,000 for a large plot of land,10 times the original price. A small plot of land may bring in EGP 6,000 per square metre.

Shawkat pointed to a lack of sound urban management for planning the administrative capital, which will end up perpetuating Cairo’s crises.

“The government talks about moving ministries to the proposed capital without providing a mechanism for utilising the old locations, amid expectations that they will be resold to investors to build commercial and administrative projects. Instead of vacating the city and reducing its population, this will increase pressure on Cairo,” he explained

Shawkat said that the Cairo 2050 plan cost EGP 20m in 2008. It provided for a reduction in population density in the capital, as well as the transfer of ministries to Cairo’s outskirts,but did not discuss the construction of a new capital for the state. The plan did not come to fruition, despite the presence of studies, and yet the state expects success for the administrative capital project, without having completed clear studies on funding or implementation mechanisms.

He added that figures from New Urban Communities Authority (NUCA), affiliated with the Ministry of Housing, referred to 500,000 housing units with a 50% occupancy rate, despite many years having passed since the idea for new cities emerged in Egypt.

He explained that expanding cities around the current capital translates to increased pressure on Cairo, especially since work opportunities remain linked to the city. This causes residents of such cities to move to Cairo and generate traffic on main roads around the capital, close to internal neighbourhoods.

Shawkat pointed out that the new administrative capital would precipitate a resource crisis, as it requires road networks, electricity, water, and sanitation. This is complicated by a lack of such facilities, as well as the existing network’s inability to provide them.

He mentioned that electrical energy used in New Cairo may be equivalent to the amount consumed in Cairo, despite the fact that the population of the former is 1m,compared to 9m in the latter. This means that resources are distributed unequally among the population,Shawkat explained.

According to Shawkat, the government will create a water station to serve the new capital through significant investments, but the original supplier is limited, and a shortage is expected in upcoming years due to the problems faced with the Nile Basin countries.

Shawkat further criticised the lack of economic and social studies completed for the new capital project, and said that the idea has been turned into a real estate investment limited to selling land and constructing buildings that will not be used.

On the other hand, Madboulystated: “An important clarification must be made with regards to the new administrative capital project: it is not a transfer of the current capital. The suggested location is within the administrative and geographical scope of Cairo, and simply involves the construction of a new administrative centre for money and business. The goal is to restore the capital’s leadership regionally and globally, while revitalising the cultural and touristic climate of historic Cairo.”

He added that the project will be completed by developing the Suez Canal area, and will become a centre of money and business for Cairo. Madbouly noted that the government area will not include all ministries, as some will construct their headquarters in different locations, including the Ministry of Interior. The parliament also falls under this category, because it will require a very large headquarters: the building must house each member’s private office, as well as a diplomacy headquarters.

The Minister further completely rejected the idea that the city would be for the rich, as it will incorporate housing for young people, as well as social, middle-class, and luxury housing. He pointed out that the buildings have not yet been designed and that the master plan is currently under development.

Regarding project funding, Madbouly said: “It would have been possible for the state to implement the first phase by itself, but the government wanted to maximise the benefit from this site. There is high demand for the city, and so as not to exhaust the state budget, project development was made available in the short-term in a manner distinctive from other projects,where the statetakes the lead in order to attract the private sector.”

The minister emphasised that the process of vacating Cairo will begin in approximately three to five years, explaining that general ministry offices in which there is no direct contact with citizens will be moved first, with the remaining government departments moving to the new city in subsequent periods.

For his part, AsimGazar, Chairman of the NUCA, stated that the Ministry of Housing is currently studying development for the initial administrative capital project, and identifying stages of development and a proposed timetable. At the same time, the ministry is preparing an initial feasibilitystudy, as well as studies for funding resources, and expected investment returns.

Gazar emphasised that the capital will be linked to a high-quality transportation network within the state’s plan to develop means of mass transit and serve new housing settlements in East Cairo. These means of transportation will be connected with the metro from the Cairo-Suez road to the electric train that will serve East Cairo, as well as Cairo-IslamiliaRoad.

Gazar pointed out that there is interest in making the new administrative capital an environment conducive to investment, which contains the infrastructure and services required to do so. This will also include a communications network, especially since Cairo has come to suffer overcrowding, traffic, and communications difficulties.

According to the official website for the project, the city is expected to accommodate 5 million inhabitants, as well as 40,000 hotel rooms and 5.6sqkmof central trade areas and 4.2 sqkmof areas designated for retail trade.

The area of land available for development will reach 490 sqkm, including 91 sqkm for energy farms, 16 sqkm of airports, and 4 sqkm for an amusement park on the capital’s total area of 700 sqkm.

The central area will accommodate 250,000 individuals,with 15 km of main streets and side streets, 1,250 houses of worship and 700 kindergartens.

The website also indicates that the new capital will be a smart city built according to the principles of sustainability and will both benefit from available technology and have the ability to adapt to future technology. It will promote efficient use of resources and include an innovation sector and international cooperation. The city will also recycle organic waste.

The initial plan for the capital is expected to expand the population of Greater Cairo from 18 million to 40 million by 2050, and thus the new site holds a strategic position along the road stretching between Cairo and the Red Sea. The capital will provide economic links on Egypt’s most important cargo routes.

A special area of the capital will be designated for governmental management of Egypt, with another area designated as the future downtown area. The city will have a diversity of urban neighbourhoods, and each area and neighbourhood of the city will have its own character.

Emirati businessman Mohammed Alabbar founded Capital City Partners Limited from a special fund for global investors, with support from engineering design firm Skidmore, Owings& Merrill (SOM). SOM set out the initial framework and basic elements of the new sustainable city in a manner that is harmonious with the surrounding desert environment. The plan meets all needs of modern cities, according to a statement issued by the company.

Philip Enquist, partner and head of Urban Design at the company, said that SOM has committed to all international standards and bases throughout the stages of design, in order to construct a modern, integrated city that will include several vital facilities, such as educational institutions and so on. The company has taken the provision of economic opportunities and quality of life for youth into account, Enquist stated, noting that SOM will design and build the city in a manner completely consistent with its natural environment, making it a unique model for the region.

Enquist believes that the capital has several benefits, the most important of which is its geographic location, which boasts valleys, hills, and other terrain,featuring exceptional, unique features. Each part of the city will be outfitted with vital facilities that serve a variety of needs. The new city will be the headquarters for a number of centres, including administrative, business, cultural, and technology and innovation centres, and so on.

For his part, Daniel Ringelstein, Director of Urban Planning at SOM, said that the new capital project will serve as a developmental and economic revival of the country as a whole. He noted that the capital will form a strategic turning point that will permit the Egyptian people to move forward in achieving their aspirations for a better life. He added that the project will push the wheel of development and economic renaissance in Egypt by developing new projects for housing and work.

Topics: New Capital

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